Want to streamline fleet costs and add in a greater level of efficiency? Read on for some hints and tips from industry experts to help boost the bottom line.

Nicola Richmond, head of Churchill Expert

Nicola Richmond, head of Churchill Expert

Managing a vehicle fleet is no walk in the park. The post-pandemic recovery has been met with one macro issue after another. Reduced vehicle supply has added to mounting pressure on fleet managers, exacerbated by UK car production declining by almost a fifth in the first six months of 2022. Fuel prices are another concern, as business costs spiral. Against this challenging backdrop we are also witnessing a quiet revolution, as the automotive industry is becoming increasingly electric, following regulation in 2020 – something not all fleet managers seem prepared for.

The transition to electric vehicles (EVs) poses financial and logistical challenges and insurance considerations. Going electric has clear long-term benefits for fleet managers and the earlier you prepare, the more rewards you can reap.

Seeing the business benefits

An early transition to electric can lead to reduced costs for running fleets. Recently, petrol and diesel prices have soared and running traditional vehicles is becoming increasingly expensive. Research from KeeResources shows that electric cars are at least 30% cheaper to service and maintain than carbon-based equivalents. In many cases, EVs can be half the cost per mile of their petrol-based counterparts. As such, transitioning to electric could save fleet managers a significant amount over the long run.

As cost-savvy fleet managers move towards EV fleets, the overall number of electric vehicles on the streets is growing, with over three quarters of a million now on UK roads. Over time, infrastructure will increasingly cater to EVs, particularly after 2035 when all new cars and vans in the UK will need to be zero emission at the tailpipe. While shifting the fleet to become electric will save hassle in the long run as well as ensuring your business is climate-conscious, it is important to make sure it is adequately insured against theft and damages.

Thinking about your employees

Having an environmentally forward stance is becoming increasingly important to employees and businesses are adopting specific schemes to demonstrate their commitments in this area. Our research shows that a third of drivers say access to an Electric Car Salary Sacrifice Scheme (ECSSS) would have a positive effect on how they view their employer. Interestingly, 17% would even consider switching jobs if a similar company were offering an ECSSS. Clearly, employees value action from their employer to a point where they would consider moving job.

Businesses have also recognised this mood shift; our research amongst SMEs shows there is an increasing appetite to offer these schemes, as over two-thirds of SMEs are currently considering an ECSSS, and 45% believe it will have a positive effect on staff retention. Drivers want to be a part of this change, to the point where 65% of motorists have said they are willing to lease or subscribe to a car to make the transition. To ensure a smooth transition, fleet managers must make sure electric vehicle fleets have necessary insurance cover.

Preparing for the future

As the transition to EVs gathers momentum, we will continue to be at the forefront. Our team of dedicated underwriters can support businesses with fleet insurance policies for electric vehicles, covering all the risks one would expect, such as vehicle theft, accidental damage, battery, theft of charge cables and EV charger wall boxes. While some may feel the 2030 deadline for transition is still a way off, we can help businesses prepare now for a brighter, electric future.

Christopher Caddick, head of business development, JCT600 Vehicle Leasing Solutions

Christopher Caddick, head of business development, JCT600 Vehicle Leasing Solutions (VLS)

Many of the challenges affecting the automotive industry are outside of the fleet manager’s control and influence. It’s worth focusing on the areas that can be controlled and will make a difference to costs, both now and in the future.

Start with the existing vehicles on the road and how current contracts can be maximised. For those operating three- to four-year fleet cycles, a lot has happened to the world in that time. The mileage originally specified may no longer be right for the business’ needs today.

Can contracts be extended or rewritten to take into account the new mileages? The whole-life cost of the vehicle must be considered here, not just the short-term monthly cost savings. The used car market is strong at moment, so even early terminations, where appropriate and dependent on your contract, may well not be as much of a cost as perceived.

When looking at future vehicles, consider funding methods. What worked three years ago may not be the most cost-effective solution today.

Claire Evans, fleet consultancy director at Zenith Vehicles

Claire Evans, fleet consultancy director at Zenith Vehicles

Fuel and energy costs are often seen by fleet operators as an unavoidable cost of doing business. However, through careful policy design, there are ways that can help operators both control and manage these costs.

By introducing a salary sacrifice scheme, fleet operators can make savings on fuel costs for cash takers and grey fleet drivers. At Zenith, four out of five salary sacrifice orders are for electric vehicles, which attract a much lower business pence per mile (PPM) reimbursement rate.

Using the Advisory Electric Rate (AER), a typical EV would cost a fleet operator 5p per business mile compared to 14p when using a typical petrol equivalent. This saving of 9ppm could rise to as much as 15ppm when reimbursing at cost. While this initially may seem minimal, it equates to a £90,000 saving (when converting 200 cash takers to EV at 5,000 business miles per annum).

