Tips to reduce Fleet costs.

30 Tips to reduce Fleet costs. 

Tip 1 

Reconsider funding methods.

A fundamental start to any fleet strategy is to think of the funding methods. 

You made choices three maybe four years ago that do not quiet sit right now with the possibility of a recession coming or with the way we have to change our businesses due to the Covid-19 outbreak. 

Contract hire is one of the most popular ways to fund a fleet, there are other ways but review all finance and operational benefits, there is a number of ways, find what is best for you and your business. 

Research all contract hire providers, look at them and see who can do the best for you. A reputable contract hire provider will be able to negotiate manufacturer terms on your behalf and also should have access to a panel of finders which will be of great value to you. 

Tip 2

Compare CO2 and MPG

Create a list on the CO2 and MPG, look at the difference and adapt a capping level on CO2 and MPG will make a good choice. 

So in this list you should only include vehicles with CO2 figures no more than 140g//km with fuel consumption of now less than average of 45mpg you should then be able to see savings in not only fuel, but also National Insurance and Benefit in Kind Taxation. However now you have EV’s to consider on top of all this, if your still wanting Petrol or Diesel engines then this is some thing you should look at but the way forward now is the EV. 

You may just be surprised by the choice of vehicles you have in this list. But do not rule out the Electric Vehicles, even Hybrid or Plug in Hybrids. 

Tip 3

Remove vehicle choice

This is a bold move, maybe unpopular with your drivers. But by doing this could have the biggest savings to you. So find the best vehicle that suits the needs for the job required. Maybe one for staff and one for management. 

Of course you want to consider recruitment and retention of your staff, and this choice could have an impact on them so do not make that choice lightly. 

But for fleet managers issuing cars to staff, if they are all the same they have a simple task in doing so. 

Tip 4

Vehicle costing 

You can ask your provider to give you full coating on the vehicle. So review the total costs of the fleet.

Many will buy on make and model some on price of the vehicle. But this will not show you the full vehicle costing over its lifetime. 

So ask your contract hire provider to provide you with financial modelling information on things such as fuel, fleet taxation, servicing, maintenance and insurance coatings. 

Tip 5. 

Examine cash allowances versus company cars

Cash for car allowance usually covers more than just a vehicle to the employee. So ensuring that verses the company car could should you a substantial saving. 

To get an idea of what savings can be made, you should compare costs for each company car. Do not forget to include mileage reimbursement with the cash option you provide. 

You may be very surprised at the differences. But ensure you cover all aspects of this. 

Tip 6

Encourage fuel efficient driving

This could be the biggest impact. But by encouraging your employees to drive more eco friendly and efficiently could help you cut your fuel bills. 

As part of our training we have worked with the Energy Saving Trust. Savings can be made up to 15% can be achieved. Drivers doing 12,000 miles a year can make average savings of about ￡250 each year. Just by changing and improving driving habits.

Here are some suggested driver tips to help achieve these savings include:

Better use of gears

When accelerating, keep the engine revs low. We would encourage drivers to change gear early (often below 2,000rpm). Where appropriate, change gears in a ‘block’ when accelerating, for example third to fifth, and adopt the same principle when changing down through the gears to slow down.

Slow down

The faster you go the greater the fuel consumption and pollution. So keep to a steady and slower speed to maintain a steady use of fuel. 

Keep tyres at the right pressure

Tyres running at the wrong pressure are not  just a safety concern but also wear much faster. But they increase fuel consumption to a degree that many fleet managers find surprising. Driving on under-inflated tyres can reduce fuel economy by up to 10%. Tyre pressures should be checked regularly and before long journeys. We recommend that true pressure checks are done daily as part of the daily vehicle checks. 

Consider issuing drivers with handheld tyre pressure monitors and make it part of their responsibility to frequently check their tyres.

Remove roof racks and roof bars when not needed

A large roof rack or roof box can increase fuel consumption by as much as 30% at motorway speeds.

Stuck in a jam? Switch off

This is great for the environment but also for a fuel saving. We would recommend if your stationary for more than three minutes then you should switch off your engine.

Anticipate road conditions

Through better anticipation, drivers can reduce unnecessary acceleration and braking and make the most of the vehicle’s momentum. By reading the road ahead much further than the one or two vehicles ahead of you, you will then see what the 4th - 6th vehicles ahead are doing so you can react to them by when they start to change you can ease off the gas slowing earlier reducing braking. But always look ahead as far as you can see too for better planning of your journey. 

