Tue | 16.11.2021
Autonom talks about what challenges are affecting the automotive industry and why operational lease is an optimal solution for businesses in this uncertain environment. Read the interview with Radu Predescu, Executive Director at Autonom Lease.
Where is the automotive industry today? How has the Covid-19 pandemic impacted your sector and what has changed in the customers’ behaviour?
The present and the future look more and more like a VUCA world characterized by Volatility, Uncertainty, Complexity and Ambiguity. This unpredictable environment forces us to quickly adapt to ever-changing realities and act in an agile way.
Since the beginning of Covid-19 pandemic we have tried to help our clients and be flexible in terms of solutions.
First, we discussed with our clients and supported them by offering facilities on payment schedules. Then, we offered consultancy trying to optimize their costs by providing combined mobility solutions adapted to each situation that our clients faced in these unusual times.
In this regard, our integrated mobility services portfolio proved to be a real competitive advantage on which we relied successfully. For example, we used medium term rentals to cover the delays in car deliveries, one of the effect of semiconductors crisis that completely redefined the concept of delivery time.
The automotive industry has suffered significant disruptions of their operations because of the dependency of the global supply chain. If, at the beginning, the companies were highly cautions regarding the planned investments, now the supply is lower than demand and this is reflected in rising prices.
This year alone, in our industry, the auto insurance rates increased by 50% and the increased costs for products, shipping containers and labour are reflected in auto parts rising prices.
The highest impact of the semiconductors’ shortage is reflected in the car delivery terms and rates for the new and used cars. Car importers and dealers cancelled fleet discounts and this year several price indexations were performed.
In this context companies must adjust their strategies to the new market circumstances and search for more suitable solutions.
What are the benefits of an operating lease and why is an optimal mobility solution in the current context?
In short, an operating lease is a tool for outsourcing car fleets, in order to optimize operational costs, suitable both for companies with large vehicle fleet and also small entrepreneurial companies that operate only few vehicles. Going more in-depth, through the operational lease service, the lessor transfers to the company the right to use the fleet and covering at the same time all the car's operating costs and other additional services, such as: insurance, interest, taxes and duties, maintenance, repairs, and administrative costs. Basically, a vehicle is rented for 12 up to 57 months, and the company must only pay a monthly fee.
In the current context the operating lease can be a suitable solution that offers predictability in terms of budgeting. Our differentiator is that the monthly fee is fixed for the entire contractual period; therefore, the cash flow of the company becomes more straightforward and more predictable in these uncertain times, when all the prices are basically raising. This solution gives a clear picture of where a company stands financially and helps the entrepreneurs in planning ahead in the current disconcerted market.
How can companies budget their car fleet costs for the next year?
The global chip shortage shows no signs of ending and the current context could continue until 2023. Therefore, we are expecting the prices to continue to rise next year and delivery dates for new car to remain uncertain. Our team of consultants is ready to help companies find the best mix of services and to find the best solutions for the car company fleet. Companies could take into consideration an operational lease service when they budget the car fleet in order to optimize their operational costs and to obtain a fixed cost for a 4-year period of time, together with solutions of short- and medium-term rentals for flexibility and optimization.
What about the transition to green fleets? What benefits can the transition to hybrid and electric fleets bring to companies?
These days more and more companies are driven to think about how their daily activity influences and impacts the environment and those around. The future will bring a lot of opportunities for companies with a valuable, transparent, and responsible business model in harmony with the environment and ESG principles. Institutional investors and banks are already putting a strong emphasis on these criteria and are targeting significant budgets to finance green and high-impact projects.
Considering sustainability as a holistic approach in all internal and external processes, we have recently developed our Sustainability Strategy for the coming years which aims to reduce the average carbon emissions of the operational fleet by 51% by 2030 and to have a positive impact by developing high-impact projects in the ESG area together with our partners and our communities. Our long-term vision is to be a model for the entrepreneurial environment and, at the same time, to support companies in the transition to "green fleets" and to modern mobility solutions, in harmony with the environment and ESG principles. We plan to help companies better meet their employees’ mobility needs while optimising their costs in a sustainable manner and yes, an example of solution can be a car sharing concept.
We hope our partners will embrace our view and together we will find new paths toward changing the attitude in order to boost a more sustainable approach of mobility in our industry.
This article was provided by our Mobility Partner, Autonom.