Expert Opinion by Nigel Underdown, head of transport advce, Energy Saving Trust

Electric cars will radically alter the emissions from road transport.

Hydrogen power may even deliver the cost-effective solution which currently evades vehicle manufacturers.

But there are some much less radical solutions which will reduce your fleet’s carbon footprint and provide welcome cost savings.

Here are ways to manage a fleet which will not only be green and efficient, but do not rely on tomorrow’s technology.

Your choice list

This month, the goal posts have moved.

Vehicles with CO2 emissions the wrong side of 160g/km will mean a much reduced writing- down allowance if you buy outright, and higher rentals if you contract hire. In simple terms, mid-range cars with high emissions will increase in cost (although very expensive cars could be cheaper).

Cars below 111g/km are now even more tax efficient, with a 100% writing-down allowance.

Emissions and tax need to be at the centre of an effective choice list.

Here’s a simplified approach that will not require complex discounted cash flows to derive workable solutions.

  • Express driver allowances and vehicle costs in wholelife terms to reflect contract hire rentals, blocked VAT and fuel costs.
  • Best of all, ban cars over 160g/km. You guarantee fuel savings and improve the tax efficiency.
  • If current policy makes this an impossible sell, add a premium of (say) 5% to wholelife cost of 160g/km-plus vehicles to reflect reduced tax efficiency and further discourage drivers from choosing high emission vehicles.
  • Make sure choice lists include the company car tax implications (for both 20% and 40% taxpayers) against each vehicle.

Fuel reimbursement

The simplest approach if your staff claim on a mileage basis is to use HMRC’s advisory fuel rates.

You avoid long debate and rest safe in the knowledge that there is no risk of tax and National Insurance liability.

But for the fleet manager who has already steered drivers towards the most efficient vehicles, advisory fuel rates represent a generous allowance, even with most drivers struggling to achieve the official combined mpg.

Advisory fuel rates are a maximum – there may be every reason to pay less and encourage more economical driving styles.

Better still, recharge private miles back to the driver by apportioning fuel card bills in the same ratio of business/private miles.

Driver training

On average, company car drivers achieve about 15% less mpg than the claimed figures.

However, evidence from the Energy Saving Trust’s smarter driving training programme has shown that after just an hour’s tuition, drivers improve consumption by 15%.

But you need to ensure this is maintained; league tables with even modest rewards have been very effective.

If you run 100 vehicles and improve typical mpg (combined less 15%) and achieve the official combined then you could save about £20,000 p.a. in fuel and reduce your carbon footprint by 50 tonnes of CO2.

Smarter driving techniques are inherently safer as they rely heavily on reading the road ahead and accelerating and braking more gently.

Expect to see worthwhile savings in maintenance and repair bills as well.

Mileage management

The marginal cost of a business mile might be 11p in fuel but add depreciation, wear and tear and the cost of your driver’s time and the impact on the bottom line is significantly greater.

Find ways of trimming one journey in 10 or maybe 1,000 miles per vehicle per year and your carbon and cost savings will be substantial.

  • Set a reduction target and cascade to departments.
  • Ensure fuel reimbursement rates don’t create profit and encourage more miles.
  • Make sure line mangers are reminded of all high mileage drivers – is there time to do the day job?
  • Point out the opportunities for car sharing when attending the same events.

Grey fleet

On average, grey fleet vehicles will have higher emissions than newer fleet cars but for casual users making short journeys in a private car can be a simple and low-cost solution.

The challenge is to distinguish between the necessary and cost- effective journey by private car and the high mileage which should be in a different and lower emission car, or the mileage which is simply encouraged by the use of approved mileage allowance payment rates.

  • Limit annual grey fleet miles – at 8,000 miles, a company car will often be cheaper and have lower emissions.
  • Limit daily grey fleet miles – at 100 miles, a daily rental vehicle will be cheaper and have lower emissions.

Communicate

Even the best policies will fail if you can’t win hearts and minds. Identifying the right solutions, calculating the benefits in cash and environmental terms are key to setting the right course but if you want to see real progress communication is key.

Communicate before you start to review policy what it is you hope to achieve.

Consult, so that staff feel they have contributed to delivering improvements, and feedback regularly on what you have achieved in terms of reduced costs and tonnes of carbon.

It can only demonstrate that fleet management is much more than managing the metal and is a core activity which touches all parts of the business.