As a fleet manager, you are probably all too aware that running a fleet can be incredibly expensive.
And everything adds up quickly. Keeping abreast of vehicle maintenance, rising fuel costs, and other logistics can be a daunting task, but we’re here to help.
By making just a few simple changes, you can reduce costs and save money in the long term. Read on to find out how you can make sure that all that money isn’t going to waste.
1. Lower Fuel Cost
After depreciation, fuel is the second largest expense that fleet managers face. Fleet managers are challenged to stay abreast of fuel hikes and maintain a proactive fuel management program. This entails taking advantage of technology, buying fuel in bulk, and being aware of fleet support and infrastructure development.
Preparing for price spikes by bulk buying white diesel could save firms money, and fleets with fixed routes (like delivery services) have the greatest potential to save on fuel because they return to a centralized location where they are refueled overnight.
2. Reduce Miles Traveled
Although fleet managers have little (if any) control over the miles the vehicles in their fleet travel, they should have the tools to determine if trips are reasonable and justifiable.
A problem that often arises is that fleet managers are not privy to day-to-day business purpose data –but when unnecessary trips occur, they increase the operating costs of the vehicle.
One way to address this is to task supervisors to become more involved in monitoring business-use reports, driver territories, and scrutinise the number of sales and service calls while factoring in time and mileage.
Another way to reduce miles traveled is to leverage technology. In the digital age, employees can and should utilise communication services such as teleconferencing and other interconnectivity tools to minimize the need for physical travel. Additionally, equipping all vehicles with GPS systems will reduce unnecessary mileage by improving route planning.
3. Cut Down on Fleet Size
Reducing the size of the fleet by reducing the number of vehicles is a proven way to reduce overall costs. On average, the total cost of ownership for a light-duty vehicle is from £3,500 to £5,800 per year – so it makes sense that eliminating vehicles can provide massive yearly savings.
Although eliminating vehicles would reduce all fixed costs associated with them, the capacity or workload that would be then transferred to the remaining vehicles in the fleet will increase all of their operational costs – however, it will only raise it slightly.
The resulting savings will largely depend on mileage and usage, but fleet managers can expect a total cost of ownership reduction of around 10%.
4. Reduce Lifecycle Costs
Although frequent vehicle replacements may seem like an unnecessary cost, studies have found that retaining and operating vehicles past their optimum economic lifespan results in increased maintenance and fuel costs.
Continuing to operate an ageing fleet can usually be attributed to insufficient funding or a lack of knowledge about the costs and benefits of replacing vehicles in a timely manner.
To reduce vehicle lifecycle costs, fleet managers must know how to optimise replacement cycles. The best fleet organisations utilise economic planning tools to determine the appropriate time for vehicle replacement.
After considering factors such as the cost of new vehicles, projected resale value, planned maintenance and repair, and fuel economy, fleet managers can create vehicle replacement plans for the long and short term.
5. Lower Acquisition Cost
The greatest contributor to the total cost of ownership is usually the depreciation of a vehicle. Purchasing vehicles at the lowest initial cost will reduce the total cost of running a fleet.
A common strategy to reduce acquisition costs is to negotiate the price based on “triple-net” cost – which entails negotiating with the dealer at invoice and excluding OEM factory holdback, advertising refunds, and flooring.
Fleet managers should also negotiate volume discounts with one or more OEMs by employing a single or multiple OEM vendor strategy. Usually, fleet organizations are also able to save more money when they begin negotiations on the vehicle early in the model year.
Ordering vehicles straight from the factory instead of from the dealer’s inventory will also save around £750 per light-duty vehicle.
6. Retain a Higher Resale Value
To retain a higher resale value for the vehicles in the fleet, fleet managers should create a system that prevents drivers from ordering unnecessary or cosmetic repairs.
Another way to assure a higher resale value is to only purchase vehicles in neutral colours – typically, white vehicles retain their value more than other colours. Maintenance records should be kept and presented to potential buyers, and any reconditioning should not be more than moderate cleaning.
Fleet managers should also consult reliable fleet industry publications and familiarize themselves with benchmarks for sales – such as Black Book’s “fair” condition.
