There’s unspoken assumption these days that lower-carbon cars are cutting fleets’ fuel and tax bills.

After all, higher efficiency means lower consumption and lighter bills.

Well, perhaps not. Some data I’ve seen this week suggests that fleets are not necessarily translating CO2 improvements into bottom line savings.

I’ll come on to the possible reasons for that in a minute. But first we need to go back some 150 years, to a book called The coal Question by a Victorian economist named William Stanley Jevons.

Jevons suggested that when better technology allows a fuel to be used more efficiently, consumption of the fuel will go up, not down. His idea is known as Jevons’ Paradox and, put very simply, it says that if you make an activity cheaper, more of that activity will take place.

It occurred to me that car fleets could easily find themselves in a similar situation – or certainly one where their response to the financial effects of lower CO2 cars could actually counteract the potential for cost savings.

Comparing data on lease contracts taken out in 2006 with those signed in 2010, it looks as though a Jevons’ Paradox-style displacement of technological efficiency with greater use of resources is indeed happening.

Average annual contract mileages are 5% lower today, but the typical term is nearly 20% longer. Net, companies are getting some 8% more use out of each car than they did four years ago.

But if Jevons was around today, he wouldn’t be surprised to learn that 8% is also what the businesses should be saving on fuel costs (in real terms) thanks to the general drop in CO2 emissions over the past four years.

In other words, potential cost savings from lower CO2 emissions are being displaced to a great extent by longer change cycles. A lot of fleets seem to be trying to maximise their current cost base by extending the life of existing cars, rather than sticking to a shorter change cycle and moving to a lower cost base with the help of new technology.

That’s not a bad thing. For one thing, it implies that fleets still have scope to cut costs when they need to.

But businesses would be sensible to think carefully before locking into still longer contracts as emissions continue to improve. Better technology delivers a variety of benefits and fleets can bring those on board much sooner if they turn over cars at the optimal rate.

It’s definitely something to talk to your leasing company’s strategic advice team about, if it has one.

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