WLC approach now vital, says CLM
That's the view from fleet management specialist CLM, which says that the latest round of rises in Benefit-in-Kind taxation, Vehicle Excise Duty, fuel duty, a new "showroom tax" plus planned increases to National Insurance have combined to increase the cost burden on fleet operators at a time when many companies are struggling to come out of recession.
CLM has proactively contacted its clients to recommend that they look to review their fleet policies and develop strategies to reduce operating costs in the light of the new increases, with whole-life costs being one of those strategies employed to keep costs under control.
'The cumulative effects of the various tax increases are starting to hit home, and will continue to do so for the next few years. Businesses will see their fleet costs rising in future unless they take action now,' said Rob Wentworth-James, head of sales and marketing at the Newport Pagnell-based company, which manages around 20,000 cars for corporate clients.
'Without taking a holistic approach to vehicle selection, it is easy to make the wrong decisions. That's why using whole-life costs to inform selection is essential in getting vehicle choice right now – and for the medium term.'
In essence, whole-life costs reflect all projected, vehicle-specific costs associated with operating a vehicle over its fleet life, including depreciation, funding, service, maintenance and repairs, VED, insurance, fuel (for business mileage), CO2 taxation impact, Class 1A NIC payments and VAT on the fuel scale charge for private use, if provided.
A key component of the whole-life cost approach is assessing the tax and environmental impact of each vehicle. And with capital allowance rules linking them to carbon emissions at 160g/km per vehicle, setting a CO2 ceiling for fleet choice lists is also becoming more commonplace amongst fleet operators.
CLM is now recommending that companies start to look at levels around the 140g/km limit, because Government is not going to stop in its drive to reduce emissions and any policy decision taken by fleets at this time, will impact on company costs and driver taxation for years to come.
'The message that lower CO2 equals intrinsically lower costs and lower taxes is now gaining impetus. By making the right vehicle choice now, fleet decision makers can make cost savings running into several thousand pounds over the typical three-year life of a vehicle,' said Rob Wentworth James.
'With the newly announced tax rises starting to take effect, there has never been a better time to instigate a fleet review aimed at selecting the most cost efficient vehicles and cutting overall operating costs,' he added.