Adapting to a changing motor fleet market

Covid-19 pressures

Fleet cars and vans make up a significant proportion of the vehicles on UK roads, with data from the Society of Motor Manufacturers and Traders (SMMT) showing that fleet purchases typically account for over half of new vehicle registrations [i]. However, with many businesses forced to close doors or scale back operations during lockdown, there was understandably a knock-on effect on fleet vehicle usage in Q2 and Q3 this year, with some companies opting to declare vehicles SORN and reduce their cover accordingly to save money.

But not all businesses sought to reduce vehicle usage in this way. For many, making home deliveries became a key part of their business model, which led them to increase their cover as a result.

During this testing time, flexibility has proven key and at NIG we have received positive feedback from brokers on our willingness to shift businesses to laid-up cover.

Overall, SMMT data [ii] shows that new fleet registrations have dropped significantly over the course of the pandemic, with year-to-date fleet and business registrations standing at 647,939, some 37% down on the one million-plus cars registered in the first nine months of 2019.

Green shoots are starting to show, with signs that our fleet business has been returning to normal levels since July. However, it remains to be seen what impact increased homeworking will have on fleet in the long-term, and whether greater flexibility will become more standard in the future.

The rise of electric vehicles

While fleet registrations may have fallen over 2020, SMMT data has highlighted a clear uptick in demand for greener vehicles.

Battery electric and plug-in hybrid cars now account for more than one in 10 new registrations and demand for battery electric vehicles has increased by 184% year-on-year to September 2020.

This surge comes as sustainability issues climb up companies’ agendas and the range of electric vehicles on the market continues to grow and become more affordable.

The increasing demand for electric vehicles is part of a long-term trend. At NIG, we’ve seen a 60% increase in the number of policies which include an electric vehicle and a 240% increase in the number of electric vehicles on cover over the last five years.

And this shift towards electric fleet vehicles is one we expect to see continue as companies look to reduce carbon emissions in line with the government’s target of being net-zero by 2050. In response, we’re working closely with our garages across the UK to upskill and ensure that technicians are able to effectively repair and maintain electric vehicles.

Evolving car technology

Increasingly complex car technology is also having an impact on fleet policies, with specialist experience and expensive parts often required for repairs.

In particular, an increasing number of company vehicles are being fitted with Advanced Driver Assistance Systems (ADAS), which can be impacted by even common repairs, such as windscreen or wing mirror replacement, and can require full recalibration in order to fix.

At NIG, we’re constantly working to upskill our UK-wide repair network, to ensure they’re able to work with a growing range of new car technologies.

As part of our efforts to keep our Motor Fleet proposition current and suitable for businesses’ evolving needs, we’re moving our Fleet product to our new system for producing quotes and documents for regionally traded products. Talk to your usual NIG contact to find out more.