Why there is a rise in Fleet Management in the Automotive Industry


The rise in fleet management in the automotive industry can be attributed to factors such as the need for technological upgrades, growing industrialization, revenue generation, economic development, and mobility solutions. Fleet vehicles are needed for transportation of goods and people, and the industry is constantly evolving to meet changing demands through technological innovations such as telematics and cloud technologies.

 Government regulations and laws also influence the industry, and leasing is becoming a popular alternative to ownership due to high operational and maintenance costs. Overall, the automotive industry plays a significant role in the economy and revenue generation for governments.

The automotive industry’s objective is to create a self-powered vehicle designing, manufacturing, testing,  marketing, and selling motor vehicles. The sector comprises a wide range of private and government organizations, which has emerged with its traditional strengths. 

In India, automotive industries have classified the vehicle types as two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles. In 1991, the economic liberalization led the automotive sector to be delicensed, which brought many car manufacturers to set manufacturing units in India. 

With government support, the automotive industry derived a unique path by setting manufacturing units in many countries, including India. They cater their production based on people’s demands from different categories and the market size. Their strategic goals and aims push them to stand outside and stay on the top compared to other markets.

Globally, the automotive industry’s growth is a contributing factor to the economy based on its stability and technological advancements in various developed & developing nations. It supports multiple nation-building dimensions: Boosting government revenue, Increasing employment rates, upgrading the economy with innovation, and benefiting other industries with further Research & development. 

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Factors responsible for the growth of Fleet Management

Why is everyone opting for technological up-gradation?

In the coming years ahead, the automotive industry brings more Fleet vehicles with technological innovations. Most suppliers and vendors, especially SMEs (Small Medium Enterprises), face difficulties competing with other industries and do not have the available resources for up-gradation. 

Most manufacturers are facing challenges with high operational costs and the non-availability of skilled labor. The competition from China and the other Asian countries is another factor for the price hike of vehicles. The mandatory laws and government rules added pressure to follow standard international safety lead to telematics and cloud technologies. 

The fleet industry needs to compete with future needs through the rising challenges. The drive will bring more fleet vehicles, alternate fuels, ride-sharing features, and vehicle connectivity, prioritizing safety measures and cost-effectiveness. Sometimes the private and government organizations will give fleet vehicles for leasing to carry out their operations.

Growing Industrialization

Over the years, the growing industrialization has mushroomed with the emerging population. The increased demand for large-capacity vehicles to transport large numbers of goods from one place to another has increased fleet vehicles’ need to establish connectivity to buy and sell the products. 

The entry of many industries has opened the doorway for fleet vehicles and government schemes and investments that have fueled the automotive market industry. And the worst part is to maintain the entire fleet and its maintenance. 

The automotive fleet is segregated into two types of ownership and leasing in the market trend through analysis. In Ownership, the operational cost and maintenance cost is high. For those who have thoughts about buying vehicles, leasing is the best option to avoid such expenses. 

Based on the region, demands, business requirements, fleet type, and vehicle type, fleet vehicles’ need is categorized into commercial and passenger vehicles. The commercial vehicles were subcategorized into Light Commercial vehicles and High commercial vehicles. As per the future market analysis, the expansion of Heavy-duty vehicles in the automotive industry increases through leasing activities. 

The industrialists’ emerging needs and services have led to the booming in the automotive fleet market. The BRIC countries, particularly China, have the leading economy with the largest manufacturing units and are expected to grow with increased CAGR in the coming years with the rising population and technological advancements. 

Revenue Generation

The production of numerous automotive vehicles is witnessing a hike in the growing years, and we can see the increase in the number of vehicles on roads. The discovery of new models in every brand with new updates and features incorporated with the latest technologies triggers many users to buy the vehicles—particularly youngsters. 

The Automotive industry has a significant role in the revenue inflow for the government. The government has increased investment in technology-based vehicles and derives the tax revenues from Vehicle sales, usage-related services, business, and income taxes. 

The taxes levied on new vehicles, Value-added services, Service delivery exercise, local taxes, and import duties. Automotive manufacturers reap benefits from the export operations and foreign exchange earnings.

In India, the market overview in 2020, the total number of automotive produced and sold in India has gradually increased over the years. Moreover, most of the manufactured cars are exported. The top exports of the Indian countries are the USA, Mexico, UK, Sri Lanka, South Africa, and Bangladesh. The automotive industry shares are higher in developed countries compared to the developing countries. 

Economic Development

The Covid-19 pandemic has slashed many economies down, but some e-commerce sites may reap the benefits in upcoming years. The world will adapt to the changes and challenges with the existing situation, and many businesses will find ways to bounce back to the market. 

Similarly, the fleet business faced a downtime during the pandemic and found ways to play with the improved telematics and cloud technologies. Upgradations like intelligent decision-making, wastage analysis, reviewing fuel economy, Cost-cutting features with the agile innovation to respond with more effectiveness, and fleet market volatility helps o streamline the workflow. 

Companies involved in Sole source supply and the purchase will be affected by these market standards. In this economic uncertainty, it would be better to choose short and mid-term leasing to offer flexibility.

As a measure to mitigate the risk, fleet decision-makers need to think about their procurement options. Flexibility in fleet budget helps to enable more excellent responsiveness with changing economic conditions.

Mobility Solutions

Automakers revolutionized their mobile technologies so that people find it easier to move their goods and services to different geographical regions. Through people migration to foreign countries has increased vehicle ownership and transformed transport infrastructure. 

Mobility opens the opportunity to use different fleet vehicles as per the requirement to carry out the sustainable mode of operations. With the development of technologies, more automakers will choose mobility operations to optimize their fleet management. 

With the need to tackle the future fleet challenge, a joint approach strategy is coordinated globally by splitting up the operation into departments such as Human resources, finance, operations, and procurement with the innovative advanced fleet management system. 

Sushanthi is a Content Writer who wishes to be the voice of brands to project their innovative ideas and stories through her writing skills.

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