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FUEL COST MANAGEMENT: Overpaying at the pumps - how to reduce fuel expenditure

Date: 26 October 2012

Getting employees to drive more economically is one thing, but businesses are often haemorrhaging cash at the pumps for a variety of more complex reasons. Jack Carfrae explores the less obvious methods of reducing fuel costs

Fuel cost and the need to reduce it is something every fleet is aware of, and yet - aside from investing in fuel-efficient cars and encouraging drivers to go easier on the throttle, or relying on falling fuel prices - fleets are overlooking several areas where they could potentially save thousands of pounds.

BusinessCar spoke to several savvy industry players to explain where firms could do better at the pumps.

Buy the right cars

Having a vehicle that's fit for purpose is crucial. Fleets have a smorgasbord of clean and economical cars to choose from, but take the figures as gospel at your peril, because the cleanest cars aren't necessarily the most appropriate for the type of work the vehicle will be expected to do.

Gavin Amos, valuation services manager at whole-life costs specialist CDL, tells BusinessCar: "Don't just look at fuel economy figures as a direct link to mpg. Cars like the Vauxhall Ampera and the Toyota Prius quote massive mpg figures, but fleets shouldn't take them as black and white - look at how you're going to use it. It's a case of not being dragged in by new technology - make sure you experience it first.

"Fleets should look to get an extended trial [of a vehicle] before they make their buying decision - maybe a week or two. It's worth pressing for an extended demo - if you're doing this the manufacturer will be keen for your business anyway."

Amos also says that businesses should be wary of buying vehicles in bulk, as a large fleet of the exact same model has the potential to outweigh any purchase cost discounts with poorer economy later on: "You often get fleet deals when you bulk-buy one type of car, but be wary about these. If you have a driver doing 10,000 miles a year and then another doing 25,000 miles a year then the same type of car won't be appropriate for both. It's worth having a mixed fleet for this reason."

Monitor your staff

Knowing where employees are and what they're doing will naturally give a manager a realistic idea of how much fuel expenditure to expect. David Rawlings, director of BCF Wessex Consultants, says: "The vast majority [of fuel cost reduction] comes down to pure common sense: good management of your people - knowing where they are, why they're going there and what they're doing."

Jakes de Kock, marketing director at The Fuelcard Company, believes fleets can save money just by keeping an eye on what they're spending and suggesting alternative routes: "It's difficult to implement strategies for saving fuel unless you know how much you are using. Most fuel card providers offer real-time reporting, which shows exactly how much fuel is being consumed and who is consuming it, and mpg reporting is also often available, allowing you to record and analyse mileage patterns.

"An overview of all these figures will help find areas where savings can be made in order to devise an appropriate plan of action. Look in-depth at how your drivers are getting from a to b. Perhaps they could use an alternative route via better-conditioned roads to reduce fuel consumption or maybe several journeys to similar areas could be combined into fewer trips. These may sound like obvious suggestions, but can be easy to overlook without careful monitoring."

Remove financial incentives to drive

If employees think they're going to benefit financially from submitting fuel expenses then they're almost guaranteed to drive further than they need to. This is a particular issue for grey-fleet drivers, as Rawlings explains: "You mustn't let people have an incentive to drive. If you give somebody un-thought out AMAP rates then they're going to say, 'this is great, I'll take my car to Birmingham and back and I'll end up with £90.'"

De Kock claims that incentives can be turned on their head, with staff being encouraged to drive more economically as a light-hearted sporting practice within a company: "Although research has shown the majority (two-thirds) of company car drivers are limiting their mileage and driving slower to reduce fuel consumption, providing incentives for best practice is a great way to reward this behaviour.

"Play on drivers' natural competitive side by introducing league tables categorised by fuel usage with a prize for those who drive the most efficiently each month. Not only is this almost guaranteed to reduce fuel consumption, it will also make each driver aware of their exact fuel usage and the subsequent importance of making savings."

