Fleet market changes highlighted in Cox Automotive report

Short-term vehicle leasing and subscription products are likely to make a “significant impact” on the shape of the fleet market in the years to come.

That’s according to the annual Cox Automotive and Grant Thornton Automotive Insight Report, which also features revised 2021 UK new and used car forecast.

The report calls on the fleet sector to embrace the dual opportunities being offered by electrification and mobility solutions.

While current short supply in the new and used car markets is hampering fleet ambitions to transition their vehicle mix, the report suggests the enforced reset in the market as a result of plant shutdowns, supply chain challenges, and raw materials shortages, will open the doors for increased adoption of battery-powered vehicles.

It also recognises the significant step forward in electric vehicle (EV) market share over the past 12 months, in part caused by a decline in production and sale of more traditional petrol and diesel vehicles. 

Owen Edwards, head of downstream automotive at Grant Thornton, explained: “Most global vehicle manufacturers have indicated they will stop making or selling ICE vehicles between now and 2050. Many have already begun that process, and there are now around 370 electric car models available, a significant increase from pre-pandemic.

“Consolidation and vertical integration are producing economies of scale on production lines, as well as collaborative technology development around the raw materials, powertrain, and charging infrastructure. For fleets, there are just one or two change cycles remaining to make the transition to electric.”

The report highlights how shared mobility has come under pressure during the Covid-19 pandemic; however, it suggests short-term leasing and subscription products are likely to make a significant impact on the shape of the market in the years to come.

For the fleet sector, this means a change in the way the relationships with the manufacturer and the driver are managed, as well as opportunities to explore new revenue streams and complementary aftermarket services, it says.   

With vehicles potentially moving between drivers more frequently, the report suggests there will be a much wider range of age and time cycles in the market, rather than the more traditional sub-12 month or three-year replacement phases.

It argues fleets and rental companies will need to consider how best to maximise vehicle utilisation and monetisation.

Vehicle values are also explored, with used car inflation currently being seen on both sides of the Atlantic Ocean.

In addition, the report calls for changes to support the increasingly dynamic way in which vehicles are owned and used.

Philip Nothard, insight and strategy director at Cox Automotive, said: “The organisations which succeed in this new automotive era are those who build or buy the capability to keep up with the global pace of change; those who partner strategically around the world to create networks which offer holistic international solutions; those who find ways to remove borders and barriers; and those whose vision is focused on enabling people to remain mobile, whatever shape that will take.”

Key market dynamics explored in other chapters of this year’s Cox Automotive and Grant Thornton Automotive Insight Report include the impact of electrification; online retail and digital transformation; connected propositions; the changing shape of mobility solutions post-pandemic; as well as changes in the wholesale ecosystem.

The Insights team has forecast the UK new and used car figures for the coming year, as well as proposing scenarios which may impact global vehicle transactions.

On the back of the weakest September for new car registrations since 1998, Cox Automotive has revised its year-end forecast down to 1.63 million. This is on a par with the year-end figure for 2020, also 1.63m.

While supply constraints are impacting used car transactions, the market is expected to exceed the 6.75m transactions which took place in 2020. The Insight Report 2021 projection for used car transactions in 2021 now sits at 7.14m.