In quest to go green, US firms retool car fleets
Companies are looking for ways to cut down on greenhouse gases and save money on increasingly expensive gasoline.
Call it the greening of the fleet.
Corporate America is starting to look at the millions of cars it owns or leases for traveling salesmen, executives, and technicians as an area where it can cut down on greenhouse gases and save money on increasingly expensive gasoline.
• Abbott, a large pharmaceutical company, has shifted 20 percent of its fleet to green status – more fuel-efficient vehicles. In analyzing its carbon footprint, the company found 4.5 percent of its emissions in the US came from its 6,500 vehicles.
• Last month at an expo of the National Association of Fleet Administrators (NAFA) in Houston, managers of corporate fleets waited in line for test rides in hybrid vehicles and cars that use alternative fuels. It was the first time in the 46 years of the expo that NAFA has featured a "green zone."
• Last week, Hertz Corp., owner of one of the largest automobile fleets in the nation, said it would buy 3,400 hybrids, an investment of $68 million, over the next two years. Enterprise, with the largest US rental-car fleet, will have more than 3,000 hybrids this year.
This shift in corporate thinking is relatively new but has the potential to make an impact. Automobiles that are part of the corporate fleet have double the miles of the family vehicle. In the case of rental-car companies and executive car services, the mileage can be even higher.
Whether the shift in thinking is for the public-relations value or because it saves money, companies are suddenly trying to change their ways.
"In January, we tried to do a story on what companies are doing to turn their fleet green, but we couldn't find many who were willing or able to talk about it," says Phil Russo, executive director of NAFA. "But at our meeting in May, we asked people what had happened, and they said, 'This is part of our corporate mandate: We're trying to turn green.' "
In a survey earlier this month by PHH Arval, one of the largest fleet-management services in the United States and Canada, 45 percent of fleet managers said their interest in the environment had grown significantly in the past year.
"One of the things that came out of the survey is that companies are struggling. They feel like there is not a good variety of vehicles that meets their needs and is available," says Karen Healey, who is in charge of PHH's green initiatives.
This is certainly what some car-rental companies have found. Over the past several years, Hertz has had only 50 to 100 hybrids in its fleet. "We are Toyota's largest customer in the world…. Basically, they didn't want to sell us any, and we just had to beg," says Frank Camacho, vice president for marketing at Hertz.
Indeed, hybrid orders have been difficult to fill, says Bill Kwong, a spokesman for Toyota in Torrance, Calif. "We have had very limited production," he says.
But with production of hybrids increasing, Toyota is now willing to sell Hertz 1,000 vehicles this year, with the fleet growing by another 2,400 in 2008, Mr. Camacho says.
Enterprise says that it, too, would buy more hybrids if it could get them. Instead, it has found it easier to acquire some 41,000 "flex fuel" vehicles that can run on various combinations of ethanol and gasoline.
"If we find a station selling E85 (85 percent ethanol), we will group the cars close to the fueling station," says Pat Farrell, the vice president responsible for the company's environmental platform.
To date, some consumers have been disappointed that they've been unable to rent hybrids. "Every time I travel, I ask for one," says Andrew Winston, coauthor of the book "Green to Gold." "When I went to Hertz's 'green fleet collection,' they only had a Camry.... Now it sounds like they are stepping it up."
In fact, some of the shift in fleets is demand-driven. Next week, Edelman, a national public-relations firm, will hold a general-managers meeting in San Francisco, and it will be "carbon neutral." This includes procuring hybrid ground transportation, says Chris Deri, who is in charge of the firm's corporate social-responsibility business. "If we can't find enough, we will purchase an offset [that goes to another organization to support greenhouse-gas reduction efforts]."
Such demand is helping to spur the growth of Ozocar, a limousine service in New York. The company started 20 months ago and has grown to 81 hybrid vehicles that shuttle executives around town. "We're entrepreneurs, but we would also like to help save the world," says Roo Rogers, the president and cofounder.
At Abbott, the impetus was a challenge from Miles White, the company's CEO, to improve its environmental performance. As part of this effort, says Bob Accarino, director of global environmental affairs, the company asked for employees to volunteer for a more fuel-efficient vehicle such as a Dodge Caliber.
One of those driving a Caliber for Abbott is specialty sales representative Frank Mattoon of Thousand Oaks, Calif. He gets 10 more miles per gallon, plus the company charges him $3 less per week for the use of the leased vehicle.
"Someone has to be the bell ringer and take the first step," he says. "Now, other sales reps are asking about my experiences driving in a greener car."