Already, we’ve touched upon how you can save money for your fleet in our article 12 ways to save money when managing a fleet of vehicles.
But we know that many of our customers are looking for even more ways to reduce operating costs, because if these costs aren’t managed very carefully they can soon have a big impact on a fleet’s return on investment (ROI).
That’s why we’ve put together this extra article. It provides some new top tips, covers some previous recommendations, and offers some ‘big picture’ thinking to increase your fleet’s ROI.
Your vehicle strategy
Buy or lease vehicles?
To be fair, there’s no definitive answer to this question. It really does depend on the size of your fleet, your budget and your overall strategic aims. However, we can give you some top reasons for leasing or buying to help you make an informed decision:
Preserve capital – leasing agreements typically involve the payment of lower monthly fees.
Save on maintenance and fuel costs – lease vehicles tend to be newer vehicles, which usually means fewer maintenance needs and better fuel economy.
Flexible vehicle replacement – the average lease term for a vehicle is 2–4 years, which means you can regularly switch and benefit from new vehicle offers.
Reduce admin costs – in comparison to buying a vehicle, leasing involves less paperwork, which in turn means more time to spend on other areas of your business.
Access to newer vehicles – as well as your fleet looking top notch, new vehicles mean the latest technology and safety features, great fuel economy and reduced maintenance costs.
No imposed limitations – it’s your vehicle, so you don’t have to contend with any mileage restrictions or wear and tear limitations, as you may do with leased vehicles.
Get rid when you want – if you’re not happy with a vehicle, you can sell it when you want. With a leased vehicle, you may be restricted to keep it for a certain time.
Potential to lower acquisition costs – if you regularly buy from the same company or dealer, or buy multiple vehicles at the same time, you may be able to negotiate lower prices for your vehicles.
Tax benefits – the value of your vehicles will depreciate over time, but these reductions can be used to help offset profits. With leasing, the depreciation benefit stays with the leasing company.
A long-term asset – once the finance is paid on your vehicle you own it as an asset on your balance sheet.
What type of vehicle?
When choosing vehicles for your fleet, there are quite a few things worth considering which may save you money over the long run. These include:
Miles per gallon (mpg) – a better mpg means lower fuel costs and lower CO2 emissions, which is better for the planet too.
Whole life costs – speak to the company you buy your vehicles from or your leasing company about the true costs of a vehicle over its lifetime in your fleet. They may have software that takes into account variables such as fuel, taxation, maintenance and insurance.
Colour – if buying, consider vehicle colours that are popular. For cars, that’s typically black, grey, silver, blue and white. For vans, it’s hard to look beyond white. Just take off your livery when you’re ready to sell.
Resale value – again, if you’re buying a vehicle for your fleet, always consider the potential resale value too. A top-end car that looks great off the forecourt may not hold its value as much as a car with lower specs.
What type of fuel?
As you might have guessed, there’s no simple answer to this question. You really need to develop a strong selection strategy to help you make an informed decision about your fuel choice. A strategy that typically takes into consideration operational needs, fuel economy and costs, sustainability, initial prices for vehicles, maintenance requirements, current and future regulations and resale values.
However, before you start to look into that detail, it’s worth considering some key positives and negatives regarding each fuel type:
Petrol – petrol vehicles are usually the cheapest to buy and run. But they can be less fuel efficient than some alternatives, and the cost to maintain and repair them tend to be higher. Also, they can depreciate faster in value than other types of vehicles.
Diesel – diesel vehicles are typically more expensive to buy outright and can be hit by extra taxes. But they can be up to 30% more fuel efficient than a petrol-powered equivalent, and they are good at retaining their value and often have lower repair and maintenance costs. However, a big question over diesel vehicles is their negative impact on the environment, due to their high CO2 emissions.
Hybrid – they tend to be more expensive to buy than conventional vehicles, but their maintenance and additional costs tend to be lower than petrol or diesel vehicles. They also tend to have higher fuel economy and lower CO2 emissions because they are powered with both a battery and a petrol or diesel-fuelled combustion engine.
