Managing your company cars: The grey fleet

By Nigel Trotman, head of strategic consultancy, Alphabet - An extract from the Managing your Company Cars book edited by Colin Tourick and produced in association with Fleet News

Please introduce yourself

My name is Nigel Trotman and I am Head of Strategic Consultancy at Alphabet. I have been in the role since October 2010.

My fleet background is varied. I took on responsibility for the Whitbread car fleet in 1993, having been a humble company car driver, and managed it successfully through a wide variety of acquisitions and disposals between then and 2008. At its peak, the fleet stood just short of 3,000 vehicles.

During my time at Whitbread I achieved significant external recognition, including Fleet News Awards in 2000 (Fleet Manager, Large Fleets) and 2008 (UK Fleet of the Year), an Energy Saving Trust Fleet Hero Award in 2007 and an Employee Benefits Award in 2006.

The Whitbread fleet was also an early adopter of initiatives such as the Motorvate ‘green fleet’ programme and the Driving For Better Business work-related road safety campaign.

On leaving Whitbread, I joined Lloyds TSB Autolease, where I was part of the fleet consultancy team, and also managed the Lloyds Bank car fleet. I am an active member of ACFO, acting as regional secretary for the Midlands region.

Please introduce your company

Alphabet is a multi-marque fleet funding and management company. We’re passionately committed to excellence in everything we do.

We thrive on fresh ideas and we love sharing them with our customers.

We manage a fleet of more than 40,000 vehicles in the UK and have unrivalled and award-winning experience of delivering sophisticated company car and employee ownership solutions.

The expression ‘grey fleet’ only popped up in the fleet world a few years ago. What is it and why is it essential for fleet managers to consider it?

The term ‘grey fleet’ applies to vehicles that are not company cars (or cars funded by a car allowance or cash from the employer) which are used for business journeys. In many cases, employers don’t even know what the employee is driving.

Grey fleet is undoubtedly a safety risk because businesses often know little about the use of these cars on their behalf.

Are these cars safe and properly insured for business use? What about driver licences and eyesight tests?

Ignoring grey fleet is not an option because the legal and financial risks are too great. Legally, a grey fleet car is no different from a company car.

When it is being driven for work it becomes a ‘workplace’ and is subject to the same regulations as a company-owned car, including the Health & Safety at Work Act and the Corporate Manslaughter and Homicide Act.

Both Acts require employers to assess the risks posed to and by employees driving at work. Any evidence of inadequate management of owner-drivers would harm the company’s defence if it was prosecuted following an incident involving a grey fleet driver. And there is some evidence that grey fleet drivers are more likely to cause accidents.

No-one knows exactly how many grey fleet drivers there are in the UK, although estimates range from three to five million drivers routinely covering some form of business mileage in their own vehicle.

A growing number of employers now question whether they should have a grey fleet at all. A few have already stopped almost all use of private cars for business journeys.

However, for the majority of companies, getting rid of the grey fleet overnight is not an option and therefore it becomes an issue of measurement and cost-effective management.

Best practice grey fleet management is therefore all about increasing the visibility of private car use, quantifying the risks and costs that owner-drivers expose the company to, and putting management systems in place in order to reduce the risk.

What are the key areas of grey fleet management?

Duty of care is the key area for many companies. Lives are at stake and the financial costs and penalties arising from a serious incident are potentially immense.

It’s also an area where some companies are still very vulnerable because they have only recently understood that owner-drivers are just as much their responsibility as company car drivers when using cars for business.

Environment is a major area of corporate social responsibility. Grey fleet concerns include high CO2 emissions from older cars.

Cost is increasingly an issue. Where grey fleet is not well-managed, its costs easily go unnoticed at a considerable loss to the bottom line.

Duty of care

Employers are responsible for the at-work road safety of grey fleet drivers to the same extent that they are responsible for the at-work road safety of company car users.

In law there is no difference. Today, most large businesses and bigger SMEs understand that both their management and employees can be prosecuted for road traffic collisions involving work-related journeys, even when the driver is using their own vehicle.

The average age of privately-owned vehicles is seven years, which is more than twice that of company cars. Surveys have shown that a significant proportion of older cars have mechanical defects that render them legally unroadworthy.

Although the driver of a vehicle has the primary responsibility for ensuring it is roadworthy and fully insured, employers have “vicarious liability” when cars are used on business, meaning that they can be prosecuted for aiding and abetting an offence committed by an employee.

Companies have been successfully prosecuted for accidents caused by vehicle defects.