Business outlook improves but vehicle market not out of the woods
Slow and steady will become the “new normal” for New Zealand’s economy over 2010/11 as the global financial crisis fades into history.
The prediction comes as New Zealand’s vehicle industry continues to claw itself out of the hole it fell into during the global financial crisis (GFC).
In its latest Economic Forecast report, ANZ notes that “momentum is building and our central scenario has the economy recovering progressively over 2010 and 2011”.
But the report goes on to caution: “we are mindful of structural forces at play as the economy adjusts to a new normal”.
ANZ Bank Chief Economist Cameron Bagrie said New Zealand was in the midst of a fundamental structural shift with profound implications for business and consumers.
“We are out of recession but we are not setting the world on fire,” Mr Bagrie told FleetView. “We have an economy here that is capped by some major structural headwinds. We still need to de-leverage, we have a significant reliance on debt.“
“New Zealand is a nation that is caught between two polar extremes. There is the great opportunity Asia provides for growth but at the other extreme we have an economy with a net external debt position of 95 per cent of GDP.”
A new economic paradigm
ANZ’s view of the coming economic cycle rests on the belief that New Zealand cannot return to the patterns of debt-driven growth and consumption that defined the past decade.
“Whereas in past downturns business debt proved a major drag on growth and Business outlook improves but vehicle market not out of the woods recovery, in 2010 it is private household debt and to a lesser extent farm debt that has economists worried,” Mr Bagrie said.
“When you are talking business debt they typically have levers they can pull to quickly de-leverage debt. This time around it is households that need to cut back and that is a much slower and potentially painful adjustment.
“The old story for New Zealand was spend first and worry about the income to pay for that spending second. The economic model going forward is much more about the two being linked. Spending will be a lot more out of cash flow as opposed debt. This shift is going to have some profound implications in terms of the structure of the economy.
Rebound in vehicle sales cause for optimism
The good news for fleet managers and those in the vehicle industry is that the new car market got off to a very strong start of the year, with January registrations up 6 per cent.
Mr Bagrie said the lift in sales was encouraging but there was a long way to go before the industry returned to pre‑GFC demand levels.
“The motor vehicle industry is a perfect example of the new economic “normal”. Yes a recovery is underway but we are not looking at a return to historical averages, which were themselves inflated. Rather we are seeing a return possibly to more sustainable growth.“ Winners and losers as recovery spreads As in most cycles, some industries and sectors will do better than others in this new cycle of growth.
“There is no going back to the old normal. The new normal is going to be fundamentally different to the past 15 years. Many companies will be looking at their business model and balance sheet, and making significant structural changes. Companies prepared to make the hard decisions now will be the best placed to
do well in the future.”
“And if we look at the successful companies they will be ones who get the balance right between spending, earning and investment-led growth as opposed to spending-led growth,” Mr Bagrie said.
A key demand driver for fleets over 2010 will be new investment in fleets from industries hard-hit by the downturn. In tourism, where many operators froze or scaled down their fleet numbers, improving consumer confidence will translate into more orders and fleet upgrades. Another trend to note will be a push towards greater consolidation within corporate New Zealand.
“Directionally things are picking up but within the vehicle and fleet industries there are still pressure for consolidation because the pie has gotten smaller. This will play out over the coming few years. After that period of adjustment we will see a new equilibrium form.“
Customer experience survey opens door to even better service.
While most companies aim to satisfy their customers, FleetPartners is going one step further with the introduction of a new Customer Experience Index (CEi).
The CEi, based on research recently undertaken by leading New Zealand research firm Colmar Brunton, will measure both customers’ experience and non customer perceptions of FleetPartners.
The CEi will be expressed as a numerical ‘score’ between one and 100 per cent. FleetPartners aims to achieve a CEi of at least 75 per cent for all its services.
“We are very serious about listening to our customers and quantifying their experience with us,” says FleetPartners Marketing Manager, Gail McNamara.
“This research is designed to ensure FleetPartners exceeds the changing needs of our customers by identifying their requirements before they occur, to improve business processes, verify changes in our business direction, retain existing customers and attract new ones.”