Electric – electric vehicles tend to be more expensive to buy than conventional vehicles. However, they have very low refuelling costs; they usually require less maintenance; and they’re great for the environment. The big issue is the lack of charging points beyond urban areas. Although the government has big plans to change this.
Your fuel strategy
Invest in telematics?
Monitoring your fleet’s data through a telematics system is a good way to improve how you manage your fleet’s fuel and increase its return on investment. In particular, the three main areas that telematics can help with are:
Miles per gallon
To improve your fuel efficiency, one of your first steps should be to build a better understanding of your current situation. This is something telematics can help you with, as it can be used to provide you with accurate miles per gallon (MPG) reading for each of your vehicles. Figures that should play a crucial role throughout your fuel strategy.
The driver of a vehicle has the biggest impact on fuel efficiency. To help improve this efficiency, a telematics system can report on key performance indicators including speeding, harsh acceleration, hard braking, sharp cornering, and engine idling. You can then speak to and potentially train any drivers who need to improve their driving efficiency and monitor their progress afterwards.
The reality is that drivers don’t always use or know the best routes to increase fuel efficiency. But what some telematics software can help you do is plan the best routes for specific vehicles to reduce fuel costs and potentially wear and tear to vehicles as well. In addition, telematics can also help you identify where and when to refuel on journeys to help save more money.
What other technology can help me?
As a customer of The Right Fuelcard Company, a piece of technology you’ll begin to benefit from straightaway is our superb online account management system. In terms of fuel, this allows you to easily view all your fuel purchases, which is excellent for monitoring transactions.
In addition, you can also use the management system to run a number of reports that will help you better understand your fuel expenditure and identify ways in which savings can be made.
Where should my vehicles refuel?
Fuel pump prices can vary widely within only a few miles, so it’s important that you plan journeys and refuel early to prevent your drivers from urgently refuelling at a more expensive station. A free and easy way you can do this is by using The Right Fuelcard Company’s site locator, which allows you to search for ‘fuel stations near me’ or view the locations of fuel stations that are on your chosen route.
In addition, you could also lose the worry of where best to refuel by simply going for a fixed weekly price fuel card for your drivers. That’s because you’ll pay a competitive set price for your fuel at selected stations, regardless if it’s located on a motorway or A-road, or in a city centre.
Cash, credit card or fuel card?
One of the key considerations you should have as part of your fuel strategy is how you’ll pay for your fuel purchases. Certainly, cash and credit/debit cards will be something you and your drivers are familiar with, and you may currently be of the mind, “If it isn’t broken, don’t fix it.” But the truth is that fuel cards can offer you and your business a wealth of benefits that you just can’t ignore. These include:
- Money-saving fuel prices
- Greater control over your fleet and fuel expenses
- Reduced administration costs
- No interest on purchases
- Better security and fraud prevention
- VAT made easy
What else should I consider?
In our article How to save money on fuel, we highlight a number of other areas that are worth considering when developing a fuel strategy. Rather than repeat ourselves, we’ll just highlight the main ones here:
– Assess whether you can use smaller vehicles to reduce fuel consumption
– Consider if you can reduce the number of vehicles in your fleet
– Explore if you can remove any excess weight from your vehicles
– Keep your vehicles well maintained, which includes checking tyre pressure and engine performance.
Your analytics strategy
Why is the analysis of data important?
Today, most businesses with fleets analyse data to help them make more informed choices and smarter decisions. In turn, this helps these companies to save money, make cost-effective investments, stay ahead of the competition, increase employee satisfaction and retention, and ultimately enjoy bigger profits. All good reasons why you should think about developing an analytics strategy for your fleet.
What information should I analyse?
Typically, an analytics strategy to reduce fleet costs should focus on the following key areas:
Vehicle performance – over time, it’s critical to crunch data to analyse the performance of individual vehicles, departments and entire fleets. This will help you to establish key performance indicators (KPIs) and budget goals, and review progress towards these success metrics.
