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Governments put car ownership in reverse

New way: Governments are continuing to put vehicle fleets in the hands of private enterprise.

Rental and business fleets remain stable but sales to government fleets decline


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23 Aug 2021

GOVERNMENT purchases of new vehicles have slumped to one half of the levels a decade ago while private and business vehicle sales remain stable.


One reason is the reduction in vehicle fleets as government and semi-government agencies increasingly outsource their fleets, taking direct sales off their books.


Once the mainstay of vehicle sales, governments are significantly less prominent when it comes to vehicle sales and play a much smaller role in affecting registrations.


In 2009, vehicles purchased by governments accounted for just over 60,000 units. A decade later, in 2020, only 30,417 vehicles were purchased by these public agencies.


The movement out of government and into fleets surprisingly does not translate into growth in the business vehicle sector.


In the same 10-year period, businesses bought almost 390,000 vehicles in 2009, yet close to 370,000 in 2020.


Estimated business sales this year are 408,000 units, in line with the rise in private vehicle (passenger car, SUV and LCV) sales that are expected to hit about 575,000 this year.


The trendline for business fleets has been comparatively stable, from close to 390,000 in 2009, rising to 484,000 in 2017 and then 368,000 last year to average 424,000 annually for the period.


Private sales have followed close to the same line, coming out of 2009 with 423,000 units sold to the sector and then finishing last year with almost 450,000, averaging 523,000 sales a year.


The private market is a good barometer against the movements of other buying groups, less affected by major economic movements.


Australia’s rental market also shows the signs of regular buying intervals, though masked to a degree by the different companies buying at different times.


They also highlight major economic interruptions. Rental firm purchases were soft during the global financial crisis (GFC) of 2009, for example, and then picked up again for the 12 years before 2020’s pandemic nipped it in the bud and sales returned to 2009 levels.


Sales of vehicles to the combined private, rental, government and business sectors this year are estimated to rise to about 1.075 million, 18 per cent up on 2020 and 4.8 per cent up on 2019.


In the government sector, local governments (LGs) especially have been proactive in managing their fleets.


In a Fleet News article, Fleet Advisory director and principal consultant Paul Oliver reported that changes to the structure of vehicle ownership was attributed to the need of LGs to justify and reduce costs, much in the same way as most businesses.


“The need to maximise fleet ROI is evident across industry, government and not-for-profit organisations alike,” said the article.


Many government organisations were ‘early adopters’ with vehicle pooling as asset sharing was already common, and they understood the benefits of delivering fleet optimisation.


The change in the way LGs use vehicles has impacted on which vehicles they select.


Mr Oliver said LGs were now leading the way in the transition to battery-electric vehicles as a key to their sustainability policies.


“Most have a strong commitment to protecting the environment and are focused on minimising their carbon footprint.” he said.


“It is interesting to see how this impacts government organisations’ willingness to switch to a cost-effective fleet management solution that can help them manage their hybrid fleets.


“They are particularly interested in a technologically advanced solution that can scale and meet EV specific requirements, like tracking the vehicle’s state of charge, analysis of active driving times, usage patterns, and driver behaviour to enable the successful deployment of electric vehicles in their carpools.


“Facilitating a ‘vehicles on demand’ approach while meeting compliance requirements appears to be the mantra of those government organisations that are delivering optimal fleet ROI.”

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