In the latest instalment of our fleet industry executive interview series, we sat down with Mike Palmer, Client Development Director at Nexus Vehicle Rental, to talk about his company, industry opportunities, COVID-19 challenges and why straight talking is so important in business…
Tell us about your company, products and services.
Established in 2000, Nexus Vehicle Rental is the UK’s leading tech-driven business mobility provider with a supply chain of more than 550,000 vehicles across 2,000 locations. We supply cars, LCVs, EVs, specialist and HGVs and one day, when they’re available for commercial use, we’ll supply autonomous vehicles. Our innovative platform, IRIS, streamlines rental management for our customers, driving large cost savings for them.
What have been the biggest challenges the Fleet Services industry has faced over the past 12 months?
As we have weathered the storm Brexit presented, with political and economic ambiguity over the last 12 months, we are now facing continued uncertainty surrounding the spread of COVID-19 and its impact on the country. Many companies are already scaling back operations significantly and will face serious issues in the coming days / weeks/ months as their normal supply chains are unable to continue at usual capacity.
We have also seen challenges of increased supply chain costs, in the main as a result of the WLTP changes, which saw more stringent laws and testing on vehicle fuel consumption and CO2 emissions from passenger cars. On top of this businesses are also seeing increases elsewhere such as higher pension costs and rises in living wage.
Our large supply chain does allow us to mitigate some of these rising costs and risks to ensure that we can keep any pricing increase as low as possible for our customers. Unfortunately, for smaller companies and direct rental businesses this can be very difficult and again, in many cases these businesses have been forced to scale back operations.
And what have been the biggest opportunities?
As supply chain costs are increasing and legislation is changing, many direct suppliers are now unable to service the largest contracts due to fleet scale and higher demand. Nexus is ideally placed to service large scale contracts, as we have access to the largest supply chain in the country.
As a disruptor in the corporate vehicle rental industry, we have revolutionised the sector through our use of technology, which keeps overheads low, but means we deliver rental efficiencies for our customers at every step. We understand the rapidly evolving situation surrounding COVID-19 is putting greater pressure on businesses, local authorities and front-line workers. As many businesses in the UK must adapt to new ways of working, we want to do what we can to support our clients keep operations running smoothly.
What is the biggest priority for the Fleet Services industry in 2020?
As we continue to navigate the current situation surrounding COVID-19, businesses are facing times of huge uncertainty, not just in the fleet services but across all industries.
This uncertainty will not go away anytime soon. As we are forced to adjust to a new way of life and working for the foreseeable, we will see businesses continuing to scale back operations and adapting operations to drive cost efficiencies. The flexibility that comes with rental means that businesses can scale fleet needs at any time, to increase vehicles on the road to deal with peak periods or downsize fleets when demand is reduced, so I think we’ll see an uplift in businesses adopting rental moving forward.
Times like these highlight the need for businesses to remain flexible, agile and adaptable to changing conditions. While looking after the wellbeing of the workforce, clients and suppliers’, the priority for the fleet services industry will remain in delivering great service and keeping people and goods mobile, wherever and whenever it is safe to do so.
As fleet rental providers, it has been important for Nexus to recognise changing requirements and customer demands and to adapt our service offering to reflect the needs of our clients and comply with legislation.
What are the main trends you are expecting to see in the market in 2020?
Phases of ambiguity often highlight the real benefit of remaining flexible, and this has led to growth in rental in recent years. For those organisations that need to scale-up their fleets quickly whilst mitigating costs, short term rental will prove an excellent solution. As the situation surrounding COVID-19 shifts every day, many are choosing to adjust operations to meet demand in a different way to ensure that individuals and other businesses can continue operations safely.
Until recently, we have seen a rapidly increasing demand for electric vehicles across all modalities. Legislation is a key driver of changes to the market with the introduction of Clean Air Zones (CAZs) and Ultra Low Emissions Zones (ULEZs), propelling the need for innovation in cleaner transport solutions.
