As a fleet manager, one of your primary responsibilities is to keep costs low. The cost of running a company car or lorry fleet is likely to be the second or third largest expense that a business has to deal with. However, there are many different ways of running your fleet more efficiently so that the cost of fleet management to the company is as controlled and as low as possible. In this article, we look at some of the ways to keep fleet costs down.
Choose your fleet acquisition method carefully.
The cost of acquiring vehicles is typically the most significant expense associated with running a fleet, and most businesses either lease their vehicles or purchase them outright.
Buying vehicles outright mean a massive initial outlay of money. This can mean using funds that might be better off used elsewhere, especially in the early stages of building your business or sourcing some sort of loan to cover the costs. If you make the decision to purchase your vehicles outright, you should review this process regularly to make sure it is the best use of company funds. The vehicles that you own are a depreciating asset, losing money as soon as they leave the forecourt, and are liable to fluctuating values.
If ownership of vehicles is not critical for your business, you may want to consider leasing as an option. Many fleet leasing options offer some considerable savings on multiple vehicles. There has been an enormous shift towards this sort of vehicle acquisition because it is much easier to budget for and gives you access to a newer and broader range of vehicles than you might have should you be looking to purchase outright.
Extending the replacement cycle of your fleet
Whatever method of fleet acquisition you choose to use, extending the cycle in which you replace vehicles can be a huge money saver. Instead of replacing them every three years, why not try extending it to four years? Obviously, people like to drive newer vehicles, and keeping your employees happy is an important factor to take into consideration, but the durability of modern vehicles means that even the most heavily used car or truck doesn’t need replacing quite as often. One way of balancing out this might be to offer employees an upgrade if they hold off renewing their vehicle for an extra year, keeping everybody happy.
Cultivate your vehicle policy
Your vehicle policy has an enormous impact on your fleet costs, and huge savings can be made by making sure that your fleet management cost analysis takes into consideration vehicles with the lowest CO2 emissions and fuel consumption. You should be reviewing your vehicle choices regularly, to make sure that you are only selecting those that perform best in their class or category. Whoever provides your fleet management should give you assistance in selecting vehicles which can provide the best fuel economy and emissions statistics.
Again, some of your staff may be unhappy with these decisions, but you can offset these by offering them rewards and incentives in other forms for taking vehicles with lower CO2 emissions. This will also help you to future-proof against potential forthcoming changes in legislation and laws which will make ever more rigorous requirements on vehicle emissions. You could if you are particularly forward thinking, consider electric or hybrid models, which are now generally available from most vehicle manufacturers. Of course, this very much depends on your business needs.
Manage fuel costs
Fuel costs can be a considerable expense – after the price of the vehicle itself this is usually the most significant spend, and if you can cut this down or manage it better, you will be well on your way to saving big money. One way of keeping an eye on costs is by signing up to a fuel card provider such as WatchCard.
These handy cards work very much like a credit card but are specifically for fuel and other associated costs – motor oil or washer fluid and the like. Fuel cards let you accurately record how much you are spending on fuel, when and where your employees are filling up, and how much fuel is being used in relation to miles driven. This gives you greater control over your total fleet fuel management and also allows you to plan routes to enable your drivers to complete their journeys more efficiently.
They can also be used as a method to detect fraud. It stops drivers from claiming that they have filled up with more fuel than they have used, or filling up vehicles that are not a part of your fleet, as these cards are usually assigned to one particular vehicle. They can also be used to identify drivers who may be using premium fuels instead of the most cost-efficient one. Using a fuel card system may also help you to cut down on your admin costs. Drivers no longer need to keep wallets and purses stuffed full of receipts and invoices to hand in for reimbursing.
On their own, fuel cards will not reduce fuel costs, but huge savings can be made by carrying out fleet management cost analysis of the data that they can provide.
Take another look at your maintenance program
The majority of vehicle leasing packages come with a maintenance element, which is a fixed cost payable every month. This covers all routine services of vehicles, maintenance and repair costs. Many businesses decide to do this as it is makes budgeting more straightforward, as it is one fixed, regular price. While this appears to be a cost-effective way of covering these expenses, research shows that generally, a managed ‘pay as you go’ scheme that allows you to pay for these services as and when you need them saves money in the longer term. After all, what is the point of paying for a service that you might not need 11 months out of the year?
Encourage fuel-efficient driving
This may cost you in the short term, as you may need to fork out for additional training, but in the longer term, if your employees take it on board, it will save you a considerable amount of money. In fact, it is thought that you could save up to 15% just by encouraging staff to improve their driving habits. These may include:
- Better use of gears: When accelerating, the engine revs should be kept as low as possible. Drivers should change gear early, and where possible, change gears in a ‘block’ when accelerating, for example third to fifth rather than going through the gearbox, and adopt the same principle when changing down through the gears to slow down.
- Slow down: It is quite simple – the faster you drive, the more fuel you will consume. Even by dropping by a few kilometres an hour you can make some serious savings.
- Keep tires inflated to the right pressure: Having tires inflated to the wrong pressure can not only be a huge safety issue, but it can also cost money, as they will wear out much faster. They can also increase fuel consumption massively. Pressures should be checked regularly, particularly before or after long journeys. You may want to consider issuing drivers with handheld tire pressure monitors and make it part of their responsibility to check their tires on a regular basis.
- Turn off or cut down the air conditioning: As great as it is to have air con on a hot day, it massively increases fuel consumption, particularly at low speeds. Encourage drivers to open windows to let in fresh air and cool down. However, it is important to run it once or week or so to maintain the system in good condition.
- Remove any unnecessary clutter: Empty the trunk or the back of the vehicle regularly and only carry the necessary equipment or tools, and remove any roof bars or roof racks. At 70mph, an unused roof rack can increase fuel consumption by up to 30%!
- Switch off the engine: Long distance drivers are likely to spend a lot of time sitting in stationary traffic. If you are likely to be stationary for three minutes or more, switch off the engine if it is safe to do so.
- Anticipating road conditions: By looking ahead and better predicting road conditions, drivers can reduce unnecessary braking and acceleration and use the cars natural momentum more. Train them to look forward three or four cars and work out what possible manoeuvres they may undertake.
Continually monitor and reevaluate
Even the tightest of ships and most efficient fleet management systems can fall victim to external factors. You have no control over taxes, rising fuel costs and employment law, and of course, all of these will influence the amount of money you spend on your fleet. You need to monitor these situations, and while you can; do anything about them, you can evaluate the factors that you do have control over and change them as and when necessary.