Maintain the focus on fuel savings

Monitor the fuel usage for each driver, maybe keep reports on weekly fuel usage to monitor how well your drivers are driving week to week. This can be used to highlight where training may come into play.

Tip 7.

Choose your fuel card provider wisely.

When selecting a fuel card provider choose a one that makes tracking expenditure easy through online reporting tools. 

The efficiency of the fuels themselves can also vary considerably. 

Here is an example: Shell’s Fuel Save products can deliver extra efficiencies of around 2% - which when calculated across a large fleet can easily amount to six figure annual savings. But we recommend you do research what is the best suit for your business. 

Tip 8. 

Remove free fuel

Free fuel is now becoming a much less attractive perk due to changes in benefit in kind taxation. 

But also with the change to EV coming this will become something that is no longer needed. 

But for the lucky ‘perk car’ drivers who still benefit financially from this arrangement ask yourself what is their motivation to save on private fuel?

Tip 9. 

Encourage refuelling at the right places

Based on what fuel card you may used this will be more relevant if you do not have fuel cards. 

Prices at the forecourts can vary considerably depending upon factors such as local competition and location. 

Journey planning and refuelling early will eliminate the need for an urgent refuel at the more expensive places such motorway service stations

Tip 10. 

Communication 

Communication is key. Keeping drivers informed of ways you wish to make savings and costs, you may also be surprised that drivers themselves may even put forward ideas to you.

If you do this it shows you also consider their needs and also what they may help with, but increase the way you can pass on this message to them  and keep the message going and strong.

How can this be done, a number of ways will depend on your company structure. Large companies with an Internal Communications team, HR or Fleet departments can help spread the message and your fleet provider should also be able to help through web based resources, email bulletins or mobile phone APPs. 

Tip 11.

Van fleet tips

These tips I cover are for cars. But can work very well for vans so here are some that apply to van fleets.

1- Downsize to smaller vans where appropriate, many have a van that is much larger than required for the jobs it actually does. But consider EV vans also now. They are very economical and spacious. 

2- Choose white vehicles and add livery rather than use odd colours which are known to reduce residual value

3- Investigate the potential benefits of bunkered fuel, but Electric vans are very much able to continue to do the job of other vans.

4- Review ancillary equipment and shop around for cheaper alternatives. Whatever suits your business.

5- Consider fitting speed limiters which will help to save fuel, wear and tear and accidents.

6- consider investing in software for your vans that will optimise routes and the operational needs for each day. Making much better planning to improve savings. 

Tip 12. 

Accident Management

As we know 1 in 3 road deaths include someone driving for work purposes. Also business drivers have collisions rates that are 30-40% higher than that of private drivers. This downtime of any business vehicles impacts profitability, causes disruption, creates additional admin time and potentially affects business-client relationships.

Making drivers aware of the higher risk situations can help to reduce incidents. For example what road types are are considered most dangerous. Accidents on A roads are thought to represent 20% of the share of all accidents, car parks are at 10%, B roads at 11% and motorways at just 2.27%.

Fleet Managers should therefore consider using an Accident Management company. By using these firms means they have well developed sector networks, covering everything from vehicle recovery, repair work, legal assistance, personal injury claims and vehicle replacement. The Fleet Manager can therefore concentrate on core business functions confident that the situation is being professionally handled.

Tips 13

Consider switching to EV’s

You now have the choice of Fully Electric, Hybrids or Plug in Hybrids.

The cost of a charge on a EV is about ￡6.16 for a full charge which can do aprox 200 miles.

Chargers are getting better and mileage range is improving more and more. 

At tank of diesel ￡75-￡80 will be about 600 miles depending on the drivers and other aspects of driving. However if you still want a ICE (Internal Combustion Engine) consider petrol vehicles for low mileage drivers. Don’t automatically assume diesel will work out cheaper. For example The 1.4-litre diesel VW Polo BlueMotion, for instance, is exempt from car tax charges under current rules. But the equivalent, 1.4-litre petrol VW Polo is hit with an annual bill of ￡120.

What about the differences in servicing costs? Over a typical three or four-year ownership period, you're unlikely to see a significant difference between servicing costs for equivalent petrol and diesel cars.

Tip 14.

Optimise daily rental usage

Watch out for employees looking to hire vehicles with powerful engines and an unnecessarily high specification. Some like to try and get a great looking car as it is not them paying for it. So ensure they choose from what your policy stipulated rather than driver choice.

Look over different suppliers and only make them available for the driver to choose from this will help achieve better rates and will also make it far easier to monitor costs and usage. Online booking and management platforms now make this a straightforward process.

