Time and again experienced fleet managers prove their worth. They put the right policies and procedures in place, they ensure compliance (which could ultimately keep a company director out of jail) and, more often than not, they save businesses money.
Steve Cuddy, head of fleet, Banking Division at Close Brothers, is a case in point. He has worked in the automotive sector since school – he joined the Youth Training Scheme (YTS) as a motor mechanic, followed by roles at Hertz, Balfour Beatty and Network Rail – and was brought into a new role at Close Brothers in April 2012 when an audit identified the need for a dedicated fleet manager.
Since then, he has changed ‘almost every aspect' of the fleet – funding, insurance, risk management, manufacturer terms, short-term hire, replacement cycles, company car grades, fuel type, mileage capture, supplier contracts and the management of suppliers – and saved Close Brothers an estimated £2.5 million over the past five years.
This has been achieved despite the fleet more than doubling in size due to business growth. When Cuddy started there were “about 250 cars – that we knew of”. Phone calls over the next three months revealed there were actually 350 leased cars, 20-30 cars that had been bought, and about 60 grey fleet drivers. Today the company car fleet stands at 645 (all leased), including 20 cars in Germany and five in the Republic of Ireland, and there are 150 grey fleet drivers.
Cuddy now manages the fleet with support from fleet coordinator Morgan Migallos, who joined three years ago.
The fleet is 98% job-need (the cars are used by salespeople across five divisions: Motor Finance, Asset Finance, Invoice Finance, Premium Finance and Asset Management) and 2% perk.
When Cuddy joined there was no consistency across the divisions. Each had its own insurance policy, expiring on different months, for example. It took 18 months to realign them and to appoint one broker (Arthur J Gallagher & Co) and one insurance company (AIG), resulting in a £500,000 saving.
Compliance and duty of care high on the agenda
During that first year, compliance and duty of care was high on Cuddy’s agenda. He appointed DriveTech to handle licence checking, online risk assessments and driver training.
Formalising Close Brothers’ relationship with Lex Autolease was also essential. Lex was supplying vehicles to two divisions, getting the cars repaired if they were damaged and replacing them, but there was no contract and no manufacturer terms.
Cuddy met with a number of major manufacturers (at the time Volkswagen and Audi were the most popular brands with Motor Finance, while Asset Finance and Invoice Finance favoured BMW and Mercedes-Benz). Eventually he secured terms with all the manufacturers, not just the most popular ones, and loaded them onto Lex Autolease’s system to “test the waters”.
“After about a year we realised it was predominantly the German brands that people were ordering,” he says. “It was very badge-orientated.”
Cuddy reduced the number of grades on the car policy from 12 to five in 2014 after spending time understanding the various job roles (account managers, sales managers, directors etc.)
He also introduced a CO2 cap of 160g/km (emissions were not previously capped) and then dropped it to 130g/km for all divisions bar Asset Finance (“the petrol heads”) three years ago. The Asset Finance division also has cars on three-year replacement cycles (the other divisions are on four years), although Cuddy is gradually changing this.
“They love their cars and would change them every two years if they could,” he says. “We let them carry on at three years but we gave them the opportunity to extend to four years on the premise they could get a slightly better car or more options on their car because the lease rate comes down slightly.
“We have gone from more than 150 vehicles on three years to 60 and I would expect that 60 to disappear within the next few years.”
He opened up the fuel policy from diesel-only two years ago as “the benefit-in-kind (BIK) was getting more expensive”.
A few petrol vehicles were ordered, which fell within the 130g/km CO2 limit, and then people began to choose plug-in hybrids.
Emissions have tumbled. Four or five years ago the average emissions of the fleet was 200g/km. That dropped to 98g/km in 2017 and is now at 95g/km.
Cuddy put in place strict policies as part of the agreement to allow plug-in hybrid vehicles on the fleet. Employees must sign a disclaimer when they order their vehicle that they will have a charger fitted at their home address at their expense and that they will charge the vehicle at home or at the office. They are not allowed to reclaim the electricity cost.
“We recognise we are probably upsetting a few people that live in flats because they can’t get the same car but there are pure hybrid alternatives available,” he says.
