James Langley, director and council member of the Institute of Car Fleet Management, outlines how to improve your fleet’s performance
Understand the fleet requirement
Make sure you fully understand what the organisation requires from its fleet. If the cars and/or vans are operated exclusively to fulfil a business transport requirement, then the structure of the scheme and the management techniques applied are likely to be very different from a fleet provided for remunerative purposes. Recent research suggests that the ‘perk’ aspect of car fleets is beginning to have greater significance. Some fleets will have a blend of requirements and these may reflect the employee’s status or job role.
Develop and agree the fleet policy
The policy provides the framework within which fleet performance and cost will be managed. It will enable consistency and will need to accommodate all user groups. It commonly specifies a structure of car grades, and may well consider a variety of methods of provision, ranging from a company-provided vehicle through car allowance schemes and grey fleet to salary sacrifice schemes. There will be other matters to clarify in the policy. For example, how does an employee qualify to join, and perhaps leave, the company car scheme? What costs will the organisation meet? To what extent will driver choice be allowed? What is the replacement policy upon which the cost profile will be based?
A word of warning: there are many sample fleet policy documents in existence and it’s fine to refer to them. However, every fleet is different and it’s really important that the policy reflects the reality of the fleet you’re managing. Finally, in respect of policy, make sure you get buy-in at all levels.
The fleet policy is likely to dictate some processes. For example, if the organisation is going to meet fuel costs only for business use, then a process will need to be established to identify the split between business and private mileage on a regular basis and to drive the financial settlement.
In addition, there will need to be systems to purchase fuel and to access maintenance and support facilities as well as maintaining the vehicle qualification and entitlement process irrespective of whether it is delivered by company cars, cash allowances or salary sacrifice. There are many other processes which are likely to be required and one of the other considerations in this area is the need to generate the information which will serve as the basis for future decisions.
Select the right vehicles
Whatever processes are put in place to maintain the currency of choice lists or entitlements, the first priority is to ensure that the proposed vehicle is capable of fulfilling the specific business requirement. This may appear to be obvious but fleet history is littered with the memories of fleet vehicles selected because of price but which were incapable of doing the job or vehicles which have been overspecified and cost far more to operate than was reasonable.
Given vehicle suitability, the ICFM will always recommend that vehicle evaluation is undertaken on a wholelife cost basis to include costs of depreciation, funding, non-recoverable VAT, differential writing-down allowances and rental restrictions, as well as all the support and fuel costs.
Communicate the fleet policy
Having laid the groundwork in terms of policies and procedures, it makes sense to ensure that all the parties involved are fully briefed on what is happening, how and when it’s happening and the part they are expected to play in making it happen. Regular communication becomes even more important when promoting salary sacrifice car schemes.