The increase in sales of company vehicles in recent months has not yet erased the decline recorded during successive crises in the automobile market.
Covid-19, microprocessor and material shortages, rising energy and raw material costs, and logistics issues have taken a toll on auto purchases.
Due to the drop in supply, manufacturers have favored individuals, with whom they achieve higher margins and preserve their financial results.
Far from being a priority, companies had to wait for the delivery of the vehicles ordered.
At the same time, discounts have fallen significantly to the point of contributing significantly to the increase in TCO (Total Cost of Ownership), this total cost of use which has become the true judge of the peace in managing a car fleet.
However, according to Holson, a firm specializing in fleet management consulting, this TCO has increased by 30% over the last two years.
Despite these headwinds, fleets returned to growth during the first nine months of 2023. Utility vehicles and automobiles combined, registrations are up 16.66% compared to 2022, at 635,347 units.
For private vehicles alone, companies, administrations and long-term rental companies made 387,927 purchases, representing growth of 21.15% compared to 2022. Even more encouraging, the volumes are returning to the pre-Covid situation since in 2019 the fleets had registered 388,214 automobiles.
No drop in TCO
The situation is more contrasted for light utility vehicles weighing less than 3.5 tonnes.
With 247,420 sales, volumes increased by 10.25% compared to 2022, but still lag behind by 24.35% compared to 2019. If sales of vans and vans reflect the country's economic activity, the situation is improving but has not yet returned to its pre-crisis level.
Developed to fit all operating budgets of a vehicle and to go beyond the simple purchase price which is too imprecise, the TCO takes into account the depreciation of the vehicle, financial costs, maintenance, tires, insurance, energy and tax and social charges.
Companies have not taken stock of the increase in these various expense items.
They are now beginning to realize the extent of the phenomenon when it reaches its peak and is expected to decline in 2024. Among the good news, the return to normalized production and stocks will have a favorable impact on sales prices.
Eager to sell their vehicles and stand out against their competitors, manufacturers will reconnect with companies and grant greater discounts.
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However, the TCO will not decrease across all of its components.
Financial rates have increased in recent months, and nothing suggests a reversal of the trend for 2024. In its TCO Scope 2023, the Arval Mobility Observatory measured the evolution of costs during the year 2022. The think- tank of the BNP Paribas group integrates all expenses linked to the use of a vehicle and calculates a kilometer cost price.
At 0.441 euros, the latter has never been so high since the first study carried out in 2012 by the BNP Paribas group's think tank.
The increase reaches 12.2% compared to 2021. The Arval Mobility Observatory attributes this inflation to several factors including the increase in fuel.
The increase in vehicle prices also plays an important role in the increase in fleet prices with an average growth of 11% in the panel of vehicles selected by the Arval Mobility Observatory.
The first item of expenditure with 35.9% of the TCO, depreciation (difference between the discounted purchase price and the resale value) increases by 2.5%.
Second largest expenditure item, tax and social charges represent 21.5% of TCO and increase by 11.6%.
Electrification is accelerating
At the center of concerns for fleet managers, electrification is still progressing slowly.
Framed by the mobility orientation law (LOM), the annual renewal of fleets of more than 100 vehicles must include a quota of rechargeable vehicles: 10% since January 1, 2022, 20% from 2024, 40% from from 2027 and 70% from 2030.
Another legal framework favorable to electrified vehicles, low emission zones (ZFE) will concern 43 towns with more than 150,000 inhabitants by 2025. Incentives for the moment, these systems are not always accompanied by sanctions except in certain ZFE where the fine reaches 68 euros for a non-compliant light vehicle.
Faced with this new situation, professionals are still procrastinating.
“So far, companies have electrified their vehicles half as fast as individuals.
As a result, they are behind the objectives set by the LOM,”
observes Stéphane Montagnon, director of the Holson consulting department.
Initially waiting and waiting, businesses have finally woken up and are accelerating to catch up.
Some of them go so far as to switch all of their vehicles to electric.
With ranges greater than everyday journeys, recharges carried out mainly at home or in the office and a network of public terminals which has passed the milestone of 100,000 charging points, all the signals are green.
And price no longer constitutes a barrier in certain cases.
The Arval Mobility Observatory compared the TCO of thermal and electric versions of equivalent models.
For forty-eight months and 100,000 kilometers the difference reaches 2,225 euros between the electric and gasoline Twingos.
Over forty-eight months and 80,000 kilometers, the TCO of a Peugeot e-2008 amounts to 34,525 euros compared to 41,382 for the gasoline version and 42,719 for the diesel version.
In view of these results, electric has become economically competitive.
LLD wins over SMEs
With the brakes now partially lifted, electric is carving out a place in business purchases.
Over the first nine months of 2023, companies, administrations and long-term rental companies registered 203,766 electric, hybrid and plug-in hybrid automobiles and light utility vehicles, representing a market share of 32.07%.
In 2022, they only accounted for 23.15% of company purchases.
Another trend, the method of financing vehicles leaves a growing place for long-term rental (LLD).
This formula eliminates the risk of resale on the second-hand market and allows fleet management to be concentrated with a limited number of service providers.
LLD has established itself in almost all large groups and is now making progress in smaller companies as it is with individuals.
Backed by automobile manufacturers, operating within the orbit of banking groups or operating as independents, many players are competing for fleet customers.
After acquiring LeasePlan, ALD Automotive created an international champion present in 44 countries.
The new entity now operates under the name Ayvens.
This subsidiary of Société Générale boasts 3.4 million vehicles worldwide.
Another operation, Stellantis and Crédit agricole Consumer Finance joined forces in the second quarter around Leasys, today held 50-50 by the two entities.
Another player, Arval communicated its half-year results last September.
Its orders are up 10.8% for a financed fleet of 1.642 million vehicles at the end of June 2023, representing growth of 9.5% compared to June 2022. The SME and individual segment is growing by 12.8%. and demonstrates the growing interest of this clientele in LLD.
Medium-term rentals are also experiencing success with a number up 38.3%.
Over the first half of 2023, Arval's results benefit from the good performance of the second-hand market.
With sales prices that exceed residual values, rental companies increase their profits.
Professional buyers could take advantage of this to negotiate more competitive rents.