Procuring company cars internationally

Factors concerning the cross-border specifications of vehicle models and differing taxation regimes make international fleet procurement an art form, says Victoria Furness

If you read nothing else, read this …

Do not expect to produce instant savings because procuring cars is not like buying other commodity goods.

Do your research thoroughly and cover all issues, such as tax, warranty and service provision.

Make sure your project team represents all relevant interests in the organisation including fleet managers, human resources, accounting and procurement.

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Some quarters of the US like to think of Europe as one homogenised country but anyone living within the region knows that national differences run rife, particularly when it comes to the type of vehicle one drives. "If you say to a Frenchman that they must drive a Fiat, they will not be pleased. Give an employee in Southern Italy a Volkswagen to drive and they will not find anywhere to have it serviced," says Stewart Whyte, director of the Association of Car Fleet Operators (Acfo).

Outside Europe, the situation is even more complex, which is why more organisations are not procuring cars on a global, let alone regional, basis. "In most cases, it falls into the too difficult category," says Alastair Kendrick, director of PAYE and NI solutions at Ernst & Young.

Despite this, some organisations are testing the waters. "[They] are looking to leverage, consolidate and understand their spend," says John Pout, head of sales at fleet leasing provider Arval.

But he admits a one-size-fits-all approach is not possible in the company car business. "You cannot assume this is a commodity exercise and run it in the same way everywhere. We seek to apply what is pertinent and necessary locally."

For a start, there are practical issues to take into account since car models can vary from country to country. A Ford Focus 1.6 Zetec in the UK, for example, might look the same as a Ford Focus 1.6 Zetec in Greece, but could have a different engine or feature air-conditioning instead of a sunroof.

Tax differences across countries are another problem. And contracts from leasing providers can vary wildly. In addition, there may be a lack of support in countries where a leasing provider is not represented, but relies on partners to provide the service.

The list is certainly long, but if organisations are willing to put in a significant amount of effort, the challenges can be overcome. "This is something you have to accept is unlikely to happen in two to three years’ time, but it is a way of working towards where you want to be in five years’ time," says Acfo’s Whyte.

He advises organisations that are serious about moving to a global or regional model for procuring cars to create a project team whose job it is to glean information from each country and evaluate the project’s viability.

This was the strategy Hewlett-Packard (HP) followed when it decided to consolidate its spend across its 17,000 car fleet in Europe, the Middle East and Africa (EMEA). A key aim of its programme is to standardise the structure of its car policies by working with one fleet management provider and two or three leasing providers, but for allow some country variations. Philippe Stolbowsky, procurement manager for EMEA at HP, says: "We do not think it is possible today to have one unique solution across all countries. We decided to look at this at a country level because this is where we need to be competitive. We could reduce costs a lot, but then we may not be in a position to attract or retain the right people."

Herein lies the crux of the matter: company cars still carry kudos with most employees. A sales director who values their top-of-the-range Audi, for example, is unlikely to be satisfied with a Ford Mondeo replacement. So any organisation venturing into a global procurement strategy must ensure that this key retention and recruitment tool is not sacrificed at the expense of cost savings.