Driver behaviour – as mentioned in our ‘fuel strategy’ section, analysing driver behaviour can help to improve fuel efficiency. In addition, keeping a close eye on drivers can improve safety and lead to fewer accidents; improve job satisfaction and productivity; and even result in a better customer service, all of which can improve your balance sheet.
Asset costs – closely monitoring how much you’re purchasing and selling your vehicles for is another step towards cutting costs, as you may be able to identify lower acquisition prices and optimise when you replace a vehicle. It’s also important to track how long vehicles are off the road and their maintenance costs, as this can help you develop a preventative maintenance plan that saves you money.
Fuel purchases – analysing fuel purchases can help you identify drivers and vehicles that are not fuel efficient, because their vehicle may be consuming more fuel for a route than is necessary. In addition, monitoring fuel purchases will help you quickly identify suspicious transactions that may have been carried out by someone who is committing fuel fraud.
Route efficiency – the shortest route is not always the most efficient route, because your vehicle may encounter lots of traffic lights or hills. This is why analysing your routes is so important to find the most efficient one for you in terms of fuel and maintenance costs.
How can I analyse the above information?
An investment you can make to help you analyse data and begin to save money is a telematics system with vehicle tracking. The areas telematics can help you with include:
Driving patterns – this allows you to identify if a driver is driving to optimum standards and fuel efficiency, and whether they are carrying out careless or dangerous manoeuvres.
Traffic problems – a fleet manager can use live data to make drivers aware of traffic delays and congestion, as well as provide updates to customers if a deadline may not be met, for example, for a delivery.
Geofencing – a fleet manager and driver can be alerted if they don’t stick to a route that has been chosen because it’s the most efficient.
Servicing and maintenance – information on vehicle faults, mileage and usage can be used to plan when servicing and general maintenance should occur.
CO2 emissions – telematics can help to provide accurate data on CO2 emissions, so you’ll know if individual vehicles, departments or a whole fleet are meeting government targets.
Another key tool for analysing fleet data is an online account management system, such as the one our customers have free access to. This is particularly good for understanding your fuel expenditure and monitoring all fuel transactions. In addition, The Right Fuelcard Company’s system also makes it easy for you to analyse all your invoices and identify any VAT payments you need to make.
On top of this, it can be important to put in place additional office software that allows you to easily analyse, manage and present other ‘off-the-vehicle’ data, so more savings can be made. This data could focus on the purchase prices for vehicles and when and where you buy them; sale prices for vehicles and when and where they are sold; your insurance and maintenance costs for each vehicle or your whole fleet; and employee satisfaction ratings, as happy staff members can lead to improved productivity.
Your driver strategy
Should I train my drivers?
Given that driver behaviour can have a huge impact on fuel, insurance and maintenance costs, it may be worth considering providing professional training to drivers so they keep your overall fleets costs down.
Alternatively, you could simply highlight to your drivers how they can improve their driver behaviour. This is something we cover extensively in our How to save money on fuel article, with the three core techniques being:
Drive smoothly – your drivers should try to avoid unnecessary braking and acceleration by anticipating situations and other road users as far ahead as possible. They should also maintain a safe distance from the vehicle in front that allows them to regulate their speed without using their brakes.
Reduce speed – driving slower is crucial to road safety, allows drivers to react more safely to potential hazards, and can reduce stress for all roads users. In addition, high speeds use up a lot of fuel and increase wind resistance on a vehicle.
Drive in a high gear – if it’s possible and safe to do so, drivers should change up into a higher gear without labouring their engine or redlining their rev counter. This is because driving in a higher gear lowers the engine speed, which in turn improves fuel efficiency.
How can I encourage better driver behaviour?
Of course, providing your drivers with some better driving top tips is one thing, getting them to implement these tips is another. But there are some ways you can successfully do this:
Identify drivers who need help
Use data generated by your fuel card management system, telematics and additional software to identify drivers who are fuel inefficient, carry out risky behaviour, are involved in a lot of accidents or often need their vehicle to be repaired. Speak to these drivers about their performance, how they can improve their behaviour, and what support they may need.
