Cutting costs

Anticipated Annual Mileage

Working Out Anticipated Annual Mileage

Mileage is one of the biggest cost drivers, through fuel use, tyre wear and increased depreciation. Working out the anticipated annual mileage for each vehicle requires effort and liason with various disciplines in the business including:

  1. Accounts
  2. Human Resources
  3. Sales

By necessity it includes guesswork so we need to dovetail with Record Keeping so that adjustments can be made on an ongoing basis. This is vital if costs are to be kept to a minimum. Where we already have history we can more easily shortcut to anticipate the mileages but we must still take these points outlined below into consideration to do the job professionally.

The general assumption is that average fleet cars cover about 20,000 miles a year. Business mileage is generally around 50% of this total. But these are not necessarily what happens in any one fleet or with any one car.

In any fleet, the overall patterns of mileage will show where additional servicing is needed, where a car or van may need to be considered for early (or deferred) replacement, and even where drivers are expected to do too much. With current concerns about managing occupational risks of road use, this is an increasingly important issue.

A field based employee working around a major city might do relatively low business miles, against his colleague who covers a large rural area, for example.

Some employees may be based in the middle of their territory, while others live to one side, or even outside it.

Understanding the patterns of mileage should be used to think about realigning territories to make the overall business more effective, so the fleet manager can help the whole organisation. With so much congestion, cutting down the need to travel is a business priority.

Employees are not usually productive while sitting in a traffic jam. Business mileage patterns is a key part of looking at business efficiency, as well as helping to reduce fuel costs and the emissions produced. Patterns of private use should also be looked at.

For instance, the housing market and employment patterns can lead to long commuting distances. Again this is not productive and can lead to some employees spending too much time behind the wheel, as well as working a full day.

Even if the driver is paying for the fuel, long distance commuting will increase servicing and tyre costs, and add to depreciation costs.

Most company car drivers have the benefit of private use of their company car (in addition to commuting use). Mileage records will show if anyone is clocking up very high private mileages, possibly to the point where they might be expected to show driver fatigue.

Also, very high private mileages will lead to earlier replacement, possibly higher excess mileage charges and increased operating costs.

Vans are generally much more business-mileage related. Studying van mileage patterns might show that some drivers travelling too fast to meet their schedules.

This is unacceptable and bad business practice, so needs to be identified, understood, and managed out of the system.

Although the aim of business cars and vans is to provide efficient transport, mileage shouldn’t be allowed to just “happen”. There is a strong business and cost case to look at mileage patterns on a regular basis.