How to save money on your fleet

#Finances, #Fleet
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How to save money on your fleet

We’ve previously considered how businesses can save money when managing a fleet.  However, our customers are always looking for new ways to reduce operating costs, therefore in this article, we will provide more top tips to help you increase your fleet’s ROI.

How to improve your vehicle strategy

Should businesses buy or lease vehicles for their fleet?

When considering whether to buy or lease vehicles, businesses should consider the size of their fleet, their budget, and their strategic aims, as this will impact what is the best option for your fleet. To help you make an informed decision, we have highlighted the benefits of both buying and leasing vehicles:

Leasing

  • Preserve capital – Leasing agreements typically involve the payment of lower monthly fees.
  • Save on maintenance and fuel costs – Lease vehicles tend to be newer which usually means fewer maintenance needs and better fuel economy.
  • Flexible vehicle replacement – The average lease term for a vehicle is 2–4 years, so you can regularly switch and benefit from new vehicle offers.
  • Reduce admin costs – In comparison to buying a vehicle, leasing involves less paperwork, allowing you to spend more time on other areas of your business.
  • Access to newer vehicles – In addition to your fleet looking fantastic, new vehicles have access to the latest technology and safety features, resulting in greater fuel economy and reduced maintenance costs.

Buying

  • No imposed limitations – It’s your vehicle, so you don’t have to contend with any mileage restrictions or wear and tear limitations that you may encounter with lease vehicles.
  • Sell when no longer required – If you’re not happy with a vehicle, or it’s no longer needed, you can sell it whenever you want. However, 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 if you 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 is best for fleets?

When choosing vehicles for your fleet, it’s important to consider what could save you money in the future. We recommend that you contemplate the following:

  • Miles per gallon (mpg)– A better mpg means lower fuel costs and lower CO2 emissions, which is also beneficial for the environment.
  • Whole-life costs – Speak to the company you buy your vehicles from or your leasing company about the true costs of a fleet vehicle over its lifetime. They may have software that considers 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 branding when you’re ready to sell.
  • Resale value – When buying a vehicle for your fleet, always consider the potential resale value as 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 should I choose for my fleet?

Choosing the right fuel for your fleet will require you to consider several factors. Your operational needs, fuel economy and costs, sustainability, initial prices for vehicles, maintenance requirements, current and future regulations will all impact which fuel you should choose for your fleet.

Before investigating these factors further, it’s worth considering some of the positives and negatives regarding each fuel type:

Petrol – Petrol vehicles are usually the cheapest to buy and run. However, they can be less fuel-efficient than some alternatives and the cost to maintain and repair them tends to be higher. They can also depreciate faster in value than other types of vehicles.

Diesel – Diesel vehicles are typically more expensive to buy outright and can be subject to extra taxes. They can, however, be up to 30% more fuel-efficient than a petrol-powered equivalent, they are better at retaining their value and often have lower repair and maintenance costs. Diesel vehicles do have a negative impact on the environment which is worth considering when choosing your fleet vehicles.

Hybrid – Although they tend to be more expensive to buy than conventional vehicles, the maintenance and additional costs of hybrids 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 are currently more expensive to buy than conventional vehicles. However, they have the benefits of having very low refuelling costs, requiring less maintenance and being beneficial for the environment. One of the main concerns about electric vehicles is the accessibility of charging points.

How to improve 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 fuel efficiency, businesses need to have a solid understanding of their current situation. Telematics can help with this, as the system provides you with accurate miles per gallon (MPG) readings for each of your vehicles. These figures can be used to adapt and develop your fuel strategy so that it’s more efficient.
  • Driver behaviour – How the vehicle is driven will have a significant impact on fuel efficiency. Telematics can help to improve this by reporting on key performance indicators including speeding, harsh acceleration, hard braking, sharp cornering, and engine idling. You can then train any drivers who need to improve their driving efficiency and monitor their progress afterwards.
  • Journey planning – Many drivers often don’t use or know, the best routes to take in order to maximise fuel efficiency. However, some telematics software can help plan the best routes for specific vehicles to reduce fuel costs and potentially limit 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 Right Fuel Card, you can benefit from our superb online account management system. 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 reports that will provide a greater understanding of 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 our site locator, which allows you to search for nearby fuel stations, or view the locations of fuel stations that are on your chosen route.

Alternatively, you could choose one of our fixed weekly price fuel cards for your drivers where you’ll pay a competitive set price for your fuel at selected stations. If you regularly refuel on motorways or ‘A’ roads, then this could help to save you money.

Should I pay using 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. However, fuel cards can offer businesses a wealth of benefits, including:

  • 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?

There are several other ways that you can save money on fuel. These require you to examine your fleet and determine if any changes could be made. These money-saving measures include:

  • Assessing whether you can use smaller vehicles to reduce fuel consumption
  • Considering if you can reduce the number of vehicles in your fleet
  • Exploring if you can remove any excess weight or heavy loads from your vehicles
  • Keeping your vehicles well maintained, which includes checking tyre pressure and engine performance.

How to improve 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 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 should focus on the following key areas if you want to reduce fleet costs:

  • Vehicle performance– Over time, it’s critical to use data to analyse the performance of individual vehicles, departments, and entire fleets. This will help you to establish key performance indicators (KPIs), budget goals, and review progress towards these success metrics.
  • Driver behaviour – As aforementioned, 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. This could also help to improve job satisfaction and productivity and even result in 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. You may be able to identify lower acquisition prices and optimise when you replace a vehicle by first analysing the data. It’s also important to track how long vehicles are off the road for 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 sometimes vehicles can consume more fuel for a route than is necessary. Monitoring fuel purchases will also 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 traffic lights or hills. Therefore, analysing your routes is important as you can investigate the most efficient journey, saving you money and minimising 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 vehicles are being driven to optimum standards, therefore increasing fuel efficiency, and whether drivers are carrying out careless or dangerous manoeuvres.
  • Traffic problems – A fleet manager can use live data to make their drivers aware of traffic delays and congestion, as well as provide updates to customers if a delivery deadline may not be met.
  • Geofencing – Both the fleet manager and the driver can be alerted if they don’t stick to the most efficient route.
  • 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 is meeting government targets.

