Ask the Expert
Mark Jowsey, Director, KeeResources Kwikcarcost
“Worried about the effect of diesel on air quality, some of our employees have been asking for more petrol cars to be added to our choice list, but I’m concerned they will be too expensive to run. Is the disparity between the two narrowing?” IM, finance director, cosmetics firm, Glasgow.
In the past it would have been easy to dismiss many petrol cars on an operating cost basis, but there is no doubt the development of petrol engines has accelerated, after a period when diesel was the priority.
The result is some new petrol engines such as Vauxhall’s latest ecoFLEX units, Ford’s EcoBoost range, plus Audi’s ‘Cylinder on Demand’ TFSI units and BMW’s modular 500cc per cylinder units are showing the way forward with reduced CO2 and improved MPG.
Even with diesel currently averaging 2p a litre less than petrol, it may surprise you that even over 60,000 miles, some common fleet products lose the whole-life cost battle to their petrol equivalents. For example Vauxhall’s Astra 1.0i ecoFLEX 105 Design undercuts the 1.6CDTi 110 Design by almost £300 and a five door Audi A3 Sport with the 150PS 1.4 TFSI undercuts the 150PS 2.0 TDI by £653.
Of course the savings in these examples come from a number of cost elements, with the typically lower P11D price of a petrol version reducing funding costs and employer’s National Insurance, together with slightly lower SMR costs and lower insurance costs as petrol versions are typically two to three insurance groups lower.
So the answer is that petrol versions of some mainstream fleet cars are absolutely worth considering.
Even when considering the improved NI costs due to the removal of the 3% band Benefit in Kind surcharge for diesels from 2016-17, and lower fuel costs, it is right for fleets with ‘diesel only’ policies to investigate whether that is still the correct decision – particularly for those users with an annual mileage lower than 20,000.
Andrew Leech, Director, Fleet Evolution
“I find my employees are struggling to understand the concept of salary sacrifice. Is there a clear, easy way of communicating how it works?” GF, logistics, Southampton.
Salary sacrifice cars are a very alien concept to most employees and can be complex to explain. In most other areas of salary sacrifice the saving is simple, the income tax and NI saving the employee achieves, but with cars this is more complex for a couple of reasons.
Firstly the savings are not restricted to the income tax and NI saving, the employee also starts to benefit from fleet buying discounts and has VAT savings. This can mean that salary sacrifice cars can be 50% cheaper than their retail equivalent but the ‘sting in the tail’ so to speak is the tax on the benefit.
Most readers will be aware of P11d for cars and how this works but for non-company car users this is alien and confusing. Quite literally the CO2 can make the difference between a saving of 45% compared to retail or a car which can be more expensive than the retail equivalent.
The key to educating employees is to firstly ensure that they understand whole-life costs. A salary sacrifice lease car can be cheaper than a five to seven year old alternative but the employee needs to be aware what they are paying and few have ever done the sums.
Secondly the employee needs to understand the impact CO2makes and lastly to understand that a demand for a clean low CO2 car no longer confines them to a Toyota Prius. Everything from super cars to family hatchbacks to 4x4s fit the bill – 3,000 models at our last count. Ultimately, however, you should demand your supplier or suppliers carries out this education piece – it’s their core business not yours.
Mike Smith, Director, Fleet Assist
"Should AdBlue top-ups be treated as consumables by leasing companies?” DS, procurement officer, IT services, Colchester.
There is some debate as to whether AdBlue should be treated in the same way as other ‘consumables’. The general opinion at present amongst most leasing companies still seems to be that they will cover the costs of AdBlue as part of a service, but any tops ups between services will be treated the same as other consumables and be at the drivers expense.
There is some concern over what damage could be caused to the vehicle if the driver runs the AdBlue tank dry, which is leading some to consider covering top-us as well.
If a vehicle runs out of AdBlue, it will not start, so it is actually unlikely to cause any damage, just a bit of inconvenience to the driver. The additional costs that you are likely to incur if the car does run out of the fluid, is a recovery cost along with probably having to pay a high price for the AdBlue fluid if it is topped up by the recovery agent.
The bigger issue is managing the costs from the garage. The AdBlue fluid can be purchased in bulk for as little as 30p per litre but we are seeing garages charge anything up to £15 per litre and 0.5 hours labour to top up the tank. As a rough guide, it seems that somewhere between 800 and 1,200 miles per litre seems to be the rate of usage for the fluid, which means the total cost for AdBlue on a 60,000 mile contract, including labour it will probably be around £100.
With the leasing companies paying for the fluid supplied during service, as long as the driver is not paying an inflated price, the cost to the driver for top ups over the life of the contract will be a few pounds.
Karl Anders, National EV Manager – Corporate sales, Nissan Motor GB
“How are fleet demands for Electric Vehicles changing?” JM, fleet manager, office equipment supplier, Birmingham.
The biggest change in fleet demand for EVs over the past year is the sheer increase in the market and expansion in interest in alternative fuelled vehicles.
We expect this demand to continue as the number of available models increases and more manufacturers introduce EVs into their line-ups.
Two years ago we were trying very hard to convince fleets that EVs were a viable option. This has now reversed and we find fleets are asking us to help them find the operational requirements that EVs fit. The market realises EVs will not meet every requirement, but where they do fit, they have huge cost and local air quality benefits.
British Gas has procured a fleet of Nissan e-NV200 electric vans for its home-based engineers. After introducing the first 50 e-NV200s into service, they are about to deploy a further 63. The aim is for 10% of its 13,000 home service vans to be all-electric by 2017.
One factor driving the increase in take up is the low cost of ownership of EVs – with running costs from as little as two pence per mile.
The other major factor is continuing government support for EVs. OLEV recently announced the extension of the plug-in car grant into next year and the government has earmarked £500m to support the uptake of EVs to meet EU targets on carbon footprint reduction and improvement in air quality.
The major advantage of 100% electric vehicles is that they have a much higher range compared to partial EV alternatives. The carbon footprint reduction and better air quality benefits of a full EV in actual use are therefore much higher.
This is helping drive up sales of full EVs like the UKbuilt LEAF and e-NV200 to public sector organisations where real world local carbon output and air quality advantages are more important.