Reducing the number of employees using their own cars on business can have significant benefits for fleets. Catherine Chetwynd asks three fleet operators honoured at the Fleet Hero Awards how they did it
Tackling the grey fleet has been a growing priority for many fleets in recent years: drivers using their own vehicles for business use has many implications for an employer.
However, it is also an issue which some organisations are failing to look at.
“The grey fleet continues to be an issue from a cost, duty of care, environmental and reputational perspective,” says Shaun Sadlier, senior consulting manager at leasing company Arval. “However, we see a number of businesses which are either not addressing their grey fleet or don’t realise that grey fleet is an area that they should be tackling.”
Lex Autolease’s annual Report on Motoring estimates there are around 14 million grey fleet vehicles in the UK.
“Worryingly, 22% of fleet managers think there are no serious risks to the company from employees using their own cars for work,” says John Webb, principal consultant at Lex Autolease. “But driving is the most dangerous activity for most employees while at work and 62% of private car use is for work-related activity, so duty of care, regardless of the vehicle’s ownership, should be a top priority.”
To find out how organisations can reduce their reliance on the grey fleet and what impact this can have, we asked three fleet operators recognised for their excellence in managing the grey fleet in the Energy Saving Trust’s Fleet Hero Awards.
Why did you decide to tackle the grey fleet?
Ian Rodham, travel plan manager at University of Cumbria: Employees using their own cars on business made up around 50% of the fleet’s total mileage and we recognised that we did not know what condition the vehicles were in or what their emissions were.
Alan Asbury, sustainability and energy manager at Aylesbury Vale District Council: We had a grey fleet of 170 cars that were, on average, 7.2 years old and being used on around 8,000 journeys annually. We checked licences, insurance and MOT certificates once a year, but we had concerns about control, cost and emissions.
Jim Thomas, head of logistics at Sussex Community NHS Trust: The trust delivers 90% of its care to patients in their homes, which involves covering an area of 1,000 square miles. When we started to track the grey fleet’s mileage, we found it amounted to six million miles a year at a cost of £3m.
What was the first step you took?
Ian Rodham: All grey fleet reimbursement is done through expenses claims, so by receiving a monthly consolidated report from payroll, I could track mileage and cost. Before I started prohibiting or restricting one particular activity, I needed to ensure there were travel options in place, so I drew on a long-standing relationship with Virgin Trains, which staff used mainly between Carlisle and Lancaster. We set up an agreement that allows them to use first class facilities on standard class tickets. I also re-wrote the travel and expenses policy to prioritise not travelling but using video conferencing where possible. If travel was unavoidable, then employees should use public transport or hire vehicles, with grey fleet the least desirable option.
Alan Asbury: When I decided to deal with the grey fleet, I said nothing is off the agenda. I wanted to come out of this with a fair system, where everybody has to drive pool cars. This meant communicating with staff representatives, unions, directors and councillors. After a trial period, we introduced an eight-strong pool car fleet of diesel-engined Ford Fiestas, with CO2 emissions below 100g/km, electric Nissan Leafs, with charging points on site, and an automatic petrol-engined Fiesta.
Jim Thomas: Grey fleet was seen as part of the HR or finance remit, rather than travel and transport, so we said we thought we could do it better. Brighton General Hospital has four trusts, so we brought them together to benefit from economies of scale. Data was collated by one of my colleagues who received numerous spreadsheets from payroll that listed everything paid to each member of staff over a year. He filtered out the number of miles travelled and the amount paid for those. We then concentrated on the higher mileage services of the directorate, explaining to them what we were trying to do, and we managed to get them into new cars.
What other initiatives did you introduce?
Ian Rodham: We arranged with our incumbent rental supplier Enterprise Rent-A-Car for our employees to use more small vehicles. By January this year, 75% of our rentals were in groups B and C (superminis and small family cars). In addition, Enterprise has started to introduce hybrids to its fleet, while the university also has car clubs and pays bicycle and car sharing mileage. We also reduced mileage reimbursement from 45p per mile to 30ppm and any member of staff claiming grey fleet mileage had to deduct the distance covered from home to work, formerly allowable on business trips.
Alan Asbury: We reduced the mileage reimbursement from between 45ppm and 65ppm to 15ppm. We also communicated to employees that hire cars are checked regularly and are fit to drive but if a member of staff using their own car had an accident and, for example, the tyres had illegal tread depth, then the council would still be responsible. Our research identified six employees who were driving their own cars for 10,000 business miles a year, so we gave them lease cars and they could choose from vehicles that produced less than 100g/km of CO2. Those cars are delivering savings and their drivers are pleased to have their own cars.
Jim Thomas: We refreshed an old business travel plan, which set out objectives and a series of initiatives to deal with the grey fleet. We also created a travel bureau, promoting it as a one-stop shop for anyone who does business mileage and wanted to change the way they travelled. We also introduced a pool of hybrid and electric vehicles at most of the trust’s key sites, which meant those needing a car did not need to drive to work but could walk, take public transport, cycle or car share. We funded them centrally, so that any service that reduced travel by using those vehicles would benefit from the savings. We are also looking at the possible addition of an electric cargo bike which would be used instead of a courier van for urban journeys.
How did you introduce the changes and what were the main challenges?
