From inflationary pressures on the cost of labour and parts and increasingly complex vehicle technologies to a shortage of technicians and ageing fleets triggered by protracted replacement cycles… a perfect storm of cost pressures is putting enormous strain on fleet budgets.
Necessity, however, remains the mother of invention and the catalyst for re-assessment of TCO strategies.
Mobility-minded
Technology is constantly developing to make it easier for companies to incorporate mobility management into their fleet operations, opening the door to other more cost effective forms of transport, such as car-share contracts, grey fleet vehicles and public transport – or even taxis for some journeys.
Smarter driver behaviour
Fleet management solutions that are helping drivers to cut harsh cornering, braking, speeding and idling can cut fuel and minimise wear and tear, component damage and the risk of accidents.
The latest telematics systems will automatically optimise route planning based on everything from road inclines and vehicle type to speed limits and distance, cutting down on unnecessary miles travelled.
Planning can also account for expected congestion and schedules adapted dynamically, reallocating jobs to the most appropriate drivers.
PAYG maintenance
Maintenance-inclusive plans are ever-present in contract hire packages, but research shows that you could save up to 20 per cent by switching to pay-as-you-go (PAYG) maintenance. This cannot only cut costs, but you can also improve cash-flow and boost flexibility with choice over parts and service quality.
With Fleet Operations’ PAYG service, we cover upfront repair costs, streamlining them into a manageable monthly invoice, aiding in unexpected cost management.
Effective vehicle maintenance
Daily app-enabled vehicle checks ensure oil and water levels are sufficient, brakes and tyres are in optimum condition, and general wear and tear is under control. Keeping tyres perfectly pressured not only boosts your fuel economy but also your bottom line while regular, scheduled maintenance can be tailored to fit seamlessly into the working day without taking your team off the road.
Fleet Operations’ MOVE Driver Companion App, for instance, offers fleets a unique solution by automating everything from defect detection to repair bookings – and even arranging alternative transportation options.
Grasp the electric nettle
Despite their higher upfront cost, and recently inflated energy costs, the total cost of ownership (TCO) of electric vehicles is still usually more attractive than for their fossil-fuelled counterparts.
EVs boast a lower operating cost per mile, and because they have fewer moving parts, maintenance bills also tend to be lower. Studies suggest that, in some cases, they can reduce SMR costs by half.
Favourable benefit-in-kind (BIK) rates for electric vehicles – currently just 2 per cent rising to 5 per cent by tax-year 2027/28 – have also significantly reduced the cost of EVs with Corporation Tax and NIC savings to be made and government grants up to 75% of the purchase and installation of charge points still available under the Workplace Charging Scheme (WCS).
An EV charging policy should encourage cost-effective charging practices, such as charging when energy tariffs are most favourable and when stops for other purposes have already been planned into the working day.
Multi-bid procurement
By inviting multiple bids for vehicle procurement, companies can leverage competitive pricing, ensuring they secure the best value for every pound spent. This approach not only fosters transparency and accountability in vendor relationships, but also encourages providers to continuously improve their offerings to retain or win business.
More flexible fleet financing
Flexible mid-term leases, short-term hire and daily rentals have all become more regular fixtures in the fleet financing mix. Although these alternatives may appear to be more expensive at first glance, the costs can be more than offset by avoiding the associated penalties of conventional contract hire, such as steep early termination fees.
They also allow companies to flex to fluctuations in demand or unexpected changes in business requirements and enable businesses to trial out EV vehicles without committing to long-term lease contracts.
Check your insurance small print
Checking your fleet insurance policy small print can pay dividends. Find out if a combined policy that wraps up fleet insurance with public and employee liability could be cheaper or whether paying for windscreen repairs independently rather than adding to your policy would make more sense.
Confirm if the cost disparity between fully comprehensive and third-party cover is negligible – it usually is. If you run a fleet with a good claims history, increasing your fleet cover excess can be a good option.
Analyse your claims history to identify and address high-risk drivers with driver training programmes and if you use telematics to underpin driver improvement initiatives, find out if your insurer will offer any upfront discounts. Finally, ask to see your ‘authenticated claims experience’. This can be enough to show you are looking at changing provider and may trigger a premium reduction.
An outsourced fleet management partner can provide expert insights across the board to help cut costs. To find out more: W: fleetoperations.co.uk | T: 0344 567 8000 | E: advice@fleetoperations.co.uk
