Cutting costs

Vehicle Policy

This has one of the biggest impact on your total fleet costs. However, it is an emotive subject amongst staff, but considerable savings can be made here.

It is important to look at who in the company is eligible for a company car. Is the vehicle provided to enable the employee to carry out their job or is it a ‘perk’? If it is solely a ‘perk’ vehicle decide if the company would be better off financially if it brought an end to the benefit by ‘buying it out’.

If this is a bridge too far or would create ill will, consider encouraging such drivers to go for more fuel efficient cars, namely low CO2 diesel cars. The drivers can be encouraged by emphasising the ‘green credentials’.

Where the vehicle is for business use (job need employees), can a smaller or less powerful version still do the job? Most manufacturers are now bringing smaller engine cars which still have the brake horsepower of the larger engines. The important thing is they use considerably less fuel and generate tax savings

Again, major savings are to be made from vehicles with lower CO2 emissions. It is not just the lower fuel costs. Your business incurs lower Class 1 NIC costs and lower road fund licence charges (road tax). Everyone wins, as drivers pay less benefit in kind taxation and the company shows itself to be environmentally responsible.

If there is employee resistance to any changes in this direction it may be worthwhile to consider a one-off financial incentive to take smaller, low CO2 vehicles. One in three companies now has a CO2 limit on vehicle choice.

Consider whether to have a restrictive choice by manufacturer across the fleet. Most manufacturers offer either extra discount for a solus policy or for a set number of vehicles. Such discounts can be taken off invoice if the company pays cash and owns its vehicles or payable to the funder of choice resulting in lower rentals. In the latter case, if you wish us to approach a manufacturer on your behalf, contact us.

However, employee morale has to be considered once more. Flexibility of vehicle choice is ranked highly by employees in company car policy surveys.

Even when you have picked a model range with a manufacturer, select the best in the class when it comes to running costs. For a BMW 320d Efficient Dynamics saloon now has CO2 emissions of 109 g/km and a combined mpg of 68.9. Our quoting systems contain this sort of information, just ask.

Many organisations run their vehicle fleets over a 3 or 4 year period. If you renew your vehicles every 2 or 3 years, consider extending this by 12 months to save costs.

Likewise, if the company’s vehicles are contract hired or leased, a potential area for cost saving is to consider extending the new contract period even for six months, say to 42 months, to take advantage of potentially lower average annual contract rentals from a longer period of hire, the saving in lower depreciation charges is likely to outweigh increases in maintenance charges.

Although, existing contracts can be extended for six or twelve months, sometimes with a reduction in rental, it may not always be the most prudent option as the potential new replacement with lower CO2 emissions may far cheaper to run in a straight comparison.

Finally, remember low CO2 = diesel = low miles per gallon (mpg) and reduced costs all round. Whenever you approach us to work out a leasing or contract hire rental, always ask us for the mpg at the same time.

Reviewing Your Vehicle Policy

It is important to maximize contract efficiency when reviewing your vehicle policy. By finding the most effective combination of contract term and mileage you can maximize the residual value of your vehicles, whilst minimising your maintenance budgets, delivering cost savings.

Example

A car policy example is to be found in the ‘Duty Of Care’ section of the library.

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