Fleet News

Fleets hear how to avoid being 'Hit for Six'

Experts clash after LPG is branded 'a stepping stone'

FLEET experts have clashed over future demand for liquefied petroleum gas (LPG) as a long-term alternative to petrol and diesel amid the fast-paced development of fuel cell vehicles.

The Fleet News Hit for Six conference heard from CAP national research manager Martin Ward that LPG was a 'temporary blip' that was only a stepping stone before more viable alternative fuels, such as fuel cells, took its place.

'Getting the fuel is easy but LPG is a temporary blip, and then there will be other more advanced fuel sources,' he said.

But his comments prompted an angry reaction from a number of speakers, including Lloyds TSB autolease green fleet development manager Malcolm Noyle, a long time campaigner on the benefits of LPG.

In a session sponsored by the Energy Saving Trust, Noyle said: 'If fleet operators believe clean fuels are a 'temporary blip', then they should think again. It is an important part of the clean fuel strategy for the future and is currently the most viable of clean fuel choices.

'Fuel cells will not be commercially viable until at least 2020, which is up to five fleet lifecycles away. LPG is available now. I believe that in three years time, a number of issues will mean there will be high demand for used models but low supply, and that can only mean healthy residual values for fleets.'

A key reason for the expected higher demand is congestion charging, Noyle said. London has already revealed that the cleanest alternative fuel vehicles will enjoy a 100% discount from the £5 a day charge when it is introduced in February.

He added that the growing crisis in the Middle East was pushing up petrol prices, but most of the current stock of LPG was sourced through the North Sea, which helps secure demand and keeps prices down.

Noyle's view was backed up by Chris Coombes, deputy chief fire officer for Leicestershire Fire Service, who has been running an LPG powered fleet of 62 vehicles since 1998.

Coombes asked fleet managers to look at the bigger picture, such as the 50-year supply of natural gas under the North Sea, and issued a challenge to manufacturers to ensure dual fuel cars remain a viable option that is not simply ignored in the rush to develop fuel cell technology.

'Green team' tackles fears over LPG fuel quality

THREE major industry players have joined forces to launch a new LPG 'green team' amid fears over the quality of some liquefied petroleum gas conversions and growing demands for information on converting to the green fuel.

Launched at last week's conference in Birmingham, the Clean Fleet Alliance includes leasing giant Lloyds TSB Autolease, LPG supplier Calor Autogas and converter MSD SVE. It aims to provide fleet operators with an easy route to the 'green' market, from funding and conversion through to vehicle delivery.

Announcing the venture, Lloyds TSB autolease green fleet development manager Malcolm Noyle said: 'There are lots of questions out there, and until now there was no one place to go to find the answers.

'The industry has felt increasingly frustrated at the lack of clear information on clean fleets. The CFA aims to put this in the past. Each member is an expert in their respective field, and the CFA has the advantage of a single point of contact.'

He said the alliance will push standards up in the conversion industry, adding that 'under the arches operations should not be allowed to flourish'.

The alliance will only recommend and endorse solutions that receive the approval of the TransportEnergy Powershift programme, which is one of a number of agencies giving its backing to the scheme. Others include clean fleet consultancy Motorvate and manufacturers Toyota GB, Volvo and Vauxhall.

The announcement marks the start of an important six months for the LPG industry, Noyle said.

There is growing awareness of the fuel among private buyers, which will push up demand as the Government drives for its target of annual clean fuel vehicle sales of 250,000 in the next decade. Noyle revealed that for an 'average' fleet car, obtaining 32mpg running on LPG and 38 mpg running on petrol, the savings of using a clean fuel over 75,000 miles were £2,848 in fuel alone.

He also estimated that a driver or fleet could save £780 a year on congestion charging fees set at £5 a day, if the vehicle went into the fee-paying zone just once a week over a three-year period.

Noyle added: 'Clean fuel vehicles are a viable, cost effective, safe and reliable solution for today's fleets. Stop sitting on the fence and take advantage of the financial and environmental benefits now.'

LPG switch a success, says fire chief

LEICESTERSHIRE Fire and Rescue Service (LFRS) began looking at air quality issues in 1998 but it was not an easy process. The brigade's deputy chief, Chris Coombes, said LFRS went through a period of discussions before rejecting electric and compressed natural gas because of limited mileage scope.

He said: 'We wanted a fuel that we could use right across the fleet. For LPG, we wanted a single manufacturer with a range of vehicles and we did not want to have to do conversions. They had to be ready fitted.

'Vauxhall was the chosen company to supply vehicles. They said we would get reasonable delivery times, but there were problems with supply and demand at the start that have since been rectified.'