Another way to analyse fleet data is to invest in 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 and sale price and consider when and where they were bought and sold. You can also investigate the maintenance costs for each vehicle, or your fleet as a whole and analyse employee satisfaction ratings to help improve productivity.

How to improve your driver strategy

Should I train my drivers?

Driver behaviour can have a huge impact on fuel, insurance, and maintenance costs, so it may be worth providing professional training to drivers to keep your overall fleets costs down. HGV drivers are also required to complete and maintain their CPC qualification, where they will learn how to drive safely on the roads.

Alternatively, you could simply highlight to your drivers how they can improve their driver behaviour. The three core techniques that are recommended are:

  • Drive smoothly– Your drivers should try to avoid unnecessary braking and acceleration by anticipating situations and other road users in advance.  They should also maintain a safe distance from the vehicle in front, allowing drivers to regulate their speed without using their brakes.
  • Reduce speed – Driving slower is crucial to road safety. This allows drivers to react more safely to potential hazards and can reduce stress for all roads users. In addition, high speeds use up fuel quicker and increase wind resistance on a vehicle, costing you more money.
  • 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. Driving in a higher gear lowers the engine speed, which in turn improves fuel efficiency.
How can I encourage better driver behaviour?

Providing your drivers with basic training will be beneficial for your fleet. However, it’s important that your drivers implement what they’ve learnt when on the roads. To encourage better driving behaviour you can:

  • Identify drivers who need help – Use data generated by your fuel card management system, telematics, and additional software to identify drivers who are not being fuel-efficient, 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 and provide advice on how they can improve their behaviour and question what support they may need.
  • Set goals – To encourage better driver behaviour, set targets for individual drivers, or your whole fleet. These goals could focus on fuel consumption (e.g., miles per gallon), the 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.
  • Offer incentives – As well as creating league tables, you could offer incentives to your fleet if they perform well 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.
  • Share information – Being transparent with your fleet costs could encourage your drivers to improve their behaviour on the roads. You should also make sure the information you share is clear and accessible to all your drivers.
Should I use a company car or a cash allowance?

As part of your driver strategy, you may need to decide whether you offer your employees a company car or a 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, it’s worth considering the pros and cons of each option to help decide what’s best for your business.

Company car

Pros

  • If you decide to buy a company car, you own a new asset.
  • 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 breakdowns.
  • If an employee leaves and is replaced, you instantly have a car ready for your new employee.

Cons

  • If an employee leaves and is not replaced, you may be left with a spare company car that requires ongoing costs.
  • Your choice of cars may be restricted due to limited purchasing and financing options.
  • If you buy a car, you’ll have to pay Class 1A national insurance contributions each year.

Cash allowance

Pros

  • The onus is put on the employee to maintain the vehicle, which should reduce your costs.
  • Some employees prefer a cash allowance as it gives them more freedom to buy the vehicle they prefer.
  • With a cash allowance, you could provide criteria of what type of cars must be purchased, e.g., 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 their vehicle.

Cons

  • 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 which 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, so may be unaware of any potential damages that could pose a risk on the road.
Should my employees use their own vehicles?

Businesses can benefit from using a cash allowance scheme or by asking their employees to use their own vehicles for business purposes as it’s often easier to manage than company vehicles. However, there are also time and cost implications to consider which may affect your decision. Here are some of the pros and cons of managing a ‘grey fleet’:

Pros

  • 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 its 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.

Cons

  • 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. These may exceed what you might have paid 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.

How to improve your downtime strategy

What are the best ways of keeping my vehicles on the road?

Maintaining vehicles that are not on the road can be costly for businesses and can also impact your reputation if orders or services cannot be fulfilled. Therefore, as part of your downtime prevention strategy we recommend the following:

  • Regularly service and repair – Vehicles that are regularly serviced and checked for repairs are less likely to break down or cause you any other problems. Also think about carrying out servicing and maintenance out-of-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 can reduce wear and tear, resulting in less downtime. Training drivers to carry out daily checks and straightforward maintenance 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 need specialist vehicles then you save money in the future by choosing fleet vehicles that are built by popular manufacturers. Often, parts from these manufacturers are cheaper and easier to source than vehicles from smaller manufacturers.
  • Analyse downtime data – As previously mentioned, businesses 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 highlight the 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. These are issues that can easily be resolved 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 break down 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 levels.
  • Maximise usage – 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, e.g. 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 backup plan – If you have enforced vehicle downtime, it’s vital that you know how to manage your fleet 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. Alternatively, 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 is 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 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.

By helping to reduce the downtime of your fleet, telematics can result in significant savings for your business.

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. These businesses have networks that can cover vehicle recovery, replacement, and repair, as well as legal assistance and personal injury claims. Their professional expertise may be superior to a fleet manager’s, allowing them to concentrate on other tasks that could help to reduce your fleet costs.

Your improvement strategy

What next?

By implementing the measures we’ve suggested, you can save your fleet money. However, it’s important to consider other external factors, such as new technology, laws and taxes, and be constantly examining how they may impact your different strategies.

In addition, you should think about regularly reviewing all your fleet strategies and examine how they could be improved to save your business more money. It could also be beneficial to ask your employees about how they think the fleet could be managed differently to increase return on investment.

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