Strategic Options in the Fleet Service Market
October 2010
Confronting Risk and Seizing Opportunity in an Evolving Market

Arthur D. Little recently completed a comprehensive survey of all the major players in the fleet service sector in the top five European automotive fleet markets. To model the market, determine the relevant trends and derive strategic options, we held over 80 in-depth interviews with leaders and experts among all the relevant market players.

After sales is the dominant profit lever in fleet markets

After sales is still the main profit lever for OEMs. In 2008, for example, parts, labor and additional services generated 54% of OEMs’ profit, but only 23% of OEMs’ revenues.  Given that the number of business customers will increase further in the coming years, fleet service will become even more important for all OEMs.  Afters sales represents up to 25% of the Total Cost of Ownership (TCO) and is the main cost that fleet managers can address directly. Since residual values are declining, the need to reduce after sales costs has become even more important. For example, a 20% improvement in after sales efficiency decreases TCO by 5%.