To encourage better driver behaviour, set targets for individual drivers, departments or your whole fleet. These goals could focus on fuel consumption (eg miles per gallon), number of accidents, or the cost of maintenance for vehicles over a set period of time.
League tables and reminders
A monthly or quarterly league table of driver behaviour could help to encourage drivers to be at the top for the most fuel efficient ratings and at the bottom for the number of accidents or maintenance costs. You could also keep reminding drivers about best practice to help them move up and down the different league tables.
As well as creating league tables, you could offer individuals, departments or even your whole fleet incentives if they perform the best against specific targets. These incentives could be bonuses, vouchers, donations to a chosen charity, a night out or an extra paid holiday. This investment may be quickly covered by savings on fuel, insurance and maintenance costs.
Being transparent with information about your company’s fuel, insurance and maintenance could really open your drivers’ eyes as to why it’s so important that they do their best to improve their driver behavior. You should also make sure the information you share about top tips, key targets, incentives, training, etc, is clear and accessible to all your drivers.
Company car or cash ?
As part of your driver strategy, you may need to decide whether you offer your employees a company car or cash allowance. In terms of reducing fleet costs, there’s no definitive right or wrong answer, as it all depends on your company’s unique situation. However, we have provided you with some main pros and cons for each option that are worth considering:
– If you decide to buy a company car, you own a new asset.
– Alternatively, you could easily lease cars from a fleet services company.
– You decide what cars your employees drive, which can help to boost your brand.
– You have control over the maintenance of each car.
– If you use a leasing company, they can handle MOTs, servicing, tyres and breakdown.
– If an employee leaves and is replaced, you instantly have a car ready for your new employee.
– If an employee leaves and is not replaced, you may be left with a spare company car on your hands.
– Your choice of cars may be fairly small due to limited purchasing and financing options.
– If you buy a car, you’ll have to pay Class 1A national insurance contributions each year.
– The onus is put on the employee to maintain the vehicle, which should reduce your costs.
– A cash allowance maybe welcomed by employees, as it gives them more freedom to buy what they want.
– You could provide a cash allowance and provide criteria of what type of cars must be purchased, eg low CO2-emissions models.
– Cash allowances could reduce your company’s admin, as employees would need to take care of car tax, servicing and replacing a vehicle.
– Potentially, an employee who buys a car with a cash allowance may leave the business, leaving you with no asset.
– Employees may choose to drive less efficient cars and their choice may work against the company image you want to project.
– As part of your duty of care, you will have to keep an eye on whether employees’ cars are regularly maintained and insured properly.
– You are not in control of the maintenance of the cars.
Should my employees use their own vehicles ?
If you are thinking of introducing a cash allowance scheme or simply asking your employees to use their current vehicles for business purposes, there are some pros and cons worth considering. That’s because although managing a ‘grey fleet’ can have its benefits over managing company vehicles, it can also result in time and cost implications too.
– If an employee doesn’t go on many business trips, just reimbursing fuel costs can be much cheaper than owning and maintaining a company vehicle.
– Your business could quickly and cost-effectively expand their fleet by allowing an employee to use their own vehicle for business purposes.
– It’s a good option for a business that cannot pay out a lot of money to buy or lease a fleet of vehicles.
– Your business could potentially save on additional costs such as fuel, repairs and maintenance, as well as time that is used to manage company vehicles.
– It can be difficult to accurately track an employee’s mileage, which means you may overpay for business travel.
– If an employee has an accident or damages their vehicle while carrying out a work activity, your business may be liable for certain costs – and costs that may exceed what you would have had to pay if the employee was driving a company vehicle.
– You have a duty of care for your employees, which means you must spend time checking that ‘grey fleet’ vehicles are maintained to certain standards and insured properly.
Your downtime strategy
What are the best ways of keeping my vehicles on the road?
If a vehicle isn’t on the road, it can’t earn you money. It could also mean a loss of reputation if you can’t fulfil an order or service. Therefore, it’s worth considering the following top tips as part of your downtime prevention strategy.