The fire service runs its own workshops, 24 hours a day, because emergency services also have to run 24 hours a day. When the project first started, forecourt refuelling was not really available, so Coombes opted for bunkered fuel from Flogas.

Coombes added: 'We now have 62 vehicles in use, with high reliability for such a pioneering project. We had four vehicles with recurrent reliability problems in the early days, but it's not a bad performance.'

The teething problems with those vehicles have been rectified and the fleet now runs smoothly.

Coombes also reported a high level of acceptance from drivers towards the LPG vehicles. He felt that a principal reason for this was that drivers could buy the cheap bunkered gas for private fuel. Drivers keep the cars for private use because of extended working hours, when they could be at home but still be on call, ready to rush to an emergency.

He said: 'Private bunkered fuel has proved very popular and has been one of the differences between success and failure. Only four of our drivers are still sceptical, and remain so, but every company will have people like that.'

Coombes himself has run two clean fuel cars during the period the fleet has switched fuels. He said the first, a 2.0-litre Vectra, achieved 32 mpg on petrol, equivalent to 10.1 pence per mile. However, when switched over to LPG, despite returning a lowly 26mpg, it cost just 5.4ppm on fuel.

The story is similar with his latest vehicle, a 3.2-litre Frontera. It returns 21mpg and 15.4ppm on petrol, and 17.5mpg and 9.9ppm on LPG.

Despite the savings, Coombes is not entirely satisfied with the results. In particular, he has found fluctuations in the standard of fuel across forecourts.

He said: 'Fuel quality is an issue. Sometimes, the quality can change, depending on the supplier. I believe there are variations in the quality and I believe it's something the industry has to tackle.'

However, Coombes has been able to quantify the project in financial terms. He said: 'It has been a success because we have an £18,000 fuel bill a year for 62 vehicles. We are now one step ahead of the game.'

The fleet's contribution to air quality is harder to measure, but Coombes is keen that manufacturers continue to support the work such fleets have done to help the environment and to safeguard the investment in alternative fuels.

He added: 'Vehicle manufacturers need to maintain their commitment to alternatively fuelled vehicles. Customers have been let down on alternative fuel in the past. The environmental advantage of LPG will get less and there is a challenge to manufacturers and fleets to ensure alternative fuels maintain their viability.'

Maintenance discipline vital for opt-out drivers

FLEET drivers who swap their company cars for cash allowances and privately run cars should be taken off the road if they fail to maintain their cars properly, a leading consultant has warned.

David Rawlings, senior manager at Deloitte and Touche, told attendees at the Hit for Six conference that: 'Taking a driver off the road because they do not properly care for their car may sound like overkill, but you have to make sure the vehicle is fit for the purpose of being used for work.'

He added that it was also vital that private cars driven on business were properly insured for work purposes 'or the penalties could be severe', saying that a third party involved in a major accident caused by an employee driving for work purposes was likely to sue the employer, rather than driver, for damages.

Rawlings presented delegates with a series of guidelines to follow before implementing cash for car schemes.

He said it was vitally important that fleet executives know exactly how much their are paying for traditional company car provision before they can judge whether a cash option makes better financial sense, and he advised fleet decision makers to review regularly the cost and efficiency of current funding policies.

He also warned fleets that there is no 'magic pill' that ensures a cash option is the right choice for all drivers, saying: 'No two employees will ever be the same.'

Instead, Rawlings said that by splitting a fleet into manageable groups, for example high mileage drivers with low incomes, employers could identify sectors of their fleets for whom cash for car plans make sense and those for whom it is not appropriate.

He said the main reason cash for car schemes have a low take-up is because drivers fail to understand how they work, with many being suspicious of a company's motive for launching such a scheme.

'They always think there's a catch', he said.

Overall, Rawlings said it is an employer's responsibility to 'help, not force' car drivers through the process, provide them with access to the right software so they can calculate the figures for themselves and explain the potential risks and pitfalls.

'If you look at any fleet there will be one driver who would better suit a cash option and another who would be better off with a company car,' he said.

Tax warning on ECO schemes

CLEAR differentiation is appearing between employee car ownership (ECO) schemes that achieve Inland Revenue approval and those plans that are rejected, according to a leading tax expert.

Alastair Kendrick, director of PAYE and NI solutions at Ernst & Young, said ECO schemes that rely on employees buying their cars with a loan provided 'by reason of their employment' must use credit sale agreements to pass Inland Revenue scrutiny.

