As fleets look for new ways to manage and reduce costs, one company has found that taking a risk-led approach to managing vehicle maintenance can bring substantial financial savings.
Fleet News parent company Bauer Media set up a budgeted maintenance scheme on its car fleet in conjunction with leasing partner Zenith whereby Bauer takes some of the risk on its service, maintenance and repair costs.
It’s a calculated risk for Bauer Media fleet and risk manager Debbie Floyde, who manages the fleet of 420 vehicles.
“We pay around 75% of the normal maintenance budget, along with a small admin fee for the privilege. At the end of the lease, we pay any deficits, and get credited any surplus,” explains Floyde, who has been with the company for 17 years.
“Providing a car – or driver – has behaved well, a credit comes back. Overall, it’s worked very well in our favour.”
The figures certainly stack up. In 2013/14, £41,000 was returned to Bauer Media from budgeted maintenance coverage.
The savings are testiment to the level of control Floyde, together with fleet co-ordinator Sarah Sharples, exerts over her drivers, ensuring they look after their cars.
Although a national fleet, the majority of vehicles work out of a centre – be that Bauer’s magazine offices in Peterborough or London, or one of the company’s 23 national, local and regional radio stations.
This enables Floyde to build long-term relationships with local repairers.
“We like to use independent maintenance providers when we can,” she says.
“For example, in Peterborough all of our vehicles go to a local centre that will pick up and drop off the vehicles, that knows our company and offers a consistent service.
“I’ve got nothing against main dealers, but the independents are perhaps a little cheaper, and you can build up a good relationship with staff over time, whereas some main dealers change their staff more frequently.”
A profit share scheme kicks in at the end of each vehicle contract, resulting in either a cost or credit to Bauer. It takes into account sale proceeds, excess mileage, cost of disposal and any vehicle repairs prior to sale.
Floyde says that although several vehicles are charged for each year, the overall balance is in Bauer’s favour. In 2013/14, the company was credited with £22,000.
Bauer’s fleet undertakes a variety of roles, with vehicles for sales staff, managers, and a large number of pool cars, particularly for broadcast teams at the radio stations.
The pool cars will often be driven by a casual staff, requiring licence checks.
With 2,200 employees across the group, plus additional casual staff, the number of licences and potential drivers far exceeds that of the fleet itself.
Floyde and Sharples undertake all licence checking in the business – a licence needs to be seen and approval given before a member of staff can drive.
Regular drivers have licences checked electronically, while manual checks take place for casual drivers. With the removal of the paper counterpart this summer, Floyde is anticipating some changes to the handling of licences.
“For those drivers, the new system will be better, as we can get them to send us a dated screenshot. We’ll still have to file the data, but it’s more accurate than a copy of their licence could be.”
Driver risk management for those regular drivers is more thorough.
“We operate an online risk assessment process. We will look at the results of each driver methodically. We put staff through online training, and speak to managers across the business on a regular basis, who will alert us to any issues with drivers.
“We also use on-road training, but courses are targeted at a very small number of our drivers. The majority of those we put through a course moan about having to take it, but they’ve always come back and said they’ve enjoyed it and learned something new.”
The fleet is dominated by Volkswagen Group cars, although there are other brands on the list, including the Ford Focus and Honda Civic.
“The fleet take-up has historically been 60% Volkswagen, so it was driver-led. We look at fleet choice lists at least quarterly and take into account RV changes.”
Floyde’s choice list is driven by wholelife costs and effective rentals – but wholelife cost takes priority.
Fleet CO2 emisisons have been driven down by ever more efficient models, with the average currently sitting at 115g/km. There are exceptions, with 4x4 vehicles in use for specialist titles and regional radio stations.
“We restrict choice lists at the low end of our vehicle grades because we reallocate so many vehicles. At one point a few years ago, we were reallocating up to 80 vehicles a year.
“Now it’s down to around 20-30, but a Golf is a Golf – you can easily move them on. A restricted list helps in that sense.”
Vehicles in radio stations are a little more unusual – and in 2012, new standardised pool cars were rolled out across the country.
“Stations had quite a lot of contra deals with local dealers which we wanted to get away from,” Floyde says.
“We put Nissan Jukes and Škoda Yetis in to each station – a smaller car for news teams, and a larger one for outside broadcasts. They’re all fully branded in the colours of each station.
She is now looking at the next raft of ‘small and quirky’ vehicles to go in to stations at the end of the year.
“I have toyed with the idea of putting electric vehicles into some stations, but the vehicles for news teams have to be ready to go.