Meanwhile, we recently worked with a company where just over 70% of their fleet was PHEV. By using real-world MPGs in the WLC calculation, we were able to identify post-tax savings of £464 per car a year, based on the fleet’s average business mileage of 6,000 a year.

Neal Francis, managing director, Pendragon Vehicle Management

Neal Francis, managing director, Pendragon Vehicle Management

With the extreme pressure on supply chains, it has become even more important for fleet managers to work with leasing companies that take a consultative approach and research all available options to find solutions.

With fleet costs continuing to rise, Pendragon Vehicle Management (PVM) works directly with clients, demonstrating flexible cost-saving solutions to suit individual company and driver needs.

With petrol/diesel prices rising sharply, there are now clear opportunities to demonstrate to a business where savings can be made over a contract period. Typically, the largest savings are made by comparing the fuel costs of electric versus diesel/petrol.

In addition to WLC analysis, PVM offers various approaches to each of our clients aimed at incentivising drivers to consider going electric. For example, a driver may pay less tax if going from petrol to electric to help fund a higher-specification EV as the BiK saving will be greater. Clients may also wish to offer their drivers a more competitive reimbursement rate on electric mileage.

Jayne Pett, sales and marketing director at Fleet Operations

Jayne Pett, sales and marketing director,  Fleet Operations

Cost pressures and supply chain disruption risk hitting the margins of fleet businesses hard. Pump prices may have fallen back from their record highs, but the fuel cost burden remains notably higher than 12 months ago. Back then (August 2021), average petrol and diesel prices stood at £134.66 and £137.11 respectively.

Against this economic backdrop, fleets can do little more than focus on the factors within their control. The challenging environment is undeniable, but for prudent strategists, opportunities for sustainable cost savings can still be found.

A short-term approach to cost control may be understandable when faced with market and economic uncertainties, but this can be to the detriment of the greater financial good. An outsourced partner can be capable of delivering long-term savings across the board – from procurement, fuel spend and insurance to cost approvals, expense processes and risk management.

An analysis of a fleet’s composition may steer changes in purchasing strategy, from single to multi-supplier, for example, allowing for best prices to be secured on vehicles and services. A pay-as-you-go maintenance package can be a particularly compelling option here, helping improve cash flow, reducing vehicle downtime and boosting flexibility and choice over parts and service quality.

Beverley Wise, sales director UK & Ireland, TomTom Telematics

Beverley Wise, regional director for Bridgestone Mobility Solutions

Forecourt prices may have eased, but as inflation and interest rates rise, the cost burden facing fleets continues – from energy and insurance to labour and supplies.

Cost control strategies and tech platforms that provide dynamic access to information for improved decision-making remain paramount. Meanwhile, fleet management systems capable of generating a wealth of insights and automating key business processes are invaluable.

Connected fleet data can help keep a lid on costs by ensuring robust service, maintenance and repair (SMR) processes. Maintenance planning tools, for example, enable fleets to make use of real measured odometer mileage to plan maintenance intervals and tabs can be kept on everything from service intervals to MOTs.

Furthermore, systems such as Webfleet are increasingly delivering insights that make maintenance predictive and preventive. Vehicle diagnostic information and malfunction alerts, for example, enable repairs to be carried out quicker, with systems automatically sending notifications to fleet managers.

And integrated camera systems, which include the latest in machine vision and artificial intelligence to identify and mitigate risky behaviour, expand on this fleet visibility. By introducing such preventative processes, not only can repair and insurance costs be minimised, but residual values for remarketing can also be optimised.

Ron Santiago, managing director of Europcar Mobility Group UK

Ron Santiago, MD, Europcar Mobility Group UK

There is no doubt that for businesses that depend on a predictable and steady flow of new vehicles, the huge drop that we have seen in new vehicle production is a huge challenge. Planning ahead and considering different mobility solutions is vital to keep businesses moving.

We are working with a number of businesses and fleet managers who are looking at how their vehicles are utilised to ensure the right vehicle is available at the right time. With changes in working patterns for example, a company car for exclusive use by one employee is no longer the best option for many organisations. And, indeed, the employee may not want the BiK penalty either. This is where long-term rental is a good fit.

Access to maintained and relatively new vehicles through long-term rental also reduces a company’s reliance on ‘grey fleet’. Employee-owned vehicles tend overall to be older, less fuel-efficient and more polluting, which in turn puts pressure on the fleet budget. With fuel prices unpredictable, more up-to-date, less thirsty vehicles make commercial sense.

Yvonne Palmer, operations director at Nexus Vehicle Rental

Yvonne Palmer, operations director at Nexus Vehicle Rental

The fleet industry is still facing challenges as a result of the ongoing semiconductor shortage, playing havoc with just-in-time supply chains of modern manufacturing. Increased costs as well as order cancellations clearly illustrate the knock-on effect of this shortage.