The purchase of a daily vehicle rental should only be used whenever there is no suitable alternative. Ensure you cover all aspects of the needs and costs in this.

Tip 15

Reduce grey fleet journeys.

Much has been covered in the fleet press regarding the corporate manslaughter risks associated with grey fleet drivers but how do these journeys affect costs? 

Here are some potential cost savings:

The table below compares the cost of various alternatives to grey fleet usage.

- A 20% reduction in organisational grey fleet mileage of 10 million miles could generate an annual net saving of over ￡1 million.

- 10 million miles at an average speed of 40mph would take up to 250,000 hours. Assuming an average hourly cost of ￡15, this would represent ￡3.8 million of indirect costs, which could be reduced through eliminating unnecessary journeys and using alternative forms of transport.

But finding other ways for doing business now may also make some much bigger saving. Use of online communication such as email, or video calling.

Tip 16.

Ensure your fleet partner is a ‘good fit’

You should select a new fleet partner to deliver cost savings without making sacrifices in customer service? 

It maybe tempting to just look at one of the biggest fleet companies, but what should you also take into account is how does your business look to them? Do they do the same job with a customer with 1000 vehicles to a company that may only have 20-40 vehicles. 

Here are some questions for you to consider. 

1- How long have they operated within the sector?

2- What service level agreements and key performance indicators do they work towards?

3- What makes them tick? Is their culture rooted in finance, motors, IT?

4- Have they recently merged with another company and are still going through the integration process?

5- Are they tied to a single funder and do they cover all manufacturers?

6- How many long standing clients do they have?

7- What do their customers and lost customers say about them?

8- Who is the parent group? What are their IT capabilities?

9- Are prices proposed in the early tender stages sustainable over the longer term?

10- What would their implementation plan look like?

Tip 17.

Minimise end of contract charges

What is considered as ’Fair Wear and Tear’ this really does vary between leasing companies, so you should check the terms and conditions of your lease provider.

As a general rule, small areas of chipping, including door edges, are usually acceptable, as are slight scratches and abrasions provided primer or bare metal is not showing. But please do check and not just take this as set in stone. 

Here are some steps your drivers can take to reduce end of contract charges. 

- The vehicle should be in good working order in all respects

- All tyres, including the spare, must meet the minimum UK legal requirements

- There should be no rust or corrosion on any painted area

- Visible dents and deep scratches on body panels should be repaired

- There should be no tears, burns or other damage to the upholstery

- All original equipment must be present and operate correctly

- The exterior of the vehicle should be cleaned to facilitate inspection

- The interior of the vehicle should be valeted and cleared of rubbish

- The Service Book should be date-stamped by an authorised service centre

- The two sets of keys that were originally supplied should be available

- All documentation including service book and manual should be in the vehicle

Tip 18.

Reduce driving speed

What are the chances you ask your delivery drivers, service engineers or sales reps to get your customers as quickly possible? 

Your drivers then are almost certainly drive to their appointed destinations as fast as possible, perhaps exceeding the speed limits as they go.

Excessive speeding is risky and uses much more fuel.  By driving at 70mph uses up to 9% more fuel than at 60mph and up to 15% more than at 50mph. Cruising at 80mph can use up to 25% more fuel than at 70mph. 

If you have a small fleet, making a fuel cost saving of just a few percent per journey makes a huge impact on your business. But if your fleet is large then the potential benefit will be even more noticeable.

It would be worth installing vehicle tracking systems which can send alerts to the fleet manager or driver to tell them when they have been exceeding speed limits and encourage them to slow down. This also can reduce them getting speeding fines and points on their licence.

Tip 19.

Use expert advice from your Account or Fleet  Manager

Step 1. Having them provide drivers with company driver handbook and drivers fully understand your policies. 

Step 2. Day-to-day interaction with your drivers, with your fleet managers and drivers. So if they need they can get help they require but also someone who fully understands your car policy, your restrictions and requirements

Step 3. The more strategic analysis of fleet data. Your Account Manager should not just oversee transactional and reactive service, they should provide recommendations on policy or pricing improvements and keep you up-to-date on industry developments, legislation, manufacturer negotiations, management information, driver support and added value services.

They should also help you identify ways to optimise fleet processes, increase efficiencies, and improve overall levels of driver satisfaction.

Tip 20.

Introduce telematics

This does not come without resistance. We would recommend communication with your drivers before installing this, ensure it is for their benefit as well as the benefit of cost cutting not to be big brother and to spy on them. 

