This car manufacturer’s entry into corporate travel management is a sign the "total mobility" concept is maturing. But legacy agencies shouldn’t worry too much — for now.
Car maker Volkswagen has shifted into a new gear following its acquisition of corporate travel platform Voya.
Volkswagen Financial Services, a division of Volkswagen, purchased Voya from Czech private equity firm Rockaway Capital on June 18 for an undisclosed sum.
Voya is a digital travel assistant with a focus on chat, as it lets business travelers plan and book their trip via messaging. Its target audience is small and medium-sized businesses with an average annual travel spend of $1 million.
The platform, which was founded in 2015 by Florian Stege, Maximilian Lober, and Pepijn Schoen, can also be white-labeled to other players in the travel and mobility industry.
Volkswagen has its eyes on the travel management sector because it also happens to operate one of the world’s largest fleet management companies, with a presence in 48 countries.
As well as leasing cars to companies, its financial services arm offers customer financing, direct banking, insurance activities and — notably — mobility services.
“With this acquisition, we are adding business travel management to our mobility offering for fleet customers,” said Lars Henner Santelmann, chairman of the board of management of Volkswagen Financial Services.
This latest deal reflects the emerging trend of mobility-as-a-service, where multiple forms of on-demand transport services are integrated into a single app, and where there’s no need for one-off payments. In Volkswagen’s case, it will be able to invoice corporates for the services booked via the app, which as well as travel could include garage visits or airport parking, at the end of the month.
“I can see why this deal makes sense as many corporate organizations explore what I call total cost of mobility,” said Justin Whitston, CEO of mobility platform Mobilleo. “That is the collision of fleet procurement and management to sit alongside corporate travel management under the new mobility manager role.”
For Whitston, Volkswagen’s purchase of Voya aligns the view that it now becomes more about the individual employee’s needs in moving around, as opposed to asset management or mandated corporate travel programs.
“The total cost of mobility focus becomes more around a mobility budget and I only see this accelerating post-Covid 19 as companies look to reduce costs and the need to travel at all for their role” he added. “A flexible mobility budget in the local territory can throttle up and down based on needs and could significantly reduce costs of running a fleet or corporate travel program in many areas.”
However, true mobility doesn’t come easily, and platforms such as these face technical hurdles and time-consuming integrations. The likes of Uber and Lyft have also attempted to venture further into the mobility platform arena, but from a corporate travel management perspective are being held back by a fragmented marketplace.
This level of complexity may explain why in January this year, Voya offloaded its travel business service to travel agency chain Lufthansa City Center, leaving it to focus on enhancing its Voya platform and on licensing software to corporate customers and travel agencies.
That deal to Lufthansa City Center, which has 570 offices in 95 countries, and some 13,500 corporate customers, comprised complex license, fulfillment, service and other agreements, according to European law firm GSK, which advised on the deal.
Lufthansa City Center will license Voya’s technology to its own corporate customers and travel agencies. At the same time, the agency network will act as Voya’s fulfillment partner — and in turn power the travel for Volkswagen’s fleet customers.
The Bigger Picture
Voya had in fact been running a pilot with Volkswagen for three years, for a few corporate customers, but this acquisition means it will now ramp up the features it offers them, Lober told Skift. A new product will be launched for them by the end of the year.
And there’s a significantly bigger market for Voya to tap into now, because out of Volkswagen Financial Services’ German subsidiary Volkswagen Leasing GmbH‘s 1.6 million individual leasing contracts, 600,000 are for corporate customers. Voya’s existing 200 corporate clients will also remain as customers.
While Volkswagen’s corporate customers do gain access to a more simplified way of booking travel, one source familiar with the deal, who wished to remain anonymous, told Skift the car manufacturer isn’t really that interested in the travel business.
“Volkswagen Financial Services is interested in giving out credit cards to customers,” they said. “Their aim behind all this is as a banking service, as they would have given either credit or debit to clients.”
The addition of Voya means Volkswagen is now able to sell flights, which brings the spending up. “Only with flights can you make a financial showcase out of it,” the source said.
However, Malte Krause, a spokesperson for Volkswagen Financial Services, said the acquisition represented a valuable add-on for its customers. “We definitely see the trend of a combination of travel and fleet management in our customers’ organizations. They want to try out these kinds of services from us and now we are able to deliver. That’s the main reason.”
And with Voya continuing to market its platform, Volkswagen can use its new mobility app to attract customers that haven’t leased cars before to its fleet operation.
Volkswagen isn’t the first car company to dip its toes in the water. The small and medium-sized business market is a significant one in Germany, and one that spends $40 billion a year on travel, according to Rockaway Ventures.
Mercedes Benz already offers an app called moovel, and clams it’s the world’s first mobility platform to feature an integrated booking and billing system for a range of different travel services. However, while it includes cars and rail, it doesn’t include flights or hotels.
Coronavrius has led to some unlikely alliances across the travel industry, and in many cases has accelerated digital transformation. Volkswagen’s entry into travel management stands to place total mobility higher on the agenda.
CORRECTION: This article has been amended to clarify that the 1.6 million individual leasing contracts, including 600,000 corporate customers, are for the German market only. Volkswagen Financial Services’ global leasing portfolio consists of 4.6 million vehicles, of which 2.1 million vehicles belong to corporate fleets.
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Tags: corporate travel management, germany, mobility
Photo credit: The Volkswagen factory in Zwickau, Germany, which exclusively produces fully electric vehicles. Volkswagen