The leasing-fleet relationship is arguably the most important in fleet. When it works, it results in savings and a better run operation. When it doesn’t work, it can be costly.
Key performance indicators (KPIs) and service level agreements (SLAs) are vital. But while KPIs should be regularly employed to measure performance, SLAs should rarely be activated – if they are, then the relationship is most likely doomed.
Britvic is testament to the benefits of a strong partnership. The soft drinks producer outsources its fleet management to Lex Autolease and relies heavily on its support when making important decisions.
Three priorities underpin the fleet strategy, according to Will Smith, Britvic reward and benefits manager: leverage better commercial terms with manufacturers, improve the employee experience and exploit environmental technology.
Consequently, among the KPIs he regularly discusses with Lex Autolease are wholelife cost, environmental targets and balancing fleet efficiency with driver satisfaction.
Improvements are measured against clear objectives although Smith recognises that a supplier relationship works best when it is a two-way discussion.
“We provide Lex with our thinking and we ask for their open and honest feedback on us,” he says. “We want to know how we can improve our processes and what they need from us to improve our relationship.”
One example of where this has had a positive impact is on Britvic’s commercial terms. Smith set boundaries for vehicle choice, wholelife cost and an environmental focus and challenged Lex to come up with solutions. In response, Lex profiled the fleet and identified how Britvic could achieve its goals in a more efficient and effective way. It then provided a suite of recommendations.
“Lex helped us to understand our manufacturer profile versus other fleets and we overlaid that with the commercial possibilities which gave us the art of the possible,” Smith explains. “It helped us to identify what was most appropriate for our business.”
He adds: “It is no good having manufacturer A with the best terms if 70% of the market is with manufacturer B. We needed that full analysis so we could know that what we wanted to do was feasible.”
More recently, Lex undertook a review of Britvic’s light commercial fleet focusing on affordability, maintenance, reliability and environmental costs. Following a trial of three vans with three different racking systems, Smith switched to Volkswagen Caddys with Bluemotion engines.
It will save the business £70,000 a year and reduce its annual CO2 emissions by more than 90 tonnes.
The review also analysed vehicle usage and loads. By redefinising its stock list and removing unnecessary items, the company shed a collective 2.4 tonnes of weight.
Smith grew up around the motor trade – his family owns the Movac refinish paint distributor – so he readily accepted fleet responsibilities from his very first rewards job out of university seven years ago.
He joined Britvic in 2014 and while the fleet (450 cars, almost 100 vans) accounts for just 10% of his day-to-day role, its value to the company and its employees is immeasurably greater. His main responsibilities are to set policy, manage the supply chain and negotiate manufacturer terms.
“When I joined, the fleet had been stagnant. There was lots of short-term decision-making regarding the vehicles ordered and what we put people in,” Smith says.
“It needed some TLC, looking at what the fleet cost and how to leverage new technology, improve the environmental footprint and improve the employee experience.”
Far from being a retention tool for the business, employees had “a negative view of the car fleet – the choice wasn’t right, staff weren’t getting the car they wanted”, Smith says. “It needed someone with a passion for cars that understood the differences.”
All staff have the choice of cash or car; therefore, making the choice list as attractive as possible makes business sense.
“My view is that the car is a significant thing for someone to own and a nice benefit for them to have, so to give them a good choice makes sense for us,” Smith says.
“They spend a lot of time with customers, so making sure they are in a vehicle that represents the company is important.”
The range of models on the choice list has widened which has helped move the cash:car ratio from 50:50 to 35:65 in favour of car, with a number of cash takers switching back.
Half of the fleet is clustered around a core of BMW and Audi, although almost 50% of new orders are for Mercedes-Benz, partly thanks to the hybrid C-class and E-class. Hybrid has also helped to encourage higher-rate tax payers to reject the cash option.
The company is able to influence employee choice through specials promoted on its intranet site, encouraging staff towards lower cost and lower emissions cars.
“People like to be told what they should be buying, either through third party reviews or by us – it’s informed decision making,” Smith says. “They like to know what best fits their needs.”
As part of the policy overhaul, he implemented new commercial terms with manufacturers and ensured the latest models were on the fleet, including hybrid options.
“We have added a number of brands, following the market regarding what’s new and popular. So we added the Jaguar XE as an alternative to the 3 Series and A4 and we brought in Mitsubishi to fill a need for an alternatively-fuelled vehicle ,” Smith says.
“We found that whatever we put on the policy, people ordered.”
Hybrids account for just 2.5% of the current fleet, although the order book is running at 15-20%. It has helped to bring average CO2 emissions down from 121g/km to 114g/km, while the orders are sitting at 109g/km.
“Hybrids stack up for us,” says Smith. “We look past the wholelife cost, because it’s new technology and we know it’s expensive, but we are willing to take a gamble on it.
“As a manufacturing business, our environmental impact is important, so there is a benefit to us being able to take a lead with a hybrid fleet. We are installing charging points at our offices for employees to use free of charge, including those that have their own electric vehicles.”
