Mercia Fleet Management is saving clients up to 25% on grey fleet costs while also helping to cut safety risks and driving emissions.

Effective grey fleet management can save money as well as managing risk exposure

The business, the fleet management division of EV salary sacrifice specialist Fleet Evolution, says that grey fleet remains a huge area of potential risk but few businesses manage it effectively.

“This means they not only expose their employees to unacceptable risks but also waste huge amounts of money,” said Andrew Leech, founder and managing director at Fleet Evolution and head of the Mercia Fleet Management division.

The business calculates that it can save around a quarter of the cost of reimbursing grey fleet drivers under Approved Mileage Allowance Payments (AMAPs) – as well as managing all the administration involved in running the grey fleet.

Where employees use their own vehicles on company business, they can reclaim business mileage at up to 45p per mile under the AMAPs scheme for the first 10,000 miles, falling to 25p per mile thereafter.

To bring these costs under greater control and scrutiny, Mercia Grey Fleet Management assesses the need to use privately owned vehicles and evaluates the cost efficiency of using AMAPs, based on a mileage-based decision tree within a dedicated client portal.

If under five miles, a typical recommendation might be to take a taxi, bus or cycle where appropriate. At 15-25 miles, the advice would be to use employee-owned vehicles with checks carried out on vehicle condition and relevant business insurance before allowing use.

From 25-100 miles the decision tree recommends taking the train or consider a taxi, comparing the costs of these alternative means of transport to those likely to be incurred under AMAPs.

And at over 100 miles, the recommendation would be to use a hire car as the most cost-effective option, with all bookings handled by Mercia Fleet Management administrators.

“It’s easy to see how money can be wasted and employees put at risk. Imagine a scenario where an employee is asked to make a 150-mile round trip for business in their own car,” said Andrew Leech.

“Firstly, you have the risk implications of asking an employee to take what is likely to be on older car, typically over eight years old, which may or may not be correctly insured or maintained in line with manufacturer guidelines, on a motorway trip during peak times of the day.

“Secondly, on top of the potential risks involved, the company is reimbursing that colleague with £67.50 for the journey – without considering any of a number of less expensive and risky possible alternatives.”

Leech continued: “For a journey of over 100 miles we would recommend using a hire car, which would be pre-authorised within a dedicated client portal. The driver would simply book the car, have it delivered to home or office and use it on company business.

“The company has peace of mind that the employee is in a brand-new vehicle with all the relevant safety checks and latest driver assistance systems. They would be charged around £30 for the car hire and around £20 for the fuel, based on that mileage – giving a total cost of around £50 and a saving of 25% against the AMAPs reimbursement.

“As well as arranging the vehicle hire and the associated logistics, we can then factor these savings back into our rates which make for a more efficient and cost effective for the client all round,” he said.

“Good risk management should, after all, save you money as well as managing your risk exposure. Our key objectives with Mercia Grey Fleet Management are to mitigate risk, as well as assessing cost effectiveness to the business,” added Leech.