“If someone forgets to plug it in, we’d have to have a back-up vehicle. It’s more down to education than the car. We’ll continue to look at it, and I think we’ll trial it at some of the stations soon. They’re not the cheapest vehicles to run as pool cars, but it’s trying to find that happy medium.”
In 2008, Emap plc sold its UK consumer magazine and radio division to the German Bauer Media group, while its London-based business publishing arm was sold to a private equity firm and renamed Top Right Group.
Despite the split seven years ago, Floyde still manages around 40 vehicles for Top Right on an outsourced contract. Its vehicle count has reduced substantially in recent years – almost halving.
The policies, bandings and benchmarks are shared across both fleets, and any communication issued by Floyde and Bauer regarding fleet gets passed over to Top Right.
“We run their fleet as we would do ours. If any of their drivers have an accident, they ring the same number ours do – the processes are identical. They benefit from the economies of scale of our larger fleet.”
As the growth of data in fleet becomes clear, so too does the use of technology to record that data.
Floyde has investigated telematics in the past, but doesn’t currently plan to introduce a third party system in the immediate future.
A sample of 15 Bauer Media fleet vehicles took part in a telematics trial with Fleet News in 2011. Although Floyde believes that, at present, the fleet wouldn’t see much benefit from telematics installation, she says this will have to be reviewed in time.
“A challenge will be embracing technology in the future. I think vehicles are likely to come with telematics as standard, and then we will have to look at how we manage and monitor the information it is giving us.
“If the car starts sending me a report telling me a driver is going too fast, I can’t ignore it. It’s about planning ahead and making sure systems are in place.”
To ensure that the fleet contract remains competitive, Floyde is currently in the process of taking the Bauer fleet out to tender. Before going to market, she narrowed the options to a handful of leasing providers.
“I’ve been looking within the top 10-20 of the FN50 at companies who I think would be a good fit with our business. When we last went to tender in 2006, I went to 23 companies. I was adamant we were having a cross-section, but it was a nightmare,” she says.
“Pricing has become irrelevant – it’s not all about price. I need to find a differentiator.”
As part of the tender process, Floyde is also investigating the introduction of a salary sacrifice programme, which would be open to all staff across the company.
“There are challenges – it would have to be cost-neutral. It would, however, help if we were looking to move perk drivers out of cars, or to provide a solution for the small number of cash takers within the business – whether they do business mileage or not.”
Invoices for services such as daily rental, maintenance, accident repair and breakdown are paid by leasing partner Zenith, and invoiced back to Bauer.
“I still maintain you need people in-house. I’m not a big fan of complete outsourcing, because we are always questioning and challenging our cost and reporting, to get the most out of our fleet.
“If it is completely outsourced, who is fulfilling that role? If a director is never drilling down into that data, you could miss potential opportunities.”
Floyde is an ACFO board director and has been involved with the fleet association for around 15 years.
“Someone recommended I attend an ACFO meeting in my early days of fleet. I’ve never been to a meeting without taking away something new,” she says.
“You can see what another fleet manager has done in a similar situation. Fleet management is quite an isolated role.
“There aren’t many people in your own business who understand what you’re doing, and know the ins and outs, so it’s quite refreshing to be able to speak to someone else with the same problems and needs as you have.
“It’s key for businesses where fleet isn’t a main role or where it has been partially outsourced to join something like ACFO, even if they haven’t got a fleet manager.
“There has to be someone in their business responsible for fleet, even if it’s just paying the invoices. They will benefit just as much, if not more.”
Taking a Risk
Seven years ago, Floyde became group fleet and risk manager, taking on responsibility for commercial insurances across the company.
“Fleet insurance was the single biggest cost for the company, so it was decided that all insurance should be managed as one.
“I procure all insurances for the company, including vehicles, property and public liability.”
As part of the insurance and risk role, Floyde has to manage risk assessments for the radio division.
“A couple of weeks ago one of our radio stations decided to blow up a presenter’s car for a feature. They also lock people in coffins, take listeners in helicopters and zip-wire over canals. The only one I’ve said no to was a request to get a presenter inside a zoo enclosure feeding lions.
“We have to make sure they are risk assessed properly, all paperwork and schedules are completed, and that we are keeping insurers informed of any extraordinary risks.”
Floyde also has a remit to look after test cars and bikes used by Bauer’s automotive and motorcycling titles including Fleet News, Car, and MCN. Her role includes providing insurance cover, accident management and breakdown cover for vehicles across the UK and Europe.
“The last thing we’d want is a vehicle to go over to Europe and not be able to get back.
“We’ve just had a classic car in an accident, and that can’t just go down to the local bodyshop for repair – it has to go to a specialist. Incidents involving bikes are more frequent too – sometimes you only have to look at one and it will fall over.”