Cuddy monitors the charging from the miles per gallon reports he receives from TMC (which he appointed in 2014. Its audit process saved Close Brothers £250,000 in the first year).
“We see straight away that, on average, most cars drop by 10mpg when you don’t charge them up,” he says. “Anyone that does forget we get straight onto the line manager. If that doesn’t work, we go to the MD of the area and the last resort would be to withdraw the car.”
Cuddy has only had to remove a plug-in hybrid once – when a driver moved to somewhere where they couldn’t have a charging point. The car was swapped for a pure hybrid.
Charging points at Close Brothers seven offices
Charging points have been installed at Close Brothers’ seven main offices. The process began in February 2017 and took a long time as Close Brothers doesn’t own all of its buildings and, in some cases, the landlord that owns the building doesn’t own the car park.
“Our facilities department has done a great job getting new licences in and liaising with the landlords,” Cuddy says. “You have to almost ‘sell it’ to the landlord. It’s future-proof for them because if we ever move out of the building they’ve got some charging points that we’ve paid to install.”
The charge points are metered and software shows when the car is fully charged, helping to avoid “car park wars”.
Charging points will be installed at other offices and branches (Close Brothers has 40 in total) where more than two plug-in hybrids have been assigned to company car drivers.
The first pure electric vehicle, a Hyundai Kona, joined the fleet recently and with about 170 cars due for replacement this year he hopes the number of EVs and hybrids will grow. He is considering limiting the choice list to manufacturers that produce electric and plug-in hybrid vehicles, although like many businesses he wants the Government to “get its act together” and offer more incentives for company car drivers.
Close Brothers’ fleet is now predominantly BMW, partly due to the manufacturer being one of the first to go through WLTP testing and to publish its NEDC-correlated figures. Close Brothers allowed employees to place orders and explained via the intranet what the new test regime was with examples of increases in CO2, although, as Cuddy points out, CO2 for the new BMW 3 Series has actually decreased.
Cuddy has experienced average lead times of three-to-four months for plug-in vehicles. Opting for 5 Series cars which BMW had in stock last year also brought cars onto the fleet quickly and meant drivers benefited from the plug-in car grant before it was cut for hybrid cars.
Cuddy favours mini-leases for new starters rather than daily rental. It has saved Close Brothers £265,000 over a two-year period. He has also taken control of hire car bookings, saving £150,000.
All UK vehicles are now on contract hire with maintenance from Lex Autolease. As Lex is not an international business, Close Brothers uses Alphabet in Germany and in the Republic of Ireland it favours local firm Merrion (which has merged with ALD).
Five year deal with Lex Autolease
Close Brothers signed a new five-year deal with Lex Autolease in October 2017 after Cuddy had spent 10 months reviewing other major leasing companies. There wasn’t enough difference in price or systems to persuade him to change providers.
“I didn’t see the need to upset the apple cart,” he says. “We had just spent four years drumming into Lex how the customer service should work and do you start that again with another supplier and manage Lex at the same time while we see out the Lex vehicles?”
Cuddy and Migallos now have dedicated customer service and sales staff at Lex who they can speak to on a daily basis if they want to and the staff know and understand the Close Brothers’ business – to the point where “I almost authorise without us having to intervene, I trust them to follow our process”, Cuddy says. Close Brothers has a damage waiver in place with Lex (up to a certain amount) and uses a refurbishment company to repair other damage before vehicles are returned.
Cuddy believes that this, along with encouraging drivers to look after their vehicles, has saved £100,000 in damage charges.
He has introduced an at-fault incident policy. Drivers do not have to pay for their first incident but if they have a second one they have the option of paying the excess or paying for a dashcam to be installed at their own expenses (approximately half the price of the excess). Close Brothers has already experienced success with dashcams when they were introduced to its Sales Academy (which trains salespeople to become area sales managers) with the accident rate falling from 80% to just 10% in a year – all minor claims. Now around 50 drivers have dashcams.
If a driver has a third at-fault incident they pay the full excess. Drivers who have three incidents – regardless of fault – in a 12-month period go on a training course with Drive-Tech. Those with six or more points on their licence also automatically go on a course and are checked more frequently.
