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.
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Jiří Filla
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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 decidedly cheaper).
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 expect, safety.
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 middle-management sector.”
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David Liška
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Tough choices
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 fleet.
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.”
| Cars for managers: The top five thousandACCORDING 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 (53.1%). 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 190 sold. 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. Jan Tuček |
Outsourcing 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. |
Manager’s cars top picks
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