There is an additional, unforeseen benefit of allowing hybrids onto the choice list, Smith says: “Hybrid vehicles tend to be well specced so there are fewer employees up-speccing vehicles. It has improved their engagement with the fleet.”
His objective is for the fleet to outperform the rises in benefit-in-kind taxes, so that employees pay a similar amount, or less, in four years as they do today. He is confident that, with the ongoing reductions in emissions from new models, this can be achieved.
Britvic’s choice list is divided into six grades: three for perk (senior manager and above), three for job-need, for which the threshold is 10,000 business miles. Two-thirds of the fleet is job-need.
Despite adding more car manufacturers to the choice list, Smith has been able to secure better terms. While he accepts that a solus fleet might enjoy higher discounts, he says it is a “myth” that fewer brands increases a company’s negotiating leverage.
“We make manufacturers understand that internal promotion impacts take-up: the ones we advertise to employees are the ones they order,” Smith says.
“So we go back to them for better commercial terms and ensure that those are the ones we promote internally.”
Promotions are via the intranet and the benefits package each employee receives. It includes details of the cars they are eligible for and Britvic’s ‘benchmark cars’ – i.e. the ones where it has secured the best terms.
“Manufacturers are savvy about it; we’ve seen a big difference over the past five years, especially among the German brands – their willingness to engage in meaningful conversations has improved,” Smith says.
“They know they have to compete with other marques in the company car market.”
He has improved commercial terms by around 5% across the fleet on a like-for-like basis. Lex Autolease helped by benchmarking Britvic against similar-sized fleets.
“We then looked at how to improve the commerciality of the fleet, looking at wholelife costs and positive engagement with drivers to put them in the right models for them and us,” Smith says.
Britvic bases its decisions on wholelife costs, incorporating lease rate, maintenance, national insurance, car insurance and end-of-contract charges into the calculation. The latter is an ongoing challenge.
Smith has stopped the ‘leave keys at reception’ culture and has implemented a rigorous end-of-life handover inspection. Drivers have also been educated on what constitutes fair wear and tear, while Britvic repairs vehicles to a “good state” before they are de-fleeted.
“This is a new initiative,” says Smith. “Drivers inform the business and we sort out repairs. We’ve yet to see the benefits, but we hope it will pay dividends.”
Also new this year is a driver safety programme, including ‘safety days’ where coaches advise staff on how to avoid smaller incidents, such as reversing and manoeuvring bumps, which make up 95% of claims. It included the use of a driving simulator.
“We started the programme in January, but already in the last quarter we have seen a 10% reduction in accidents,” says Smith.
All damage has to be reported immediately to enable Britvic to sort out repairs and take control of any third party losses. Drivers have been through the first stage of training, which included a risk assessment with partner Balfour Beatty. This showed that Britvic had a higher-than-average risk profile due to its high mileage population – the average is 21,000 miles with business accounting for half.
Part of this is due to an office relocation from Chelmsford to Hemel Hempstead, which has seen a rise in commuting miles. As a result, Britvic now offers driver training to all staff, through Balfour Beatty, should they want it.
“We are also doing post-accident training for company car drivers and other drivers in the business that have had an accident,” Smith adds.
The next step is to introduce an eLearning tool which will focus on tackling high risk drivers as Britvic moves to “a holistic risk management approach”. In addition, those travelling more than 20,000 business miles a year and all apprentices are being put through on-road training over the next few months. Britvic opted to partner with Balfour Beatty because its bespoke service offered the best fit in terms of how the company wanted to train its drivers.
“They are also flexible on how to integrate their solutions into our overall health and safety policy,” says Smith. “They’ve created a solution on the back of their own business need and we felt they had addressed the challenges of driver safety, such as telling experienced drivers that have never had an accident that they need to do some learning.”
The key to the driver safety programme is communication. “Drivers have to understand the impact their decisions have on the business,” Smith says. “That’s how we get their buy-in to making mileage and claims declarations quicker, renewals on time, reducing out-of-contract costs and pushing towards commercially-aligned vehicles.”
Wider choice impacts on popularity of cash
Britvic offers all eligible company car drivers a cash alternative, irrespective of whether they are perk or job-need drivers. Around 300 take it, although the number is reducing as more drivers move back into the company car fleet, attracted by the wider choice, including the tax-efficient hybrids.
Should they use that car for work purposes, Britvic will monitor their business mileage through its expenses system. It is also considering extending its online portal to require grey fleet drivers to upload journey information in order to claim reimbursement. The level of cash offered is matched like-for-like on a benchmark vehicle. It’s a true cash alterative based on ownership costs, albeit “within sensible parameters”, says Will Smith. “The figure has been flat for the past couple of years to balance with the cost to the business. It is more favourable for higher mileage drivers to take a company car over cash, but we aren’t overly aggressive with it.”