Introducing a vehicle tracking system can encourage drivers to be responsible for their driving and to be more aware of bad habits. 

When drivers know you are monitoring their driving behaviour, speed and fuel consumption, they will take greater care of how they drive the company vehicles. You should then see a positive impact on fuel costs, vehicle wear and tear and maybe even an improved reputation with the general public. 

Additional cost savings are also achieved by the resulting reduction in insurance premiums.

Tip 21. 

Reallocation of vehicles

Many businesses it is the company fleet that is the next biggest overhead expenditure after staff salaries. So looking to maximise all cost savings should be looked at and possibly taken.

This can be done by having a reallocation policy in place. 

This avoids having to place a new vehicle order for a new employee and avoids any daily rental costs incurred while waiting for the delivery of a new vehicle. 

Your fleet provider can provide the necessary support to ensure that the reallocating vehicles are checked, any remedial work completed, and that they are fully valeted ready for delivery to the new driver.

Tip 22.

Management of Information

How quickly can you access information showing your fleet costs? 

Taking action to reduce costs is fine, but proving your achievements and identifying the tricky areas without powerful fleet reporting tools will be difficult. 

Your Account Manager will be able to provide you with timely management information and quarterly reviews.

Tip 23.

Avoid excess mileage

This is something to target and can have a impact that you may not be expecting. 

1- be realistic with your mileage predictions. Aim to have drivers doing the lowest miles possible.

2- ensure that there are no surprises from your leasing company and you know your excess mileage charge. Provide them with regular mileage updates.

3- check with your provider and see if returning the vehicle early and taking out a daily rental will be cheaper than a large excess mileage charge.

4- consider the telematics systems that can capture accurate mileage readings.

Tip 24.

Don’t drive

This may be a very obvious one! Will a conference call, video conference, or online presentation eliminate the need for some meetings?

As with now being through the Covid-19 pandemic we all look at how can we do work differently so working from home has made the need to drive be less for businesses. 

Tip 25.

Optimise pool car usage

All too often pool car management is left to someone who has no direct involvement in the overall company fleet. Which is not correct as daily checks are not done, who is responsible to fuel it up?

When used correctly, a pool car fleet can be the most cost effective option providing savings against ad-hoc daily rental or the mileage expense of grey fleet users.

A good leasing company can help manage your pool fleet, ensuring that you have the optimum number of vehicles and that these are correctly maintained.

Tip 26.

Driver training

This is were you can have the most and best communication with your drivers. Your training provider can communicate all your policies and procedures to the driver, we can do this in a classroom style session or one to one. 

Your provider can ensure your compliance is fully covered, they can check all drivers have the correct licence required and their eye sight. 

Your provider can ensure that your drivers know the required daily vehicle checks and how to report defects.

To help them understand the benefits of more fuel efficient driving

By arranging a formal training day can help to cement the suggested initiatives in the minds of your drivers.

Tip 27.

Car sharing

This is not only good for the environment but the saving you will make sending one car instead of 4 cars for 4 people.

We all enjoy independence, but do your team members always need to drive in separate cars?

The next time your team plan to attend the same venue (e.g. a client visit, conference or trade exhibition) look for the opportunity to car share.

Tip 28.

Outsourced fleet administration

Businesses that try to do too much in-house can incur unnecessary costs and allocate valuable resources on non-core business activities. This not making your staff be as productive as possible.

By outsourcing some of the more routine back office fleet tasks you may be able to take advantage of an external company’s best practice efficiencies and cost savings delivered through expert maintenance management. Plus that is their only mission to look after fleets for businesses so you can expect that information they provide will not be altered by someone who may be distracted by other tasks within your business.

Tip 29.

Look for the hidden costs

So far in this series of tips we have covered the main areas you would expect but surely there are other indirect areas where you could make a difference? 

We have already mentioned outsourced fleet administration tasks, but do not overlook your own time management. Time is money, so do not forget to take a look at your typical working week and look for areas where you could work smarter.

Tip 30.

Continuous improvements

So we have looked at many areas and now you have to think long term. This is more of a mind-set than an action point but should not be neglected. 

You may be running a very good and and a well-managed and efficient fleet, but constantly changing external factors such as taxation, technology and employment law will constantly present new issues and opportunities. So keep on top of changes, keep your compliance and records up to date and then your prepared for anything that may come your way. 

Don’t leave fleet off the radar when running a company suggestions scheme - why not ask employees for suggestions to reduce fleet costs? As mention in earlier tips, they may just surprise you.