The dynamics of the fleet leasing market are changing thanks to the potential ‘big data’ is providing through the growth in connected cars.

Worldwide, analysis shows that less than a quarter of cars were connected in 2014, but by 2018 two-thirds will be connected, with the penetration rate predicted to be even higher in the UK. 

It is turning leasing companies, which have traditionally provided data to customers, into data analytics companies that lease vehicles, according to Craig McNaughton, corporate director at Lex Autolease.

He explained: “The sheer volume of change that’s going on in our sector is causing uncertainty and what our customers are saying to us is ‘take away that uncertainty; help us predict the future’. And, the only way that they can predict the future is through data intelligence.”

McNaughton told delegates at fleet trade association ACFO’s ‘big data’ spring seminar at Whittlebury Hall, Northamptonshire, there is an “unquenchable thirst” for data from customers who want to drive cost reduction, risk mitigation and overall revenue.

However, providing data on demand via customer reports, “no longer cuts the mustard”, he said. “What’s clear is we really have to up our game.”

Fleets want to know how well they are doing compared to their peers, what they need to do to improve and what help they can expect the leasing company to provide.

Lex Autolease has begun benchmarking some of its fleets; turning big data into meaningful insight. It uses its top 100 customers by size – equating to a combined fleet of 120,000 vehicles.

McNaughton said: “The difference from the one-off reports that we produce is it’s a live data system, with some analytical algorithms that allows customers to access comparable data on an ongoing basis.”

However, leasing companies need to be able to distil and decipher data from variable sources; creating multi-layers of information. “We need to be agnostic,” said McNaughton. “We’ve got to be able to pinpoint the critical incidents; predict and pre-empt what is happening with the fleet and then find the trends over time.”

However, he admitted that the leasing giant had become known as a bit of a Luddite within the leasing industry when it came to signing up connected cars.

He said: “They’re going to be a huge part of our future, but as a fleet provider there are many challenges to overcome before they can live up to their full potential.”

Lex Autolease has spent its time debating and deliberating with manufacturers, ‘who is the customer when there are two names on the V5?’

In fact, McNaughton believes there are five fundamental challenges that the lease provider needs to overcome. 

Customer contracts being with the fleet and not the driver is one, as is changing the car’s functionality part way through the lease which could affect its cost.

Operational costs could also be impacted, with cars being directed to a local dealership when the fleet contract is with an independent provider.

Furthermore, the deactivation of systems at defleet is paramount, as all the data created during the life of the lease will have been absorbed into the vehicle. 

And finally, data protection can prove particularly tricky, with the vehicle owner ultimately liable for any breach. 

New, even stricter rules, have been enshrined under the General Data Protection Regulation (GDPR), which comes into force from May 25, 2018. And, while they only apply to personal data, the definition of personal data is also changing.

GDPR makes it clear that information is treated as personal data whenever individuals can be identified by online identifiers, including GPS information.

Alex Ktorides, a partner at legal and professional services firm Gordon Dadds, told ACFO delegates: “The information a car generates around its performance – the brakes – that, for me, is not personal data.

“It doesn’t mean you can forget about it, but I would say that it’s incredibly low risk so you can tailor what you do.”

The key principles for fleets to consider, according to Ktorides, is that the data being gathered is anonymised, privacy impact assessments have been conducted on data subjects, and good governance can be easily demonstrated.

“The Information Commissioner wants to see from you an ethical, transparent plan,” he said.

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