Fleet Industry Embraces Flexible Pricing: Insights from Ted Chan, Schindler's Expert
In the rapidly evolving automotive landscape, flexible pricing is increasingly becoming a feasible and strategic solution. This shift towards adaptable pricing models was recently discussed during the Global Fleet Summit Virtual Experience on 5 December 2023, where Ted Chan, Manager Fleet at Schindler, shared his insights.
Ted Chan, who oversees a fleet of 3,800 vehicles and a travel group of 2,000 employees, highlighted the potential cost savings that flexible pricing offers. However, he also acknowledged the concerns surrounding determining the best time for fleet purchases.
One company leading the charge in flexible pricing is Tesla. The electric vehicle manufacturer has been experimenting with dynamic pricing adjustments, basing them on market conditions, inventory levels, and competitive positioning. This approach has sparked discussions on the sustainability of such price adjustments in the industry.
The electric vehicle market is pushing automakers to adopt pricing strategies that align product availability with consumer demand and financial feasibility. This growing openness and necessity for flexible pricing approaches are driven by the need to balance production costs and pricing competitiveness due to factors like tariffs, supply chain challenges, and shifts in demand.
Tesla's approach includes frequent pricing updates that respond to factors like raw material costs, incentives, and competitive moves. This demonstrates that flexible pricing can be integrated into automotive sales without alienating customers.
However, implementing flexible pricing requires careful consideration of consumer perception and regulatory scrutiny to avoid negative impacts on brand loyalty or accusations of unfair pricing. Yet, the direction set by leaders like Tesla and emerging OEM practices suggests that flexible pricing, when managed transparently and strategically, is feasible and likely beneficial.
The evolving dynamics of variable pricing may lead to a potential shift from the conventional annual discounts negotiated by fleet managers with OEMs. For instance, Ted Chan recommended establishing agreements with OEMs that provide price protection, citing experiences where such agreements yielded refunds due to price drops.
Unprecedented fluctuations in the automotive market due to microchip shortages and supply constraints have led to scarcity and inflated prices. In such circumstances, building robust partnerships and agreements with manufacturers to navigate fluctuating pricing structures becomes crucial.
Meanwhile, Carlos Roberto Guemez Shedden, from UNHCR, posed a question about how tracking data could support reducing road crashes in countries with a low road safety culture. As the automotive industry continues to evolve, it's clear that data-driven approaches will play an increasingly important role in shaping its future.
In conclusion, the automotive industry is moving towards a more flexible pricing model, driven by the shift towards electric vehicles, digital sales models, and global trade conditions. While there are challenges to consider, the benefits of flexible pricing, including cost savings, optimized inventory, and better consumer demand alignment, make it a suitable response to the industry's evolving landscape.
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