“Our vision is to be the recognised leader in hassle-free outsourcing fleet solutions in Australia and New Zealand. The Index is a vital tool that will help us measure progress as we work to achieve this aim,” Ms McNamara said
Results from the research will form the basis of two Customer Advisory Bureaus (CABs) to be held this year. Each CAB is a chance for customers to meet with senior FleetPartners staff as well as other customers to discuss opportunities to maximise business efficiencies, workshop ideas and share their experiences.
To date 190 customers have taken part in the customer experience research – an outstanding result according to Susanne Cotton of Colmar Brunton.
“It is a great response and is a testament to the strong relationship that already exists between FleetPartners and its customers,” Ms Cotton said.
“FleetPartners are genuinely committed to the project and to putting the results of the Index and the CABs into action. We spent a lot of time ensuring the research reflects best practice and making it as easy as possible for FleetPartners’ customers to participate.
“The survey was conducted online to allow business people to complete it at their convenience. The survey is not just about getting people to tell us how satisfied they are; it is also an opportunity for them to tell us about their challenges and help us get a picture of what is really going on. This makes it a lot more powerful when deciding where the business is at and looking for pointers to the future.” While the first stage of the research is completed, Ms Cotton said it was too early to report on trends or key findings.
“We will be presenting our results to FleetPartners later this month and they in turn will share the highlights with their customers. In the meantime we would like to extend our thanks to everyone who contributed because it puts us in a far stronger position to see what goes on in their business and to share with FleetPartners the relevant picture,” she said.
Road rule change gets it right
New Zealand’s confusing right hand turning laws could soon be overhauled under the Government’s Safer Journeys strategy released in March.
Transport Minister Steven Joyce has proposed sweeping changes to the country’s road rules, including scrapping the much-maligned right hand turning laws that have caused confusion for more than three decades.
Currently drivers wishing to make a right hand turn must give way to all traffic not turning, and in all other situations give way to traffic crossing or approaching from the right. This would be reversed under
Road rule change gets it right the proposed changes, to be introduced progressively from this year.
The Safer Journeys strategy also foreshadowed measures to improve the safety of the Government’s light vehicle
fleet, including:
- Mandating of electronic stability control (ESC) and side curtain airbags (SCA) for all vehicles entering the fleet
- Promote vehicle safety systems to consumers with a focus on emerging advanced safety technologies
- Monitor any safety issues with electric vehicles.
Managing risk
FleetPartners provide consultative advice on a variety of ways businesses can improve and save costs on the management of their fleets. We can help with everything from reporting on accidents that identify re‑occurring incidents (eg: a driver has had to have their left rear light repaired three times in recent months) through to correcting driver position when backing. Driver training is also available to teach ways of reducing fuel costs and maintenance. All of which can be measured through the FleetPartners reporting model.
From the Managing Director
Dennis Kelly
Welcome to the autumn edition of FleetView.
The arrival of autumn has brought with it a welcome shift in sentiment and momentum in the economy. The new car market – a key barometer of the health of the fleet industry and the wider NZ economy – had a particularly tough 2009 with sales down around 30–40 per cent.
Many businesses decided to hold off updating their fleets or opted to restructure their fleets to do more with less. For our part, FleetPartners has worked closely with customers to minimise their risk and exposure to the recession.
With the gradual return of confidence we are seeing customers slowly move from survival mode to a focus on strategies for the future. What is particularly noticeable is that businesses are taking this opportunity to expand and prepare for growth – whether through acquisition, growth in specific divisions or simply positioning their business for an upturn.
Our forecasts point to a continued steady improvement in conditions, although it won’t be a radical uplift. Expect to see improvement month on month as opposed to the heady growth of a few years ago.
Strategically, fleet managers need to start thinking less about survival and more about the best vehicle mix for their changing business needs. Changing times demand changing strategies and here, too, FleetPartners is drawing on its experience to offer flexible solutions suited to the current economic cycle.
A good example of this is one of our larger clients who are looking to run a new venture as a pilot scheme. We are supporting their plans by providing vehicles on flexible terms to reduce their risk and cost exposure; if the pilot succeeds we can then provide a longer-term solution.
This type of business-led fleet solution is a great example of how we partner with companies – and the benefits of strategic fleet management.
