Round table: Cost savings can win board buy-in to fleet investment

Duty of care, grey fleet management, telematics and how organisations are keeping their fleet costs in check were all on the agenda at a recent Fleet News roundtable, sponsored by RAC.

The organisations represented around the table operated a mix of vehicles, with fleet sizes ranging from 200 to more than 10,000 units.

However, they all face the same challenges and are employing similar methods to ensure they run an efficient and effective fleet.

Where does safety rank among your organisation’s fleet priorities?

Simon Binks: Since the credit crunch, a lot of managing directors and financial directors have become more aware of what the fleet costs and what impact it has on the bottom line. By looking at repair costs in terms of lost profit to the business and what turnover you have to recoup, that loss has been a big driver for a lot of changes we’ve implemented, such as driver training.

Paul Tate: The way we’ve been demonstrating the benefits to our management board is through the reduction in the average incident cost.

Robert Lindsay: We’ve changed the culture by introducing a number of initiatives, such as electronic licence checking and telematics. Perhaps the most impressive results we’ve had are from our ‘permit to drive’ scheme. We created a standard for drivers within the business and by combining these measures and crunching the data we can constantly assess our risk. We use telematics as a risk indicator and as a measurement tool. After training we check to see whether scores have gone up or down.

How do you calculate the cost-benefit ratio when considering telematics?

Robert Lindsay: Essentially the business case stacked up. We knew that we could make our investment back on the fuel savings alone by cutting down on idling and improving economy. We install telematics on all our commercial  vehicles and then do a risk-based approach for cars. For example, anybody who is under 23 years old and has a company car has telematics installed. The key is to use  your data wisely. We recognise managers haven’t got a lot of time, so we interpret data centrally – we give them the headline information with the ability to drill down. It’s about making the data accessible to them and that dashboard approach where we give them that top-line information really works.

Paul Tate: Along with these obvious savings around fuel, you have the non-direct savings such as operational efficiencies. But to make it work, you’ve got to decide what you want from a system.

Robert Lindsay: A lot of people think it will be a silver bullet, and it will have a brief impact, but the key is to challenge the telematics provider as to what they are going to do for you.

Ultimately, a safer fleet will cost you less, but what else have you done that’s had a big impact to your bottom line?  

Paul Tate: When the fleet is due for renewal, we do a full fit-for-purpose evaluation to see whether a like-for-like replacement is necessary.

Christian Siddall: We’ve downsized some of our vans and switched our fuel cards to supermarket only. The introduction of telematics has also enabled us to target idling.

Claire Marsden: We saved seven figures over four years by reclassifying anybody who does more than 10,000 miles per year and needs the vehicle to do their job as job-need driver rather than perk. It affected 200 vehicles and restricted job-need drivers to only Vauxhall Astra or Ford Focus models, where previously they had a much wider choice.

Grey fleet drivers have both safety and cost considerations, so how are you managing them?

David Kaye: We have 1,500 grey fleet drivers and when they claim their mileage there is a declaration that says ‘my car is fit for purpose’, which they must sign. We have some grey fleet drivers that drive only 30 miles per year and, because we have so many and we’re a charity, we took the view there is no way we could physically check all their documentation.

Claire Marsden: We have 5,000 grey fleet drivers and their annual mileage can be anything from 50 miles to thousands of miles. We also use self-declaration because we believe the information we obtain is showing the necessary level of duty of care. We don’t ask to see insurance documents because the driver could show it to you one day and cancel it the next. We do explain to people that they need to make sure they are covered for business use. A lot of people aren’t aware; they just assume they’re covered and they’re not.

Paul Tate: There has got to be as much duty of care shown with grey fleet drivers as there is with company car drivers. Our grey fleet drivers have got to go through exactly the same processes as somebody driving a company car. It’s the only way to say with your hand on your heart that you’re protected as a company.

Simon Binks: We do it the same way. The licence is checked, the driver must produce a valid MOT and copies of insurance and the log book. The car has to be less than five years  old, conform to our car policy and if they claim mileage it comes to me. If they haven’t got all the bits of paper, they don’t get paid.

Dennis Dugen: The big problem I have with the grey fleet is that there is no board awareness. Trying to break through that attitude is difficult.

More fleets are looking at salary sacrifice, but where does it fit into your company car offering?

Dennis Dugen: Four years ago during the recession we switched our entire company car fleet to salary sacrifice. I had spent a lot of time as a fleet manager not ordering  a single car and was simply reallocating vehicles from within  the fleet. But when that flow of cars ran out, I had to  replace them. We looked for a method that would limit the exposure of cars in the event of another downturn and salary sacrifice, because it’s got an early-termination contribution as part of the deal, seemed to offer the best of both worlds.

Peter Kowalczyk: We’re looking into it, but there are so many providers it’s difficult to know what’s good and what’s bad. It’s almost like telematics: everybody’s doing it.

Dennis Dugen: The important thing is to understand what you want to achieve with it. We were quite an early adopter so our level of choice was limited. We worked with somebody that was just developing a salary sacrifice product so it could be developed around our needs.