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You can be sure that finance directors with one eye on the global economy will have the other on the fleet manager, so now's the time to review operational costs, writes Rupert Saunders
Whatever happens to the world economy over the next few months (and, let's face it, at the moment things are looking pretty bleak) it is clear that business car managers, and drivers, are going to be under pressure to cut costs.
Rising interest rates, slower economic growth, perhaps even the threat of recession in the USA, are all likely to sharpen the focus of finance directors on every penny going out of the business. You can be one step ahead of the game by thinking now about what action to take.
Assuming you are in some sort of vehicle replacement cycle (such as a contract hire deal) there is probably very little you can do about your biggest fixed cost - the vehicles themselves. Indeed, even if you do have some flexibility and own the cars outright, any short-term buying and selling is likely to add cost, rather than reduce it.
So, what about operational costs? When did you last seriously review operating policies and look for significant saving? I would suggest the key areas (and they are all inter-related) would be fuel, service costs and driver behaviour.
While fuel costs are relatively low at present, wholesale oil prices are near an all-time high. Inevitably, petrol and diesel are going to go up as winter approaches, but do you have any sort of fuel policy or cost control?
Andy Leech, business leader at fleet software company CFC, told me: "One of the issues that we have been highlighting for a number of years is the need for fleets to be more proactive with fuel management policies. Now is a good time to change that situation."
“Ultimately, though, the greatest saving any business car fleet can make is under the right foot.” |
Rupert Saunders |
Leech advocates fuel cards in conjunction, not surprisingly, with fleet software to monitor costs, bring potential fraud under scrutiny and, ultimately, cut bills.
Alongside fuel, another major running cost is service and maintenance. I'm assuming you have already negotiated a fleet labour rate with your service supplier and have national pricing in place. That should give you some consistency and certainty of cost.
But there may still be some operational efficiencies to find. Don't forget you can now get cars serviced outside the franchised networks without affecting warranty; so think about a contract with a national fast-fit chain. And, you don't have to use car manufacturer own-brand parts either.
Asking your service supplier to use equivalent, quality independent parts for routine service tasks could result in substantial savings.
Ultimately, though, the greatest saving any business car fleet can make is under the right foot. Steve Johnson of Drive & Survive reckons a comprehensive driver risk management programme can result in a 20% reduction in incidents in the first year. Even a minimal programme produces a 5% year-on-year reduction, so the savings continue to build over time.
Ironically then, the first thing you should be doing to save money is actually spend some on driver training.
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