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Whole-life costs neglected by one-in-four vehicle fleets

Date: 01 November 2011   |   Author: Rachel Burgess

A quarter of fleets have no interest in selecting cars on the basis of whole-life costs despite widespread industry opinion that this is the most cost-effective way of running a company fleet.

According to Alphabet's fleet management review, while 51% of fleet managers are making decisions entirely on cost grounds, 25% of the survey rejected applying whole-life costs.

Paul Hollick, Alphabet sales and marketing director, said: "It was disappointing that more people are not considering WLC. Not to set fleet policies and not to have a policy around fuel, insurance and all the other extras is short-sighted. And Alphabet has always been such an advocate of WLCs."

Alphabet was anticipating overall costs would have risen, said Hollick, due to factors such as rising fuel prices and falling RVs. However, the survey of 250 fleet decision-makers showed around half reported that costs have remained static over the past year. "We were anticipating costs were starting to rise," said Hollick. "In fact, that isn't necessarily the case. Fleets are taking fewer vehicles and are trying to chip away at costs. It's a long-term planning exercise. A lot of our customer base has started to do that exercise really seriously, looking at whether business travel is actually necessarily or whether alternatives like video-conferencing are viable instead, along with capping business miles. There are some interesting austerity measures."

He said some firms' employees have set themselves targets to manage their own footprint. "It all goes back to the culture of the organisation. But it's particularly do-able around prestige fleets. You're not going to be able to cap some miles but when you're dealing with perk vehicles, you can think about it that bit more."

The research also showed that 83% reported that fuel bills have increased substantially over budgeted levels with 50% of fleets prioritising fuel-efficient technology in an attempt to redress he balance. Fleets are also evaluating business journeys (48%), changing to more fuel efficient vehicles (40%) and introducing fuel cards (35%) to reduce fuel costs. Hollick said he was surprised at the high number of firms considering fuel cards, presuming more would have them in the first place. "There's still a level of scepticism in the fleet market on how much fuel cards can do, but if you offer a fuel card you start to understand exactly what's going on and then start to look at fuel reduction."

The research also showed that private sector fleets expect operating budgets to increase in 2012. "Firms are doing okay at the moment and they've not had any sales pointers for them to think the economy is slowing," he said. "They know it's going to be a hard six to eight months but then perceive they'll be out of it. Basically, they see it as nothing on the credit crunch."