Hassle-free fleet mobility
Written by: John Letzing, Jan Tuček
Photo: Petr Poliak
The seemingly very basic business
of maintaining a car fleet can, depending on needs and personalities
involved, become startlingly complex.
WHEN KOMERČNÍ BANKA recently organized a tender for supplying its
corporate car fleet, the key element being evaluated was this: would
the machines match the grace and style of the company's public image?
And thus become suitable accessories not unlike the neckties donned
by management, or the color coordination of corporate headquarters?
The automotive solution for the country's third-largest bank, after
a tender involving seven potential suppliers, ended up being French
carmaker Citroe¨n. Citroe¨n, says Komerční banka spokesperson Marie
Petrovová, provided adequate "harmony with Komerční banka prestige."
Mobile phone operator Eurotel also frets over the style in which
its managers take to the road. Eurotel spokesman Jan Kučmáš says
that among a total management staff of roughly 50, lower-level management
are awarded a Škoda Fabia, while middle-management get a Škoda Octavia,
and top management may choose from an Audi, VW Passat, or Volvo.
Škoda's Superb, the only domestic Czech car that could be reasonably
considered top-tier material, is also an option, though Kučmáš says
it's too early to tell how pervasive its popularity has become.
One trend, however, is clear: top managers want diesel engines.
Which makes perfect sense when one considers the fact that under
Czech law a firm may provide its management with a car, but the
manager must pay for petrol him- or herself (diesel petrol being
Of course, requirements for a corporate car fleet often go well
past simply providing suitably luxurious transportation for management.
So while Eurotel's key decision-makers may choose from an array
of quality imports, the firm on the whole maintains a fleet of over
500 vehicles, 90% of which are Škodas of the more utilitarian sort.
These are used by technicians to get to the operator's base stations
in a timely way. Because disruptions in service at a station may
be covered automatically by battery support, that support only lasts
up to two hours. Having a car ready and able to get out to a base
station within that window of time could mean the difference between
service disruptions and smooth sailing.
Ride in style
Most firms don't have a need for maintaining basic mobile fleets
of technicians, so their automotive needs can therefore be as individualistic
as the personalities of their management. Choosing a trophy brand
like BMW, for example, sends an obvious message. Tomáš Olbrich,
marketing director of BMW in the Czech Republic, subtly refers to
his brand as "very selective," and adds, "I cannot
imagine a company that would use BMW cars for regular employees."
As the size and relative wealth of local firms grow, so too do the
prospects for local suppliers like Mr. Olbrich. In fact, supplying
corporate fleets already accounts for a significant chunk of the
revenues of well-known importers. Volvo, for example, is famous
for safety-conscious cars favored by the fusty and selective buyer
who wants to part with a lot of money, but doesn't necessarily want
too much flash. The Swedish brand reports that corporate fleets
account for roughly 10% of its revenues in the Czech Republic -
a percentage similar to that reported by German brand Audi. "Managers
keep being more and more interested in Volvo," says Volvo Czech
Republic's retail operations director, Jiří Filla. "Our clientele
comes almost entirely from top management, and these people have
a generally very clear idea about their priorities," Filla
claims, noting that key among these priorities is, as one might
David Liška, director of the Audi division for the Import Volkswagen
Group (IVG), claims that his brand is favored not only by top management,
but by their subordinates as well. This, says Liška, is a division
broken down along the lines of specific models: "the car of
choice among the highest level of management is the Audi A8... the
Audi A6 and the all-road quattro are the winners for middle management."
Certain other suppliers also aim to peddle cars to both tiers of
management. A brand like Peugeot, which boasts a broad range of
models in a variety of price ranges, can more easily pull this off.
"Peugeot has a high penetration in both segments," says
Peugeot Czech Republic's general director, Michel Schotman. But
because Peugeot has staked a broader claim in the affordable car
sector, its appeal is definitely tipped lower on the corporate totem
pole. Adds Schotman: "We are however selling more within the
The messy business of tenders is a topic not easily broached with
local auto suppliers. Reasons for this are clear enough: a company's
major purchases are a very subjective and highly sensitive business.
Liška at Audi says, "they (tenders) are all very different,
depending on the customer." However, one clear possibility
is that decisions are influenced by more than simply price or prestige.
It may be more than a coincidence that a solidly Czech firm like
Eurotel chooses to use a quintessentially Czech (though German-owned)
brand, and that a French-owned bank like Komerční banka uses a French
On a more day-to-day level, a key ingredient that an increasing
number of firms are opting for is operational leasing, which essentially
enables them to possess cars while eschewing many of the pains of
full ownership. "There is a clear trend (toward opting for
operational leasing)", says Mr. Olbrich of BMW, adding that
the last thing a firm that specializes in (for example) communications
wants to do is hire a team of its own auto mechanics. Mr. Filla
at Volvo notes, "the magic of operational leasing is starting
to be discovered by fleet clients only now, even though it's been
offered in the Czech Republic for a long time." Jaromir Hajek,
managing director of LeasePlan, reports that his firm is currently
leasing some 9,000 vehicles on this market (Hajek says his top client
alone now has a fleet nearing 1,000 cars). Philip Aarsman, managing
director of Business Lease, explains that though 80% of his clients
here come from the ranks of western firms that became familiar with
operational leasing elsewhere, the 20% comprised of local customers
looks poised to grow soon. Says Aarsman: "we started with multinational
companies... their influence has grown, and their business processes
have spread to local companies... and so the phenomenon of leasing
has grown as well."
for managers: The top five thousand
ACCORDING TO Automobile Importers Association (SDA) statistics,
only about 5,000 Executive and Luxury class cars are sold
per year, a mere 3.3% of the Czech market.