Nexus continues to lead the way with its new dedicated EV rental platform for business use as part of our revamped IRIS V5 rental management system. The platform eases the transition process by assisting our clients to gradually trial and make the switch to EVs – while avoiding high upfront expenditure. We are constantly looking to develop our services with new and innovative software and IRIS is our flagship product that facilitates this.
What technology is going to have the biggest impact on the market this year?
The rapidly evolving situation surrounding COVID-19 is putting great pressure on businesses and authorities to ensure that operations run smoothly. As a result of this economic uncertainty, vehicle manufacturers are announcing that production will be halted. What we thought would be the biggest trends will likely lose focus against a backdrop of businesses just trying to continue operations.
Electric vehicle technology was set to have a huge impact this year, with the introduction of zero rate BIK tax for all EVs in April to act as a great incentive for businesses to make the switch. Those that may have been previously unsure of how they could financially benefit from going green may be encouraged by this, though must consider the associated challenges from doing so, such as increased repair and maintenance costs for fleet vehicles.
The government is sign-posting fleets towards a greener future of electric vehicles and hybrids as we know, however, the impact of the widespread adoption of this technology will continue to prove a challenge. What happens if your electric company car goes in to be serviced and you have no choice but to drive a petrol or diesel replacement?
It is still a big decision for businesses to make this switch to EVs due to the huge investment required to do so, yet high demand means that orders of electric vehicles can still take up to six months for delivery. As a result, we have observed a rising trend of short and medium-term EV rental bookings to plug the gaps in supply and keep fleets moving and expect to see this escalate over the year.
In 2022 we’ll all be talking about…?
In 2022, I’m sure we will all still be talking about the same things that we are now such as new fuels, self-driving cars and alternative forms of mobility! There is a lot of work still be done to improve infrastructure to enable implementation of these technologies and this will take huge amounts of investment over the next few years before any of them can become the norm.
Over the last few years, there has been more enthusiasm surrounding the possibility of hydrogen-fuelled cars for one, despite the current industry-wide thinking that EVs will become mainstream. It could be interesting to see what developments are made over the next few years regarding hydrogen, as we have seen the EV uptake at the moment is still fairly slow due to associated costs and uncertainty about the level of infrastructure to facilitate this transition.
I think fully autonomous cars may be a bit of a distant dream for now. However, we are increasingly seeing the adoption of automated features in new cars with self-parking settings, adaptive cruise control and automatic braking systems. Realistically, the safety aspects of autonomous cars will not be ironed out for some time and I am not sure how many people would fully trust this kind of technology right now.
What’s the most surprising thing you’ve learnt about the Fleet Services sector?
I think one thing that surprised me was how many people stay in the industry for such a long time – I have worked in fleet management for 15 years! I think in other sectors, businesses tend to see people move around a lot more.
It does mean there a lot of experts within our business who have considerable experience of the industry, not just in rental but from various backgrounds such as leasing or finance. This enables us to advise customers on the best way to manage their mobility requirements with genuine knowledge and expertise.
You go to the bar at the Fleet Services Management Summit – what’s your tipple of choice?
Easy, Southern Comfort.
What’s the most exciting thing about your job?
I face different challenges every single day – no two days are the same. In this industry we are kept on our toes, reacting to constantly moving goalposts by the government especially, tackling issues around taxation and changing environmental targets, whilst providing the best service at the best price point.
For example, a few years ago, barely anyone was driving electric vehicles and now we are readying ourselves for the complete removal of petrol and diesel vehicles in the next 15 years. While the industry still adapts to new legislation and changes announced by the government, Nexus is on hand to support businesses in their day-to-day – we must be agile.
Through a tech-enabled, flexible approach, rental saves businesses both time and money, making it an extremely viable option in the current economic climate and in any times of uncertainty.
And what’s the most challenging?
I think the most challenging thing is the same as what keeps the job exciting. We are constantly having to change the way that we do things and ensure that we can provide our customers with the most up to date and appropriate advice given developments within our industry.
As a business we ensure we remain flexible, agile and able to adapt to a constantly changing environment so that Nexus remains at the forefront of the industry.
What’s the best piece of advice you’ve ever been given?
“Always tell it how it is. People will appreciate the honesty.”
Peaky Blinders or The Crown?