Looking ahead, work on the introduction of our new Drive System Platform fleet management system continues to progress and we expect to be telling customers more about this mid-year. This new company-wide system will bring significant benefits to customers including better and more detailed reporting, faster quotes and streamlined communications with FleetPartners staff. I look forward over the coming year to sharing more details of this initiative with you.
Until next time, safe motoring.
FleetPartners: experience where it counts
Two of FleetPartners’ longest-serving and most respected managers – Southern Regional Manager Peter Gapes (left) and Northern Region Sales Manager Vern McLaren (right) – will move into new senior roles as part of moves to enhance regional services and improve customer support.
Peter Gapes, who recently celebrated 25 years with the company, moves into the new role of Executive Manager Strategic Alliances. Vern McLaren, a 21-year veteran of FleetPartners, moves into the new role of National Manager for Customer Services.
Reflecting on his record of service and the new appointment, Mr Gapes said he remained passionate about fleet management and the people he has worked with and helped over the years.
“I am just as passionate now as I was 25 years ago. When I started looking after this office it was just myself and one secretary; today FleetPartners is the number one player in the Wellington region and we have a staff of 12.”
“I put our success down to our ability to move with the times. This industry has seen dramatic changes with vehicles, companies coming and going and the challenges of managing through tough economic times. Either you stay in one place or you learn to enjoy the challenges and move with them. That’s certainly been our approach” Mr Gapes said.
Asked what he had learned in his 25 years at FleetPartners Mr Gapes said: “Always remember that the customer comes first and second, don’t ask anyone to do something you wouldn’t do yourself.”
Mr Gapes was at pains to reassure customers that whilst he was taking on a new role, he would remain actively involved in the day-to-day business.
“I’ll still be fronting up to meetings and having lots customer contact, just in a different role. Behind the scenes I will be working as a trouble shooter and strategic adviser.”
Mr McLaren said customers were looking for more innovative and strategic partnerships with their suppliers – a trend reflected in his new role.
“FleetPartners has made a strategic decision to focus on improved customer relationships through the creation of a dedicated Customer Service Team delivering a total customer experience based on what our customers tell us that they need and want.”
Mr McLaren said his background in operations, pricing and sales gave him a strong knowledge base from which to drive FleetPartners’ new customer-centric service vision.
“I plan to bring my diverse experience together to make our customers feel important, valued and excited about the experience of doing business with FleetPartners.”
FleetPartners Managing Director, Dennis Kelly, welcomed the new appointments.
“Peter and Vern are outstanding managers and between them have almost half a century of experience and insight into the New Zealand fleet industry,” he said.
“These appointments reflect our belief in the importance of strategic alliances and affiliations. We want to make the most of the contacts and networks that our executive management team has, particularly people like Peter and Vern who have been with the company for so long.
Face 2 Face
Jenny Partington
Northern Region Relationship Manager
The best thing about FleetPartners New Zealand is…Our supplier and client relationships. With seven years experience within the leasing industry I can honestly say that FleetPartners attitude towards its own people, client and supplier relationships is truly tops and makes our business fun, exciting and a great place to work.
When I was a child I wanted to…Be a sports teacher. I never pursued that dream but other great opportunities have always come my way. Sports and particularly long distance running will forever remain my passion.
When I grow up I want to…Be rich enough to educate and help all of the orphaned children left homeless in Africa.
It’s not fashionable but I love…To listen to the Breeze! Old fashioned love songs never can be beaten!
If I were a car I’d be…A fast, sleek convertible, any make would do.
I wish I had never…Chosen to have only two children. The cost for more would have been well worth the time and so worth the effort.
If you were to look in my music collection, I wouldn’t want you to find…My Dad’s John Denver Country Roads eight track tape remains safely kept in my music collection. It brings back lovely childhood memories: long distance driving in Dad’s favourite Valiant with my four brothers on the back seat and me safely snuggled in between my parents in the front bench seat.
My favourite motoring gadget is…Six stack CD players. Long distance driving with a great range of favourite CDs, just
the best.
My ideal weekend is…Oyster Bay Sav, good weather, great food, awesome company and lots of my favourite music.
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