Name Cordek
Business Manufacturer of specialist expanded polystyrene products
Fleet manager Grant Naris, finance director
Fleet size 12 cars, six 7.5-tonne trucks
Funding method Outright purchase
Replacement cycle two-three years
Annual mileage 25,000-30,000

The beauty of the fleet sector is the diversity. Every company has its own approach towards owning and running vehicles – and each one is convinced it has the right method.
Simply funding the vehicles throws up a multitude of options, including contract hire, finance lease, hire purchase, outright purchase, car ownership schemes and cash allowance.

Some companies dip in and out of different methods, but the vast majority tend to stick with what they know. Cordek finance director Grant Naris, who is responsible for the company fleet of 12 cars and six 7.5-tonne trucks, is a firm advocate of outright purchase.

Naris joined West Sussex-based Cordek eight years ago. At his previous company, he’d seen the fleet converted from contract hire to hire purchase. It left a lasting impression.
“When I came to Cordek, the cars were on contract hire,” he says. “I moved them to hire purchase in the early days, but we’ve been successful as a business and so we can now outright purchase.”

He believes that contract hire is “a last resort”. If Cordek didn’t have the cash he would go back to hire purchase.

“Why? I accept that contract hire offers fixed month amount and maintenance peace of mind,” Naris says. “But I believe that rentals are weighted in one person’s favour – and it’s not the fleet. The contract hire company bears the loss, but also the profit.”

There’s one exception to the rule: Cordek runs a Toyota Prius pool car on a contract hire deal. “We knew it would be low mileage and there’s uncertainty over the residual value. Contract hire makes sense for that sort of vehicle,” Naris says.

The switch has been relatively pain-free. It required a well drafted company car policy and thorough communication to staff. They need to be clear on the cars they can and can’t have, and understand the policy on service and repairs.

The handbook also states the policy on notifying the company about licence changes, such as endorsements.

“If you put in the work up front, it pays dividends. If people know where they stand it becomes a monitoring issue,” says Naris.

However, he adds: “You have to accept that running an outright purchase fleet takes a bit more of your time.”

Including health and safety responsibilities, Naris estimates that he spends 10-15% of his time on fleet.

Cordek uses a broker to ensure it gets the best deals and to remove much of the demands on Naris’s time. “I found this works better. It saves time and you get a better deal than the sales staff doing it themselves,” Naris says.

The broker also helps to dispose of the car, although Cordek tends to favour a dealer on the south coast.

As a finance director managing the fleet, you’d expect the over-riding emphasis to be on cutting costs. Not so - Naris also wears the HR hat.

Cordek gives its drivers free private fuel – just four have opted out - and only checks costs once a month when the accounts are done. The policy is based around recruitment and employee welfare.

Elsewhere, Naris admits that he has done little work on cost reduction, although he is looking at telematics for the truck fleet to improve vehicle utilisation and does advise sales staff to bunch meetings together to reduce mileage.

He says: “For a company of our size and a fleet of our size, there are other areas where we devote our attention in terms of cost savings. Fleet costs aren’t top of the list.”
Where he has put in the work is on developing the driver handbook and on safety and training (see panel).

Naris called in DriveTech last year to give his fleet a root and branch review. Particular focus was paid to health and safety in light of the recently introduced Corporate Manslaughter Act. It was, he says, a “real eye opener”.

“It was a fantastic benchmarking exercise. Numerous action points were highlighted, some of which I was already aware of, as well as other areas of potential weakness in our risk management strategy.

“It was money well spent, as we also adapted DriveTech’s driver handbook template to meet our own requirements.”

The handbook was introduced at the start of the year and has been “reluctantly accepted” by the more experienced drivers. “They understand the need for it and it’s for their benefit as well as the company’s,” says Naris.

“We have a section in there on maximum driving times which we consulted with drivers on – that was invaluable.”

Cordek’s car policy is split into bands based on job titles - directors, senior managers, sales and others - with the choice list based on on-the-road prices. It’s an open policy with a few restrictions, such as soft-tops and two-door cars.

Cars are replaced between two and three years based on mileage – the average is two-and-a-half years. Most do 25,000-30,000 miles a year. “I don’t like vehicles going about 70,000,” adds Naris.

The company does not have a policy on CO2 emissions, yet. It has not faced questions from customers about its carbon footprint, but expects that to change. Consequently, it will embark on a pre-emptive carbon review within the next six months.

Naris predicts the car policy will need re-writing, something he’s reluctant to do right away. But he accepts that tax changes and customers will call for greater focus on environmental issues.

“Staff are already making intelligent decisions on the cars they are picking,” he says. “We advise them on the tax implications and I have put together a safety check list looking at NCAP ratings and whiplash together with CO2 emissions so they can compare it with their current car. The last six changes have all seen a big reduction in CO2.”

As a finance director running a small fleet in a part-time role, Naris knows it is important to keep up-to-date with the latest issues. His main source of information?

“You’ll be pleased to know I get a lot from Fleet News, especially new ideas.”

Twenty-five drivers - high mileage company car drivers travelling 25,000-30,000 miles a year and occasional drivers – have so far completed an online risk assessment to determine whether they were a ‘low’, ‘medium’ or ‘high’ risk drivers.

The online assessment produced a cross-section of results but Cordek decided that, irrespective of achieving ‘low’, ‘medium’ or ‘high’ risk assessment scores, the company car driving sales force would all complete a one-day on-road driver training course. Meanwhile, the remaining company car drivers, own car drivers and occasional drivers completed a half-day, classroom-based, road safety workshop.

Naris explains: “We decided that the on-road training would be more relevant to employees who were driving all day, everyday. There was a lot of scepticism at first but at the end of the day even the most hardened ones said they had benefited.”

While Cordek’s employees had not been involved in any major road crashes, the company’s insurance record showed an average of one claim per vehicle per year and premiums had consequently rocketed by 75% in the last three years.

“We didn’t have a brilliant claims experience and our premiums were rising rapidly”, says Naris. “Our insurers have now said that, as long as we remain committed to our safe driving programme and our claims record improves as a result, we will then see reductions in our annual premiums.”