Revving Up: What can automotive OEMs do to navigate Europe’s dynamic B2B car market?

The European B2B passenger car market is undergoing a seismic shift. Here we delve into the transformative trends shaping this market – from the allure of flexible leasing to the surge in electrification – and how OEMs can successfully adapt to this dynamic landscape.

As the European automotive landscape undergoes a seismic shift, Business to Business (B2B) passenger car sales are emerging as a critical growth engine for Original Equipment Manufacturers (OEMs). With true fleet registrations (all registrations by legal entities/companies) now accounting for over 30% of new car sales in most EU markets¹, the B2B segment is not just important – it is the next battleground for market dominance.

The Complexity Behind B2B Sales

Unlike Business to Customer (B2C), B2B sales are a multi-layered ecosystem involving Original Equipment Manufacturers (OEMs), leasing companies, dealers, and a diverse range of customers – from small and medium sized enterprises (SMEs) to large corporate and public institutions. This complexity demands tailored strategies, robust digital infrastructure, and a deep understanding of customer needs.

Market momentum: growth and electrification

The European B2B market is on a steady upward trajectory. In the EU5 (UK, France, Germany, Spain, and Italy) true fleet registrations are projected to grow from three million in 2024 to 3.2 million by 2029.

Electrification is another defining trend. More than 40% of the company car market is projected to be electric by 2029, driven by regulatory pressures to reduce emissions, and supported by Battery Electric Vehicle (BEV) tax incentives. These factors are particularly influential in segments where there is price parity between Internal Combustion Engine (ICE) and BEV alternatives.

Electrification is another defining trend. More than 40% of the company car market is projected to be electric by 2029, driven by regulatory pressures to reduce emissions, and supported by Battery Electric Vehicle (BEV) tax incentives. These factors are particularly influential in segments where there is price parity between Internal Combustion Engine (ICE) and BEV alternatives.

However, there are challenges as well. Unpredictable residual values in the used electric vehicle market are threatening leasing companies’ profits, leading them to seek deeper discounts from OEMs. Competition from Chinese OEMs, tariffs, and trade instability are further squeezing OEMs’ profit margins. Despite these challenges, the B2B fleet market remains a key growth area for OEMs and should be prioritised as the industry evolves.

What’s driving the shift?

Several forces are converging to reshape the B2B landscape:

1. Cost efficiency: Fleet deals offer better Total Cost of Ownership (TCO) through bulk discounts, tax benefits, and predictable maintenance costs.
2. Flexibility: Leasing and subscription models provide adaptable contracts and access to a wider range of vehicles.
3. Sustainability: Regulatory pressure and corporate ESG goals are accelerating EV adoption.
4. Digitalisation: Fleet managers demand seamless digital experiences -from vehicle configuration to telematics and aftersales.

On top of this is the major force of shifting customer expectations. According to research by Capgemini’s automotive team in Germany:

• Flexibility is king: 78% of leasing companies cite flexibility in vehicle choice and 76% in contract duration as top customer needs.
• Customisation is rising: 71% of managers expect growing demand for individual service modules – like cafeteria-style leasing packages or menu of options.
• Alternative mobility is mainstream: 78% of companies now offer public transport allowances, bike leases, or cash-for-car schemes.
• Subscriptions are gaining ground: 54% of fleet managers already use or plan to use subscriptions, with 40% viewing them as a viable alternative to long-term leasing.

Major perceived differences in customer needs between the EU markets, based on a survey of LeaseCo managers

These trends reflect a broader shift in consumer behaviour – away from ownership and toward access, convenience, and personalisation. These factors are also driving a change in preferred financing products. Operational leasing and subscriptions are on the rise.

Operational leasing is the fastest-growing financing method, expected to grow by 17%, reaching over 1.1 million by 2028¹. This growth is fuelled by:

• EV Affordability: Leasing helps align monthly EV costs with ICE vehicles.
• Convenience: All-inclusive packages simplify fleet management.
• Predictability: Fixed costs appeal to CFOs and procurement teams.

As for subscriptions, a 2023 survey by Dataforce shows that 40% of fleet managers view subscription models as alternatives to long-term leasing, while 33% see them as complementary.

Meanwhile, LeaseCos are consolidating and evolving. They are exploring ultra-short-term rentals to compete with subscription providers and meet rising expectations for flexibility. AutoFintechs are also entering the fray, with a projected 9.2% compound annual growth rate through 2031¹.

How can OEMs benefit from this opportunity?

To thrive in this evolving market, OEMs must activate four key profitability levers:

• Deploy low-depreciation models to reduce residual value risk.
• Offer modular service packages (menu systems) to capture flexibility premiums.
• Manage aftersales and uptime guarantees to generate recurring revenue and monetise connected services for fleet management.
• Recoup value through second-life leasing and resale optimisation.

Additionally, OEMs must adapt their B2B sales models to offer flexible contracts and customisable service modules. Partnerships with finance and leasing companies should be made more agile to provide innovative financial solutions.

Moreover, enhancing customer experience with digital tools like fleet configurators, fleet management systems and data-driven personalisation is crucial. This approach builds direct customer relationships, boosts loyalty, and unlocks strategic opportunities.

How Capgemini can help

Capgemini is well-placed to assist OEMs in managing this complex landscape. Our end-to-end fleet-specific transformation framework includes:

• Vision and strategy: We have helped German and Japanese OEMs set goals and target customer segments for fleet management, focusing on flexibility and efficiency.
• Digital infrastructure: We assisted Swedish, Japanese, Italian, and German OEMs in implementing CRM systems, pricing engines, and telematics to support low-depreciation models for leasing and resale.
• Sales enablement: We have supported Japanese OEMs in developing scalable B2B sales models, offering modular service packages to maximise flexibility premiums.
• Customer experience: We are experienced in helping global OEMs create seamless customer journeys across awareness, purchase, and aftersales, managing uptime guarantees for recurring revenue.

Whether you aim to expand your leasing operations, digitise your B2B sales, or accelerate the adoption of electric vehicles, Capgemini is ready as your business and technology transformation partner to help you navigate the next era of mobility.

Get in touch with our experts to find out how we can tackle your specific business challenge.