Choose another petrol station

Consistently buying cheaper fuel and avoiding significantly more expensive motorway filling stations has the potential for massive savings if fleets are vigilant with it. Graham Hurdle, managing director of E-Training World, says: "First and foremost it's important for drivers to appreciate where to buy fuel from. You can talk all you like about improved driving technique creating a 15% saving but when prices vary by approximately 11 pence per litre between the cheapest supermarket and the motorway services it's wise to put a remit out that fuel must be bought from the cheapest outlets."

Ashley Sowerby, managing director of fleet software specialist Chevin, believes that drivers filling cars with a higher than necessary grade of fuel is a major part of overspend: "Over-grading, where company car drivers, especially those with higher-end vehicles, fill up with premium fuel types, can also be a major contributor to unnecessary fuel spend, adding around an extra eight pence onto each litre purchased.

"This may not seem like a lot, but encouraging drivers to refuel appropriately and creating a culture of accountability and awareness is essential. This can be easily achieved by implementing a benchmarking process where all fuel-related data, including average mpg comparisons, fuel stations and grades, can be intuitively scrutinised, and instances of inappropriate fuel purchase automatically flagged to fleet managers, empowering them to take suitable action and recognise significant cost savings."

Lessen pressure to be on the road

If employees feel the need to be racking up mileage so they are seen to be productive and making the most of their company car then excessive spend comes with it. Hurdle claims firms need to take the pressure off staff to make the most of their vehicles and encourage them to stay put as often as possible: "The issue to address with drivers is, why are you making that journey in the first place? Sales people in particular feel under pressure to show that they are living out of their car. To clock up a high mileage is symbolic in some people's minds of a hard worker. The problem isn't with the individual but usually with their boss who needs to reconsider how productivity should be measured. Rather than thinking, 'Great, the team are all out on the road again', perhaps change the culture to, 'wouldn't they be more productive conducting four or five web meetings from their desk?'"

Reduce vehicle down time

Simply keeping a company vehicle on the road for longer means businesses not only have the right tool for the job but they also avoid spells with employees driving courtesy or rental vehicles that may or may not be as efficient and suited to the job as their regular car.

CDL's Amos explains that the regularity of servicing has a huge impact on the time the driver has with the car and how much the company pays out: "The big picture is looking at things like maintenance costs - how often a car will need servicing. Some manufacturers claim intervals of up to 20,000 miles, but question this. If it's going to tell you to go to the dealer for something like a pollen filter in 2000 miles then it's overspending. It's a case of digging in to the claims and making sure the car is right before making the purchase.

"It's also about the company making sure they have the right accident management programme in place, having the right guidelines, and keeping the car on the road for longer."

De Kock points out that simple DIY procedures such as maintaining the correct tyre pressures can also claw back cash from the pumps: "It's important to bear in mind areas of inefficiency are not necessarily caused by poor driving or fleet mis-management. In the first instance, make sure the vehicle is thoroughly checked for any running issues, which may be causing excess fuel consumption.

"Underinflated tyres can be responsible for as much as 10% of extra fuel usage and also wear out much faster, so encourage drivers to check pressures at least once a month. This is also a good way to keep an eye on tyre condition, ensuring any potential problems are identified and fixed before they cause further damage."

Invest in driver training

De Kock says that in addition to offering practical fuel economy benefits, training programmes can simply improve employees' general attitudes: "Investing in driver training can achieve up to 20% improved fuel consumption, lower CO2 emissions and an improved safety record. As well as the obvious benefits, a training course can also be a good opportunity for drivers to spend time together and share examples of best practice. Why not combine training with a team away-day or social event? Any activity that helps boost morale and inspires a sense of community will be well-received."

Rawlings suggests that businesses stand to benefit from both equipping drivers with the right vehicle and educating them in economical driving, particularly if they are funding their private mileage themselves, as any increase in economy will be reflected in business driving: "One of the things that we're doing with a lot of businesses is looking at [improving economy] on private mileage to the driver. If a driver is doing say, 8000-10,000 private miles a year and he can see a fuel saving for himself then vicariously that goes back into the business."