Chip shortage means more flexible fleet approach, says Global Mobility Solutions
That’s the view from Global Mobility Solutions (GMS), the consulting and analytics arm of global fleet management provider Fleet Logistics which has around 180,000 vehicles under management worldwide.
Semiconductor shortages around the world have forced vehicle manufacturers to slow, or even halt, production of certain popular models, which has extended the order-to-delivery time for vehicles up to 12 months in some cases.
As a result, companies need to adopt a more flexible approach to their fleet policies and be prepared to wait a while longer for new vehicles.
GMS Global Consulting Manager, Madelaine Webster, commented: “We hope to see improvements from mid-2022 as suppliers increase capacity; however, we are, as yet, unsure of recovery timescales.
“There has been intense demand and competition for chips around the world not just in the automotive sector, and vehicle manufacturers have allocated supplies to EVs and PHEVs which will help them meet their emissions targets. This has served as an accelerant in uptake and led to shortage of some more popular models. As a result, we are advising clients that alternative manufacturers may now need to be assessed to help meet demand.”
Webster said the global shortage of chips was expected to cost the automotive industry billions in revenue, which it has to look to recoup.
“The rising cost of materials, alongside component shortages and logistical challenges caused by the pandemic, and energy price increases across the board will, we believe, result in price rises to reduce the impact on manufacturer revenues. We are already seeing some volume manufacturers restrict models from Europe due to already low margins that exist here.
“This, with legislative pressures, has created the perfect storm, and many fleets are now reviewing their choice of vehicle manufacturers and the types of vehicles to make available to employees, along with determining which employees should actually receive cars, or more flexible mobility solutions, given the lower business mileages being driven.
“Many businesses would like to take advantage of changing working practices due to the pandemic to try and accelerate their carbon reduction programs, while also considering bringing in different mobility options at the same time. But the semiconductor shortage is making this very challenging,” she said.
“We are working with clients to analyse their age and mileage data with renewal requirements, in order to establish what the outlook is. Depending on the results, we can then support with a financial case and action plan to review any viable alternatives, forecasting the effects of these scenarios. There are opportunities that can come from this,” she added.
Companies also now have to consider new reporting obligations coming regarding their environmental and sustainability targets, following the COP26 climate conference in Glasgow in November, said Webster.
“At COP26, the IFRS Foundation announced the International Sustainability Standards Board (ISSB) that applies to 40 countries and delivers the global baseline reporting standards for companies.
“We expect that this will mean enhanced reporting requirements for our clients as transparency in sustainability is increased. Demand for our global reporting expertise is already very high due to the universal movement towards fleet electrification and this enhanced need for more transparent sustainability reporting will only add to that,” she said.
GMS is currently seeing strong demand for electrification consulting projects, as more companies scale up their plans to go electric as green deadlines get ever nearer.
Most, if not all, European countries plan to phase-out combustion-engined vehicles by the end of the decade, leaving electric power, and possibly hydrogen, as the only viable alternatives for corporate transport.
As a result, many major international companies are now looking to evaluate their existing vehicle fleets in terms of carbon emissions, power train make-up and TCO, and then set firm timelines for action to be taken to achieve their sustainability targets.
“We are being asked for ever-greater detail within electrification projects, and their operational complexity, including charging infrastructure for both office and home, with greater frequency.
“Companies are coming to us as consultants for input and mapping as they realise how detailed and time-consuming these plans need to be, with clear action points and timelines required rather than a broad outline,” said Webster.
GMS has a number of sophisticated modelling and forecasting tools at its disposal to interrogate and analyse client fleets, as well as introducing its own mobility solutions, such as the new MobilityBUDGET which has launched in Germany last year and which may be rolled out to other countries this year.
“So, we see sustainability and managed mobility-as-a-service (MMaaS) becoming increasingly relevant on corporate agendas over the coming year. Talk to your fleet consultant for further advice,” she said.