Regularly service and repair
A vehicle that’s regularly serviced and checked for repairs is less likely to breakdown or cause you any other problems. Also think about carrying out servicing and maintenance out of works hours, as this will further minimise downtime.
Train your drivers
Training employees so they’re better and more confident drivers can lead to fewer accidents and breakdowns and reduce wear and tear, which ultimately results in less downtime. Also, drivers could be trained to carry out daily checks and straightforward maintenance that also helps to prevent downtime.
Choose vehicles that are easier to repair
This will depend on what type of vehicle you need. But if you don’t require specialist vehicles, then it may save you money in the long run if your fleet consists of vehicles built by very popular manufacturers such as Ford or Vauxhall. That’s because parts will be easier to source, and are probably cheaper too.
Analyse downtime data
As we discussed in our Analytics strategy section, you can analyse data to learn about the performance of vehicles and the behaviour of specific drivers. In turn, this will help you identify vehicles that are off the road more than they should be, and drivers who are involved in too many accidents, carry out risky driving behaviour or cause a large amount of wear and tear to the vehicles they drive. Issues you can then resolve to reduce your fleet’s overall downtime.
Replace fleet vehicles at the optimum time
If you retain and operate vehicles for too long, they can cost your business in many ways, including downtime, repairs, poor fuel efficiency and a lower resale value. Therefore, it may help your company to establish parameters for when to replace vehicles. In addition, think about buying new vehicles, because they are less likely to breakdown and will typically have a warranty of at least three years.
Install speed limiters
Preventing vehicles from going above a certain speed may not always be popular with drivers but will reduce the risk of accidents and subsequent downtime. Also, lower speeds can lead to greater fuel efficiency and reduce stress.
Depending on your business, you may be able to maximise the usage / minimise the downtime of your vehicles by employing drivers to work outside normal working hours, eg night shifts. However, it’s important to consider that this will lead to an increase in wages, and your vehicles will be more susceptible to wear and tear because they’re doing extra work.
Have a back-up plan
If you have enforced vehicle downtime, it’s vital that you know what you can do and in the most cost-effective way. Therefore, it’s worth speaking to vehicle hire companies about the terms they can offer you if you need to cover a vehicle’s downtime. Or if you lease your fleet, it’s important to know what your provider will offer you in terms of courtesy vehicles when a leased vehicle has to be off the road.
Can telematics help?
Some onboard telematics systems could help to reduce downtime by making a fleet manager aware in real time of a repair that needs to be carried out on a vehicle. This could be anything from a tyre pressure being too low, to a serious problem like a fault with an engine.
Telematics could also be used to highlight when a vehicle needs a service or maintenance, helping it to perform at its best and stay on the road for longer. In addition, this type of system could also highlight when a driver is not responding to warning signals such as a check engine light flashing, which could help you improve driver behaviour and ensure vehicles are not neglected.
So overall, there’s definitely a strong case that a telematics system could help to reduce the downtime of your fleet, which would ultimately save your business money. And in fact, many businesses who have installed telematics have reported significant savings in downtime thanks to the data coming from their vehicles.
Should I use an accident management company?
If you oversee a large fleet of vehicles, there is potential that an accident management company could save you money in the long run. That’s because these types of businesses have networks that can cover vehicle recovery, replacement and repair, as well as legal assistance and personal injury claims. Professional expertise that may be superior to a fleet manager’s, and something that will allow them concentrate on other tasks that could help to reduce your fleet costs.
Your improvement strategy
After considering everything we’ve suggested in this article, and hopefully implementing the ones that work for your business, the next step is not to rest on your laurels. Instead, you need to always keep your eye on external factors such as new technology, laws and taxes and be constantly examining how they may impact on your different strategies.
In addition, you should also think about regularly reviewing all your fleet strategies and examine how they could be improved to save your business more money. Something you could do by asking all your employees about how they think the fleet could be managed differently to increase return on investment.