The effect of these cars on a given brand's image is increased
by the purchase price, but also by their enhanced visibility
in the world of the rich and powerful. The market is traditionally
controlled by the respected German brands Mercedes-Benz, Audi,
and BMW, with which French Peugeots and Swedish Volvos are
keeping pace with relative success. Since last year, the domestic-made
Škoda Superb has been an exception. In 2002 the upper-mid-class
(Executive) Superb asserted itself very powerfully: the 2,461
cars sold represented a more than 50% share of this segment
The new Mercedes-Benz E class has also been very successful,
as it came in second with over 400 cars sold (407), posting
a significant lead over the traditional leader among imported
cars of this class, the Audi A6, of which 345 were sold. Not
considering the very specific Audi Allroad Quattro station
wagon (266 sold), the elegant Peugeot 607 took third place
among typical manager cars, with 219 sold, outstripping the
BMW 5 line (184 sold). Only Swedish Volvo, with over 100 (115)
S80 sedans sold, broke the 100 benchmark, but another of this
brand's successes last year was its V70 station wagon, with
It is worth mentioning that less than 300 of the total 4,927
cars sold fall into the highest, Luxury class of sedans. Last
year Audi was significantly slowed by the wait for the new
A8 model, so it had to settle for third place, with 45 cars
sold. BMW sold 130 top-flight 7 class cars last year (44.1%
of this segment), and is offering a stretch version in addition
to the standard model, driven by an powerful V12, 6-liter
engine. Also among the absolute elite is the S-class Mercedes-Benz:
106 were sold on the Czech market last year.
car fleet management
Though PhIlip Aarsman defines operational leasing as providing
the "feeling of owning a car without having to pay for
it," this may be overstating the case a bit. Of course
through operational leasing, the popularity of which is rapidly
growing, firms are freed from the every-day hassles of auto
ownership including maintenance and repairs. Yet there is
a cost. Aarsman, managing director of Business Lease, estimates
that to fulfill obligations, his firm charges clients a monthly
fee of roughly CZK 750 per car.
Aarsman claims, however, that much of that cost is defrayed
by other cost savings on things such as insurance premiums
(covered) and substitution cars in case of damages (covered).
Though Aarsman says that an overwhelming majority of his clients
are multinationals with locations scattered around central
Europe, the number of purely local firms starting to show
interest is encouraging. This all, says Aarsman, is part of
the broader trend toward increased outsourcing: "Companies
have realized their main interest should be on their core
business, not on support services... it's like water from
a tap, you don't invest in it, you just use it." While
Business Lease offers a standard package to smaller companies
not dissimilar to what they might get form a standard car
rental company, firms with fleets of more than 10 to 20 cars
receive a more tailored approach.
The cost-aspect of operational leasing makes it easy to understand
how people like Aarsman are finding their customer bases growing.
Jaromir Hajek, managing director of LeasePlan, claims that
the service he provides regularly saves 30% of the costs that
a firm would incur with "in-house fleet management."
Business has taken such a positive turn, says Hajek, that
his firm (now located in 26 different countries) will soon
start peddling its leasing products in broader and more specialized
categories - according to the number of services a client
wants taken care of externally.
cars top picks
4.85 meters long, rear-wheel drive. Gasoline engines:
4R 1.8 l, 163 hp (120 kW); V6 2.6 l, 177 hp (130 kW);
V6 3.2 l, 224 hp (165 kW); V8 5.0 l, 306 hp (225 kW);
V8 5.4 l, 476 hp (350 kW). Turbodiesels: 4R 2. 1 l, 150
hp (110 kW); 5R 2.7 l, 177 hp (130 kW); 6R 3.2 l, 204
hp (150 kW)
Prices: CZK 1,125,000 to CZK 2,948,000
5.05 meters long, four-wheel drive. Gasoline engines:
V8 3.7 l, 280 hp (206 kW); V8 4.2 l, 335 hp (246 kW).
Prices: CZK 2,260,000 to CZK 2,460,000
4.87 meters long, front-wheel drive. Gasoline engines:
4R 2.2 l, 158 hp (116 kW); V6 3.0 l, 207 hp (152 kW).
Turbodiesel: 4R 2.2 l, 133 hp (98 kW).
Prices: CZK 940,000 to CZK 1,250,000
5.03 or 5.17 meters long, rear-wheel drive. Gasoline engines:
6R 3.0 l, 231 hp (170 kW); V8 3.6 l, 272 hp (200 kW),
V8 4.4 l, 333 hp (245 kW); V12 6.0 l, 445 hp (327 kW).
Turbodiesels: 6R 3.0 l, 218 hp (160 kW); V8 3.9 l, 258
hp (190 kW).
Prices: CZK 1,957,600 to CZK 3,936,400
4.80 meters long, front-wheel drive. Gasoline engines:
4R 2.0 l, 115 hp (85 kW); 4R 1.8 l Turbo, 150 hp (110
kW); V6 2.8 l, 193 hp (142 kW). Turbodiesels: 4R 1.9 l
TDI, 101 and 130 hp (74 and 96 kW); V6 2.5 l TDI, 155
hp (114 kW).
Prices: CZK 689,900 to CZK 1,204,900
4.82 meters long, front-wheel drive. Gasoline engines:
5R 2.4 l, 140 and 170 hp (103 and 125 kW); 5R 2.0 l Turbo,
180 hp (132 kW); 5R 2. 4 l Turbo, 200 hp (147 kW); 6R
2.9 l, 196 hp (144 kW), 6R 2.8 l Turbo, 272 hp (200 kW).
Turbodiesel: 5R 2.4 l, 163 hp (120 kW).
Prices: CZK 1,070,000 to CZK 1,692,100