Plea to protect safety during cost cutting schemes
30 January 2019
Author: Rachel Boagey
Cost savings are likely to dominate the fleet agenda in 2019, but must not compromise safety, says Fleetcheck's boss. Rachel Boagey reports.
Cost savings are likely to dominate the fleet agenda in 2019 as economic uncertainty and the ongoing effects of Brexit prompt organisations to contain their spending as much as possible, says Fleetcheck.
But even though fleets must look at ways of cutting costs, one of the biggest challenges is finding ways to do so without neglecting safety.
Peter Golding, managing director at fleet management company Fleetcheck, said, "We are entering a very unusual time where politicians' inability to satisfactorily resolve the Brexit situation is leading us into a largely self-generated economic slowdown.
"In this situation, all kinds of organisations are starting to batten down the hatches and put the brakes on spending in many different areas - and this will undoubtedly affect fleets."
We have already seen the first signs of this in the second half of 2018 with measures such as limiting travel to essential journeys in many organisations and lengthened replacement cycles, although the latter has also been exacerbated by WLTP and company car tax, said Golding.
Golding added that an underlying problem was that, in many fleets, most of the fundamental policies affecting expenditure had been formulated during the 2007-09 recession, so often there were few obvious remaining areas where cost savings could be accessed.
"A lot of obvious cost savings were made at that time, ranging from cutting the numbers of staff working on the fleet through to vehicle downsizing, and those measures are generally still in place," he said.
"If organisations want to make savings, they need to think creatively."
Golding explains that fleet is the second-largest cost outside of payroll for many companies, but it remains the hardest area to make any savings in that don't have ulterior affects on other aspects, like safety.
"Therefore, fleets must have a robust spending policy to ensure they are cost cutting in the right way and it is not going to come back and bite them in the future," said Golding.
"If you begin to de-fleet vehicles at a later stage to save money it has to be very focused on safety, as on the surface you might save money, but there may be later economical risks such as the safety of the car and its fuel efficiency, for example. You can't just decide to extend service intervals and not maintain the car when it needs to be maintained as it will cost you more in the long run. Also, the longer that you keep an employee in a car the less likely they are to look after it properly."
One way in which Golding advises fleets to save costs is by maintaining their cars outside of the main dealer.
"It's not mandatory and taking them to outside dealers doesn't always affect the manufacturer warranty," he explains. "It can save lots of money as long as the correct OE parts are fitted and the services are done at the right intervals.
"Also, if the cars are leased without maintenance included it might be worth asking for a loyalty discount with the garages or some sort of special deal for 12 months or so."
Fleets also need to keep on top of regular safety checks on their cars to ensure money is not being spent unnecessarily.
"Fleets need to spend more time engaging with drivers and do regular safety checks like tyre tread depth checks and adopting apps so that the drivers can do workarounds of the cars," said Golding. "It ultimately has an impact on how they drive the vehicles and look after them. Ultimately, if you as a fleet don't regularly manage it, you don't manage it at all."
Areas that fleets might investigate include ideas such as alternative fuels, increased use of OBD telematics and better scrutiny of data, Golding said. As a fleet software company, he explained that Fleetcheck is having conversations with fleets about ways in which these can be applied to reduce fleet costs.
"These are all measures that, by and large, weren't really available during the recession and which have now become viable through improved and more accessible technology," he said.
"Our view is that it is often impossible to put these measures in place without the kind of technology that we provide and, even where it can be done, products of the type we provide are needed to see whether savings and other improvements are being made. Fleets trying to assess their cars manually are haemorrhaging money. Investing in telematics will incur upfront costs, but it is the quickest and most efficient way to properly manage how the cars are being driven and see if fuel theft is occurring, for example."
"Without the right tools, you cannot properly track whether sophisticated ideas such as these are having the desired results or see what changes are needed to make them work. What is the point of telling someone in charge of a £1 million pound fleet to just use a spreadsheet? It is not the right way to manage things these days and could result in problems and fines."
Golding added that one of the oddities of Brexit was that the situation could change very quickly if positive decisions could be made at a political level.
"The fundamentals of the economy appear to be quite sound and, if Brexit outcomes are created that satisfy businesses, the flow of investment and spending could be reversed quite quickly, and cost pressures [could] fall down the fleet agenda in a matter of weeks or months."