Ian Rodham: We involved payroll, finance, HR, unions and staff, and the changes were communicated through the intranet, email messages and briefings. Anyone who slipped through the net received feedback on their expenses claims. The unions were a bit sensitive because anything to do with staff is going to be controversial, but it was received as well as could be expected. The main issue was to make sure that when people needed to make a journey, there were still plenty of ways in which they could do it.
Alan Asbury: Many employees put up resistance because they saw cars as part of their salaries, rather than as an allowance. The principle line we used was that every authority was going through significant cuts – we have lost about 200 staff in the past four years and that will continue. We told them the council was looking at ways of making and saving money, and these initiatives are saving £90,000 per year, preserving up to four jobs. Also, some employees thought the Leaf would drive like a milk float and have too short a range, and they were nervous about charging the battery. We spent a day at the council’s conference area and in the car park to introduce them to the Leaf, explaining how to drive and charge it. When they got into the car, they were astounded by the acceleration, the feel, the lack of noise and the spec.
Jim Thomas: The main challenge was persuading people to rethink their day to use the pool cars. Because community workers spent so much time in their car, they saw it as part of their personal space. The department communicated widely through a number of channels to encourage uptake, and positive feedback has included ‘I have lost weight’ and ‘I walk over the Downs to get into work’.
How successful were the measures?
Ian Rodham: The number of miles claimed has dropped 42% (258,000 miles), saving £169,000 (62%) between academic years 2012/13 and 2014/15. Those savings have not been transferred to rail and hire cars, where costs have risen only £5,000, making a total saving of £164,000. As far as I can see, numbers are continuing to fall in the current year. It has been very successful and I would highly recommend that anyone tackles grey fleet. Changes will be accepted if people are looked after and their interests dealt with.
Alan Asbury: Emissions have been cut by 50% as projected, while these initiatives are saving £90,000 a year.
Jim Thomas: Between 2013/14 and 2014/15, we saved 17% on grey fleet mileage, which equated to 949,500 miles. Based on an average reimbursement of 50ppm, that comes to roughly £500,000. The pool cars also showed a return on investment of 38% in their first year.
Grey fleet alternatives
Organisations can reduce grey fleet use by lowering the business mileage threshold at which employees are eligible for a company car.
“This means that the business has more control, or at least some say, over the car that drivers have,” says John Webb, principal consultant at Lex Autolease.
However, Jon Burdekin, head of consultancy services at Alphabet, says: “I wouldn’t say it is necessarily the most strategic way to manage your grey fleet.
“If you’ve got somebody who’s doing 10,000 business miles a year in their own car, then there is an argument to say they should have a company car because they are more than an occasional user.
“However, I wouldn’t say increasing the company car fleet is right. It is an option, of course. You can give every single employee a car, but it’s using a sledgehammer to crack a nut.”
Salary sacrifice schemes allow businesses to give employees the option of relinquishing part of their salary for the non-cash benefit of a new lease car.
They can help companies reduce their grey fleet concerns by replacing older cars with newer, less-polluting and better-maintained models, says David Hosking, CEO of Tusker.
“They also meet duty of care concerns and, by introducing mandatory licence checking and automatically providing business insurance, the schemes ensure that the company and its employees are fully covered,” he adds.
Pool cars and corporate car sharing
Traditionally, pool car fleets have been leased vehicles which are available for employees to use for business journeys, but leasing and rental companies have developed alternatives.
For example, Alphabet offers corporate car-sharing scheme Alphacity, while Hertz and Europcar have launched their own pool car or corporate car club schemes.
“Car club and pool fleet vehicles represent efficient and sustainable alternatives ,” says David Rowland, general manager for Hertz UK.
“On-site car clubs and pool fleets are made available to a large number of staff with a frequent need for short-term vehicle access.
“Car clubs can certainly reduce the overall fleet cost while improving the vehicle utilisation, freeing parking spaces and contributing towards sustainability targets.”
Daily rental continues to provide a cost-effective solution for short- and medium-term rental requirements, says David Rowland.
“Car rental provides the newest, cleanest and safest vehicles for employees on a flexible basis,” he adds.
Rental also offers employers peace of mind from a duty-of-care aspect, says Ken McCall, managing director of Europcar.
“Businesses can be safe in the knowledge that the member of staff will be driving a car that’s generally less than eight months old and has gone through a full check, including tyre tread, etc. before each journey it makes,” he says.
Car clubs provide members with flexible access to the use of a pool of vehicles.
They are generally parked in dedicated parking spaces on or off street and can be used, and paid for, on an hourly, daily or weekly basis.
Croydon Council has used Zipcar after it entered into an initial two-year partnership in 2010.
This saw the car club provide a number of vehicles for the authority’s exclusive use during office hours, and these were available to Zipcar members in the borough of Croydon at evenings and weekends.
At the end of the initial two-year period, the council had achieved a 48% reduction in business miles to 642,000, and a 64% reduction in the cost of car travel to £472,000.
Public transport can be a viable option to the grey fleet depending on the destination and purpose of a journey.
It favours fleets based in urban areas which are well served by multiple public transport alternatives.
For example, Transport for London operates a simple policy where grey fleet use is not allowed.
Its number one priority is to use public transport, keeping with the organisation’s ethos.