Mike Waters' Blog: 3 March 2009 - Tough times, but don't expect a reduction in regulation
03 March 2009
Mike Waters is head of market analysis at Arval
The economic conditions during the second half of 2008 created severe headaches for business and employees alike and this year doesn't look like being much easier.
With this in mind, organisations and drivers are rightly managing their costs closely, but for some they run the risk of taking their eye off the ball in other crucial areas.
In the midst of tough times the temptation is to focus exclusively on cost reduction at the expense of other considerations. The problem is that this approach neglects an area that isn't going to let up during the credit crunch: Government regulation - especially in the areas of environment and driver health and safety.
The Government has set challenging targets to reduce CO2 emissions over the next decade, and to have a hope of hitting these business travel will be a key area of focus. The result is the carrot and stick approach that we are already seeing to get drivers into more efficient cars and reduce overall mileage.
What's more, its not just the environment that's in scope. The Corporate Manslaughter Act should have left senior executives under no illusions that not taking driver health and safety seriously would lead to significant penalties - often financial - and this is not going to change.
With the role of the fleet manager seemingly becoming more complex every year, the challenge of cost cutting, managing environmental impact and duty of care simultaneously may seem daunting. However, once you start to appreciate that cost, environment and duty of care are directly linked with good health and safety and environmental practice, providing a host of financial benefits, the task becomes more achievable.
As an example, fuel makes up nearly a quarter of the cost of vehicle ownership, and apart from depreciation is the greatest cost that a vehicle owner will face. A more sustainable vehicle will be more fuel-efficient saving money. Drivers who have been trained to drive safely are likely to reduce their speeds - reducing the chances of an accident and driving up fuel efficiency. More efficient vehicles also save in tax while safer drivers are less likely to cost you in accident repairs, fines, vehicle wear and tear and insurance premiums.
Times are tough but taking a narrow approach to managing budgets is a false economy; it has never been more important to be aware of the methods at your disposal to achieve lower costs. Don't lose sight of the fact that managing risks and costs are not distinct - they go hand in hand - and getting into this virtuous circle will support fleet managers in hitting objectives during tough times.