The fleet industry must look to find alternative solutions. As a business mobility provider, Nexus has a good view of supply for the largest volume of the rental market, so our account teams are able to ensure that if vehicles are available, we can secure them for delivery to our customers.

Over the last two years we recognised a shift in strategy from suppliers that are moving away from supporting shorter-term hires such as one-day, one-way bookings. We’re helping combat this challenge for customers with our passenger taxi service, Nexus Go, providing alternative means of transporting people on those shorter journeys. The platform gives customers access to an online taxi booking portal and by using Nexus’ rental booking platform IRIS, Nexus Go users can consolidate all billing and reporting in one place.

Simon Staton, client management director, Venson Automotive Solutions

Simon Staton, client management director, Venson Automotive Solutions

Controlling costs is a constant challenge for the fleet sector, but to make savings and improve efficiency is critical.

Challenge fleet suppliers. Shaking things up can be mutually beneficial for both parties. A genuinely effective partner is one that works with its client to ensure the fleet policy is the most appropriate for their needs. Importantly, make sure all ‘hidden’ costs are known, such as administration, maintenance, tyres and windscreen recharges.

Driver training is often a moot point as many drivers believe they don’t require training, but 22% of crashes are caused by driver inattention or distraction. A driver who performs a secondary task while at the wheel is up to three times more likely to crash. Implementing a driver risk assessment program coupled with either classroom or in-vehicle training will reduce incident rates and associated accident costs. Additionally, insurers often reward businesses that have an active driver training program in place.

But it’s important to remember that one size does not fit all. Our key advice is to know what being offered by a fleet management company. A provider may look to be delivering the cheaper option, but ‘paper savings’ might not translate into tangible savings.

Steve Clarke, marketing manager, FleetMaxx Solutions

Steve Clarke, marketing manager, FleetMaxx

With the UK government aiming to become carbon-neutral by 2050, how businesses operate needs to change and consideration should be given to switching to greener alternatives.

Chargepass, from FleetMaxx, provides drivers with a single RFID card, which gives access to thousands of public charging points across the UK. Drivers tap the charge point to activate the charge when they’re on the road. An app shows the location of their nearest charging ports but there are no driver payments or expenses – we gather the charging activity through our portal. Your charging appears on a single monthly invoice to the fleet manager or owner.

Not interested in fully switching your fleet to electric? Our MaxxEV solution combines fuelling and charging costs (petrol, diesel, and charging) into one easily managed, monthly invoice. This will save hours of admin work to allow the focus to be on more important things.

Such is our confidence, we’re offering three months free, so fleets can try before they buy!

Sean Maddocks, sales director, UK and Ireland, Davanti Tyres

Sean Maddocks, sales director, UK and Ireland, Davanti Tyres

As fleet managers know all too well, the importance of good-quality tyres is essential in keeping vans and other commercial vehicles on the road.

Choosing the right tyres for your fleet can improve efficiency and help alleviate financial pressures.

Tyre maintenance and daily tyre checks are also an essential way to alleviate unexpected spend and financial pressures. Aside from the visible checks fleet managers can do, such as looking for obvious cuts or splits, the two main areas of focus for maintenance managers are tyre pressure and tyre tread.

BVRLA secures post-Brexit clarity for rental and leasing sectors

Toby Poston, corporate affairs director, BVRLA

The resilience and agility of our sector has been on display like never before in recent years, helping to overcome the respective generational challenges presented by Brexit and Covid. Now facing the vehicle supply crisis and spiralling costs of living, the sector is again stepping up to the plate and demonstrating its ability to meet issues head on.

In amongst that adversity is the expectation that operators will continue to decarbonise their fleets in line with the nation’s net zero targets. To do this, operators need support and clarity.

While rising fuel and energy costs are resulting in EVs having favourable running costs, those driving zero-emission vehicles at work are being left heavily out of pocket by an AER that is failing to keep in touch with eye-watering energy rates.

Some fleet operators are choosing to absorb that cost and reimburse at the real-world rate, but that approach is not sustainable in the current climate and will only slow the transition to electric vehicles. A fair and reflective rate will support drivers and operators alike at a time when it is most needed.

Giles Platel, head of commercial vehicle sales, EO Charging

Giles Platel, head of commercial vehicle sales, EO Charging

“There are large potential gains for fleet managers through electrification, but unfortunately, we are seeing them squandered by some businesses through poor planning. Misguided decisions around EV acquisition and charging infrastructure requirements are leaving fleet managers open to unforeseen costs as their fleets grow.

“As the UK transitions from BEV LCVs to BEV HGVs, which depend on 150kW chargers, this race for access to power will only speed up, so it pays for organisations to think ahead. As a global leader in powering electric vehicle fleets for the likes of Amazon, Tesco and DHL, EO Charging experts and the EO Cloud system can help.