Fuel costs that have “absolutely skyrocketed” have accelerated the transition to electric vehicles for many businesses, and particularly large corporates, but the State’s charging infrastructure “isn’t quite there yet”, according to an industry leader.
Stephen Mahony is managing director of Avis Fleet Solutions, which is rebranding as Mahony Fleet on Tuesday. The company, which was established in 1966, is part of the wider Denis Mahony Group and is Ireland’s third-largest leasing company.
It has a portfolio of about 2,300 leased passenger and light commercial vehicles and has a workforce of more than 20 people based in Dublin. It leases vehicles to SMEs and multinational companies.
“Fuel expenditure, particularly for some of our larger customers, has absolutely skyrocketed recently,” Mr Mahony told The Irish Times. “We’re just trying to help them to manage it. It is very, very expensive for customers at the moment.
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“It is something that is on our radar [in terms of affecting the business], but at the moment our inquiry levels are still high.”
Supply chain issues
Mr Mahony said the “main challenge” facing the industry was supply. “There are still supply chain issues there and semiconductor shortages,” he said. “The war in Ukraine has exacerbated the issue as well because a lot of electrical components were made there.
“There are macro challenges as well in terms of the energy crisis, interest rate increases, and inflation. There are a number of headwinds we are facing. There is a lot of negativity at the moment in terms of the macro environment.
“From a leasing perspective, it is dampening our offering, and that’s what we are going to be focused on. We’re trying to get to a point where we offer a more fully rounded and comprehensive service.”
Mr Mahony said many businesses, and particularly larger corporates, were transitioning to electric vehicles.
Charging infrastructure
“A number of businesses at the moment are trying to adopt more sustainable fleets by transitioning to electric vehicles,” he said. “That presents an opportunity. We’ve seen a huge increase both in terms of inquiries and orders for electric vehicles.
“It is definitely the way the industry is going, particularly the larger corporates. It just comes down to supply, and also the charging infrastructure at the moment needs to be improved. The network isn’t quite there just yet.
“There are costs associated with electric. Larger corporates in particular are making that transition despite the costs. We look at it from a whole-of-life perspective rather than just the extra upfront costs, and electric vehicles can actually work out cheaper long term.”
Mr Mahony added that many companies no longer wish to sign long-term leasing contracts following the Covid-19 pandemic.
“Since the onset of the pandemic, we’ve had to adapt as customers no longer want to be locked into a three- or four-year lease. They want that additional flexibility in terms of shorter-term leases. It was demand-driven, and the demand is still there.”
