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Big data to drive "massive revolution" in fleet industry

Big data to drive "massive revolution" in fleet industry

The fleet industry is set to undergo a “massive revolution” with the introduction of the connected car and the arrival of so-called ‘big data’, while contract hire companies will transform into analytics businesses that lease vehicles.

Those were two of the predictions at ACFO’s spring seminar, ‘Big Data - Big Seminar’

Held at Whittlebury Hall, Northamptonshire, around 80 fleet decision-makers, heard Nick Mitchell, Audi’s service and technical manager, say: “The arrival of the connected car will result in massive changes in the way people use cars and the application and provision of cars. Technology will be updated before our eyes. It is a massive revolution that we are about to go through and the pace of change will never be as slow again.”

Ultimately, Mitchell told delegates: “Connected car data will fundamentally change our industry. We have a long way to go, but we must change from a rear-view mirror perspective to using data to predict the future and move from a leasing company that provides management information to a data company that leases vehicles.”

However, the transformation will not be without its challenges and behind the scenes policy makers, vehicle manufacturer and leasing company representative organisations are discussing numerous issues around data ownership and accessibility.

The key challenges faced from a leasing company perspective included, said Mitchell: liability around data breaches with company car drivers not currently covered by leasing companies’ masterhire agreements, which were contracts with fleet customers; and manufacturer determination of ‘who is the customer’ - contract hire and leasing companies, end-user fleets or company car drivers.

He said: “There are real contractual challenges to overcome due to the difference between retail customers and fleet owners.

“The connected car will be a huge part of the data lake and the volume of information ever-increasing. Fleet customers demand information to tell them what is happening to their vehicles and to predict the future and lead them on a journey to provide cost savings and deliver safety.”

The traditional fleet business model needs to change as drivers ‘control their lives’ from their car

The advent of the connected car will enable drivers to download functionality that physically changes a model’s characteristics and specification with a potential huge impact in numerous areas of fleet operations as well as the likely requirement of tax and legislation revisions, according to Mitchell.

Cars, he forecast, would change from being a “status symbol” to a “mobile device” with new players such as Apple and Dyson joining long-established motor manufacturers, as well as newcomers such as Tesla, in the battle for sales.

Furthermore, Mitchell predicted a huge increase in the delivery of on-demand services to drivers and also the ability for vehicle users to update their cars as manufacturers introduced new functionality.

For example, he highlighted that a company car could be sold as a 150bhp model, but on demand a driver could add a further 20bhp, which would completely change a model’s performance and thus its carbon dioxide (CO2) emission figure and therefore an employee’s benefit-in-kind tax bill.

Mitchell said: “Drivers will want that functionality, but the car will no longer be the vehicle that it was. It could be that cars are sold with the lowest specification and on day two the specification is updated by drivers. That would have a massive impact on HM Revenue and Customs’ revenue. Legislation and the tax system as we know it will have to change and that will have to be dealt with.”

Forecasting that numerous issues, notably around vehicle contractual terms and data ownership, needed to be resolved with the arrival of the connected car Mitchell said: “People will be able to control their lives from their car. The traditional business model will no longer apply.”

Employers must take action to protect themselves in the new world of ‘big data’.

Sharing and using personal vehicle user data is a huge issue and a leading lawyer has advised businesses to update employment contracts, terms and conditions and codes of conduct to reflect the new world of ‘big data’.

Employers are bracing themselves for the May 25, 2018, introduction of the General Data Protection Regulation (GDPR), which will have a potentially significant impact across organisations, and particularly for fleet introduction of connected cars.

The Information Commissioner’s Office (ICO), which is responsible for enforcement of the law and is currently consulting on aspects of GDPR, has already undertaken some initial work with organisations, which include the Society of Motor Manufacturers and Traders (SMMT) and the British Vehicle Rental and Leasing Association (BVRLA) “in order to develop its understanding of the data protection and privacy risks arising from the deployment of connected and autonomous vehicle technology”.

GDPR builds on existing data protection legislation with a particular focus on digitalisation and technology. Core to the 1998 Data Protection Act are eight data protection “principles” and GDPR reforms those and introduces new “principles” of transparency and accountability with the ability to “prove consent” a significant pillar of the new regulations.

Alex Ktorides, head of ethics and risk, and a partner at law firm Gordon Dadds, told delegates: “‘Big data’ is all about having an ethical approach and that means transparency. Connected cars will generate huge amounts of data and the question is what happens to that data. It is crucial to make sure it is being ethically handled.

Calling GDPR a “big sea-change” and explaining that the ICO was aiming to ensure that the law kept up with the pace of technological change, Ktorides said with regards to connected cars and ‘big data’: “Some of the information will relate to employees and their behaviour so employers need to consider being completely transparent and hatch an ethical and transparent plan. Fleets need to plan how they will use that information and tell their employees.

“Businesses must be clear about what data they are gathering and why, where it is going and how it is being used and gain people’s consent.”

That, said Ktorides, meant updating contracts of employment, employee terms and conditions and codes of conduct and he suggested anonymising data was a “very effective tool”.

He told delegates: “If information is personal and identifies who a person is and how that employee is using their car and their behaviour then it impacts on their privacy and requires sign-off".

“There is huge value in gathering data, but that must be balanced against people having a right to privacy. Employers must put people’s rights at the forefront and show good governance and gain consent.”

"The advent of ‘big data’ increases the pace of fleet management change", says ACFO

Fleet management is changing at a pace never seen before and the arrival of ‘big data’ was one of the biggest steps, ACFO chairman John Pryor told delegates.

Introduction of the connected car and the generation of so-called ‘big data’ was set to change the long-established fleet management model, he said.

And that change had to be managed, while fleet decision-makers grappled with the impact of numerous other issues including: the viability of diesel as a fleet fuel amid air quality concerns, the impact of Brexit, government consultations on many issues including currently on business expenses - including potentially employee mileage allowances - the forthcoming arrival of a new real-world driving vehicle MPG and emissions testing regime and a “spectacular increase” in fleet administration.

What’s more the recent hacking of NHS computer systems in the UK and other organisations’ systems worldwide had put security fears around vehicles and the data collected front of mind, suggested Pryor.

Meanwhile, Pryor continued: “We are currently at the tip of an iceberg. The arrival of ‘big data’ will have a major impact on fleet operations and company car drivers".

“Today’s connectivity is the start of the journey towards the autonomous car and while the secure exchange of data builds the foundations for new business activities and applications, there are significant risks and challenges regarding safety, security and privacy that need to be addressed.”

Artcile first appeared on Fleet News