Q&A: Dan Frank — Managing the Rapid, Complex Pace of Change

By Janice Sutton

We spoke with Dan Frank, president of Wheels, Inc., at the recent NAFA I&E. He talks first about the genesis and success of the company’s newly-launched reimbursement program, and follows with his views on various components of advanced driver safety technology. We questioned whether or not it could be morally or even legally incumbent upon a company to offer those available safety features on vehicles in their fleet.

Wrapping up our interview, Dan says, “The biggest issue challenging customers today is the complexity. Change is happening so rapidly in our industry. This is a 75+ year old industry, and you would think we would have it all figured out by now and it is fairly commoditized and routine. The reality is it is not.  While the pace of change is challenging, it is also what makes the fleet industry so interesting, exciting and valuable to our clients.”

Dan, please tell us about Wheels’ new reimbursement program.

We decided several years ago to figure out if we could build a program that is as good in terms of service, driver productivity, safety, and legal compliance as our lease program. It took us a long time to figure out how to do that, but at this point we have achieved it. We have a great system to support it and we have a product that nobody else has. It provides a nice, seamless experience for clients to choose between company-provided or employee-provided vehicles.

What was the impetus for building the program?

For a long time, we and maybe a lot of the industry thought of reimbursement as the enemy – people trying to take away employees’ cars. We can buy, finance, insure, and manage a vehicle more cost effectively and productively than an employee can.  When you add in the increased control over brand image, safety, carbon emissions, and driver productivity, we have always viewed a company-provided vehicle as the best solution.

In talking to our customers, however, we found that almost all of them have pockets of reimbursement within their organization and there were legitimate reasons for that. They may have different driver groups, someone with a medical exception, or a summer intern who only needs the vehicle part time. They may have an employee who drives low mileage or an ex-pat who needs a vehicle for a certain period of time. They might be a pharmaceutical company who is launching a drug but doesn’t yet have approval, so it was a temporary solution.

As we looked into it we thought the reasons made sense and so we said if they are going to need to do it, we ought to support them with all of their transportation needs, company-provided or employee-provided vehicles, if we can do it to the same level of quality that we do for our leased vehicles.

How are clients perceiving the program?

We have clients who are working with the program and so far the results have been terrific. We have seen in our initial testing that costs for running the reimbursement program have gone down. We have audited drivers’ insurance coverage and found that they often weren’t compliant.  Often the employee’s vehicle didn’t meet company standards or wasn’t well maintained.  We have found company programs that weren’t tax compliant.  We have also seen that drivers, when given a choice between a company-provided vehicle and reimbursement, are more likely to choose the company-provided vehicle.

So, while we thought okay, we are bringing a fox into the hen house, the reality was quite different. When drivers were presented with an economically equal opportunity, they preferred getting a company-provided vehicle. We are still supporting the reimbursement drivers but the reality is it is actually good for the lease side of the business as well.

Did you find that some companies took a  more hands-off approach to managing their reimbursement drivers?

Yes, a lot of companies have the misperception that if it is an employee-provided vehicle they don’t have to perform motor vehicle record checks or they don’t have to worry about the safety of that vehicle. The fact is, if an employee gets into an accident during company time or while performing company business, the company is going to be liable. They have all the same rights and responsibilities whether it is a company-provided vehicle or an employee-provided vehicle. We are trying to help them do that better and also show care and compassion for their employees and their employees’ safety as well as any vendors or customers that might be riding with that employee.

Speaking of safety, please give us your thoughts on advanced driver safety technology.  If the safety options are available on fleet vehicles, is it incumbent upon fleets to offer vehicles with that advanced technology?

There is a spectrum that we see safety technologies evolve through over time. Initially, people are often wary of them, they are often expensive, and they are unproven in terms of effectiveness. Over time they get better data around those technologies, better acceptance, a better understanding of how to use them. As government and society start to see results from those technologies they become more common and then eventually they become required. Somewhere in there is that gray window of negligence where if that technology is available and you didn’t take advantage of it and you should have known, could have known, juries and judges start to frown upon that. So, there is the moral obligation to do what you can and then there is the legal stick, so to speak.

Different safety technologies are evolving through different parts of that lifecycle. So, an interesting one is rearview cameras; that almost went from beginning to end very fast. Rearview cameras came out and they found that there was a fairly slight safety benefit, but it happens to most commonly prevent backing up over children. It is a very sensitive item. They made those mandatory. So, it never went through a long phase of being optional, but somewhat negligent if you don’t have it. It went pretty much straight to making it legally required.

I think we will see similar evaluations. The bar has been raised and the expectations are much higher, but you have a lot of technologies out there. You have blind spot detection, cross traffic alerts, lane departure warnings, and frontal crash avoidance, either active or passive. You have all sorts of detectors and right now there is mixed data on the effectiveness of those things.

For example, frontal crash avoidance seems to have very good data around it. It is effective, particularly when it is active as opposed to passive, and it reduces the incidences of rear-end collisions by around 30%. For other technologies like lane departure warning, the data is less clear. So I think you are going to see frontal crash avoidance move to be very common on vehicles and potentially juries saying that a fleet can be held liable if they don’t provide it, although I don’t think we are there yet.

The other one I am starting to see very good data on is adaptive headlights. There are a number of different headlight technologies but there are ones that go around the curve, as you turn the steering wheel they turn with you. There is even a technology that allows you to keep your brights on all of the time and just blacks out the spot that would interfere with the oncoming driver, but it basically allows you a much brighter, longer distance of vision. I anticipate that will be one that comes along pretty quickly.

There is mixed data on some of the other things. People are finding that maybe some of those warning sounds going off are actually causing some distractions. Each manufacturer implements it differently so I think they are still trying to figure out the best way to warn drivers. Many drivers last took drivers education years ago, and don’t even know how to properly use these features of their vehicle.

There are a lot of possible safety technologies, obviously going all the way to full autonomous driving. I had the privilege to be able to ride in one of Google’s vehicles and have a fully autonomous experience driving for 20 minutes around Mountain View, California. The vehicle works very well and I felt very safe in it. I think all of these things will continue to evolve on that progression. I also think the price will continue to come down.

One of the things that fleets struggle with today is that many of the safety technologies are packaged in a way that makes the vehicle much more expensive. Some of the manufacturers are starting to respond to that and understand that fleet really needs to have the safety options, maybe without packaging it with other high expense features. I think that would be a positive development for the fleet industry.

Also, like any value added options, we would look for the safety options to have some residual value as well as reducing the cost of accidents, downtime, and liability. So it is more than just the purchase price of the vehicle.

Besides cost, what are your clients telling you about their biggest concerns today?

The biggest issue challenging customers today is the complexity. Change is happening so rapidly in our industry. This is a 75+ year old industry, and you would think we would have it all figured out by now and it is fairly commoditized and routine. The reality is it is not.

Safety technologies are changing, a lot of laws are changing, law enforcement is using cameras and electronic tracking, accounting rules are changing, emissions standards and the types of fuels are changing. All sorts of things around maintaining the vehicles are changing. It is a lot for people to keep track of. We are fortunate to have resources like NAFA and the education provided.

A lot of great fleet management companies are helping clients work through this, but the environment has become so complex.  The ability for clients as well as our own employees to keep up with all of the changes and all of the new technology is really challenging. We are doing our best to keep up with it and we applaud our clients who are learning along with us. While the pace of change is challenging, it is also what makes the fleet industry so interesting, exciting and valuable to our clients.

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