The fleet’s accident rate has fallen from 60% to 40% over the past year.
Telematics could bring further savings as Cuddy is trialling an app called Mentor with the latest Sales Academy cohort. It has helped bring “healthy competition” and Close Brothers will soon be offering prizes for the highest scoring drivers while those with the lowest will go on driver training.
Cuddy is also working with Arthur J Gallagher and AIG to incorporate data into the DriveTech systems and create a ‘scoring chart’, which could be more effective than online risk assessments.
Dashcams, the Mentor app, enhanced driver training and HR support to reclaim insurance excesses, combined with rebates from the Lex contract should see Close Brothers reduce its fleet costs by a further £1m over the next three years.
Cuddy is also busy helping Migallos to progress. He has introduced him to all the manufacturers, brought him to Fleet News networking events and Migallos will take the ICFM intermediate programme this year.
“It’s been recognised by HR that we provide a really good service to the driver so they are more than happy to invest in his future,” Cuddy says. “He’s being trained up to succeed me. He’s in a great position because there are so many changes (in fleet) at the moment, he’s in the thick of it, so he’s learning all the time.”
Steve Cuddy 'wound up' by cash V car debate
There’s one topic that makes Steve Cuddy’s blood boil: cash versus car.
Businesses that have chosen to scrap their company car schemes and given employees cash allowances in the wake of benefit-in-kind tax uncertainty are guilty of a “knee jerk reaction” in Cuddy’s view.
“It winds me up,” he says. “But I believe it’s because those companies don’t have a dedicated fleet manager looking after their fleet who understands the implications of moving everyone to cash and the duty of care responsibilities.”
He believes there is no saving for Close Brothers from switching to cash due to the fleet’s move towards plug-in vehicles and, ultimately, pure electric.
He is also concerned there is a “huge risk” that drivers would take out an 8,000 or 10,000-mile personal contract hire or personal contract purchase even though they do 15,000-20,000 business miles a year normally. They may then expect the business to let them use the train or short-term hire for business journeys, potentially pushing the company’s travel costs up.
The company would also lose control over the type of car staff had, which could mean they visit clients in “unsuitable” models, such as coupes, convertibles or ageing cars.
“You don’t know what you may end up with on your fleet,” Cuddy says.
He doesn’t believe it is good for drivers either. They would be ‘on their own’ if their car broke down, they had an accident or their insurance premium shot up.
“We like to look after the staff here – they’re our customers,” he says. “Morgan (Migallos) and I will go out of our way to make sure they’re safe and recovered home if they have an incident.
“We’ve got a stable, steady fleet now and the drivers are complimentary about the service we provide. If you’ve got to that stage you’ve pretty much nailed it.
“To turn it on its head and give everyone cash and say ‘you’re on your own now’, it’s not the way Close Brothers operates.”
Cuddy recognises that some leasing companies don’t like connected cars because they can allow car manufacturers to “bypass” the leasing company’s processes but he and one of his driver’s have already felt the benefit of the technology.
“We had a driver that an accident down a country lane,” Cuddy says. “He was upside down (in his car) and he said this voice came out of the car saying, ‘It’s Mohammed from Mercedes, are you OK?’ He was looking round, didn’t know what was doing on, and he replied ‘yeah, I’m OK’. They had contacted the police, the police came along, the driver was fine, job done. From a driver’s point of view and my point of view it’s great.”
Close Brothers has also been trialling technology which integrates with a driver’s Outlook calendar, alerts them via their smartphone when they need to leave for a meeting and sends the route to the car’s sat-nav.
“Is it a gimmick or not? I’m not sure, I’m a bit old school,” Cuddy says. “But the kids are growing up with new technology and we’ve got a responsibility to pave the way for them.”
In Cuddy’s view, fleet management has always boiled down to one thing: data.
“As the systems have got better over the years the data has got ‘cleaner’ and you’ve got to keep clean, accurate data,” he says.
“It’s the only way you can look at your replacement cycles, miles per gallon etc. And there is only going to be more data in the future.
“That’s something I’ve drilled into Morgan (Migallos) as well: data, data, data.”