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Usership vs. Ownership – How is it changing Business Travel?

Published on
February 2, 2017
Matt Lenton
Marketing Director
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Fleet management for the corporate world is radically changing. Access to flexible transportation has never been so easy with the global adoption of smartphone technology and Big Data. Business Travel, or Business Mobility as we like to call it, has evolved dramatically in just 3 years. Businesses are looking to more flexible short-term options like Uber for business travel as supposed to the traditional company car. Changes to company car tax schemes have only worsened the situation as businesses and employees will undoubtedly start to look at more cost-effective alternatives such as Usership rather than Ownership.

John Saffrett, global chief administration officer for leasing firm ALD International, was one of the first to highlight the growing change in perception;

“The car is no longer considered an essential item. People don’t see owning a car as an ambition; we talk about driving a car, having access to a car.”

As businesses start to delve deeper into data like the total cost of mobility, the true cost of owning, managing and keeping a fleet of company vehicles is only getting harder. Fleet Management can now longer be viewed in isolation, but has to be approached as just one aspect of Mobility as a Service.

What is Ownership?

Traditionally, the corporate world has managed fleets of vehicles for employees through an ownership model. Empowering employees with the company car meant that businesses didn’t have to devote resource to managing business mobility, the employee would be in control of their business journey. However, with recent increases to fuel prices and more consideration to environmental-friendly policies, company car ownership may be less enticing than it used to be.

Interestingly, outside of the corporate world, car ownership is also changing for the consumer. Consumers are increasingly taking on lease-hire/PCP contracts on cars that give them an option for ownership at the end of their contract.

The concept of proud ownership has in some aspects, been overtaken by the concept of convenience. PCP deals offer the consumer a monthly payment scheme that gives them flexibility to purchase. It is this flexibility of payment and ownership that has given rise to ‘Usership’ – we see this is evident in business travel as well.

What is Usership? quoted Jon Burdekin, head of product management at leasing company Alphabet, stating that the millennial generation of consumers and employees,

“don’t go out and buy CDs and DVDs; they download them. It’s a very instant, throwaway society and these are the guys coming forward to be the company car drivers or mobility users of the future. They will not need one car for one person.”

Burdekin hypothesized that businesses didn’t want to take the financial risk of large fleets that we’re sat unused in a car park depreciating in value. Combined with all the associated maintenance or repair costs that employers are obliged to fulfill, business mobility wouldn’t be as efficient as it could be.

A Usership model negates this in that it allows a more flexible investment in business mobility whilst providing employees with the convenience and accessibility of transport when they need it. It’s no wonder that car hire companies like Enterprise have jumped all over the car club model – allowing hourly rental rates to consumer and business.

A Usership model aligns with today’s society and employee where short-term flexibility and convenience trumps long-term prestige and ownership. Connected cars, telematics and fleet management software like Fleetondemand give Fleet Managers the ability to reduce their fleet size and manage their users more efficiently. Instead of owning five company cars, they can utilise on-demand car hire without a long-term contractual commitment.

How does Mobilleo benefit both?

Our Mobility as a Service platform not only provides options for ownership (integrated with your fleet management system) and usership (connected to thousands of car hire/car club providers), but it lets you measure the total cost of mobility by comparing both options.

Mobilleo’s smart mobility engine provides a real-time quotation and analysis of your chosen business journey based on time, convenience, cost and even your employees preferences (e.g. time of travel, preferred car/travel operator or available seating/class). This informs businesses which model is more cost-effective to their business and allows employees to make the choice.