'You cannot use personal contract purchase, hire purchase or personal contract hire if the loan arrangement is by reason of employment,' said Kendrick at the conference, in a session sponsored by GE Capital Fleet Services.

ECO schemes have been a hot topic for discussion and an area of rapid growth because of their ability to provide employees with all the traditional benefits associated with a company car (including guaranteed holding cost, service, maintenance and insurance) without the burden of benefit-in-kind tax.

Kendrick said: 'The Inland Revenue is looking at this area and knocking back schemes initially introduced on a PCP basis. If you are in any doubt use a credit sale agreement, but it's imperative that the Revenue understands what you are going to do, how you are going to do it, and then approves the scheme.'

He added that as a rough rule of thumb ECO schemes could deliver savings to high business mileage drivers who can qualify for tax-free and NI-free business mileage reimbursement of 40 pence per mile for the first 10,000 miles a year and 25ppm for every mile thereafter; and to employees with high emission company cars who will escape punitive levels of benefit in kind tax under the new company car tax system. Conversely, ECO plans are much less likely to prove cost effective for low business mileage drivers who will not qualify for the advantageous mileage reimbursement payments.

What is an ECO scheme?

  • Employer arranges with a fleet provider to provide finance to enable employees to purchase vehicles.
  • Any discounts from manufacturers previously available to the employer are offered within the arrangement.
  • If the employee buys the car through a credit sale agreement he or she should avoid company car tax.
  • The employer will typically collect the monthly repayments directly by salary deduction.
  • Repayments can be structured to make maximum use of Inland Revenue business mileage reimbursement rates that are both tax-free and NI-free at 40 pence per mile for the first 10,000 business miles and 25ppm thereafter, saving both employer and employee money.
  • The vehicles are offered with insurance and maintenance and breakdown cover.
  • The employee is given a buy-back price for the vehicle at the end of the loan period.
  • It is intended vehicles will have all the feel of a company car without the tax burden to the drivers.

    Balancing act to be a 'fleet hero'

    FLEET executives must balance keeping bosses, HR departments and drivers happy if they are to be called 'heroes'.

    Dug Brown, fleet executive for supermarket chain Somerfield, told delegates at the conference, that he had been able to cut fleet costs in half as well as improve staff retention and ensure drivers took pride in their vehicles.

    Brown, who won the 2002 Fleet News Award for UK Fleet of the Year, joined Somerfield in 1998 when its company car fleet numbered 950 vehicles, took on nearly 1,000 extra cars when the company bought Kwik Save, and oversaw the fleet's reduction to 1,200 cars.

    When he joined Somerfield, company car selection was based on retail price with an annual cost in 1998/99 of £7.5 million. Brown decided to use wholelife cost calculators as a basis for vehicle choice, and switched to a dual-badge agreement which trebled the discount he had previously been able to achieve and drove the annual fleet bill down to £5 million, despite 250 more cars. He also expanded the type of vehicles offered to drivers.

    'A consultation with our HR department and drivers found that there was a large demand for MPVs,' said Brown. 'We added them to the choice list and although drivers had fewer badges to choose from, they have a greater choice of vehicles.'

    Brown said that as a result of reviewing the policy, communicating any changes between bosses, HR and drivers, he has been able to ensure all three parties are happy.

    'No shortcuts' to a safe fleet

    BRITAIN'S safest fleet has warned that there are no short-cuts to a comprehensive safety policy, and advised that it can take five years to improve the safety of at-work drivers.

    Alison Crump, fleet manager for Ortho-Clinical Diagnostics, revealed how she had been working to reduce the levels of risk faced by fleet managers since 1997 with a series of initiatives that have driven down accident rates to 3.67 per million miles so far this year.

    In a session sponsored by Town and Country Assistance, she revealed that there were five key areas on which she concentrated to introduce a successful accident reduction programme.

    Firstly, she ensured that she secured visible support from the company's board while secondly she made sure she had the wholehearted support of drivers.

    This was followed by ensuring the resources were in place to create an effective policy, before embarking on the hard work of changing the company's culture to have a zero-tolerance attitude to accidents, which needed the fifth key element - hard work and tolerance.

    Crump said: 'Drivers may have been a bit blase about hitting a bollard until I made it clear to them that it could have been a child. We have introduced driver training throughout the company and I have had resistance from drivers, but once they realise how valuable it can be, then they come and thank you.

    'One driver told me how grateful he was to have been on the course because he had used all the experience he had gained to avoid an accident.'

    Since OCD's safety programme began in 1997, Crump has introduced a series of initiatives, including accident workshops, and driving licence checks that cover partners and anyone driving a company car.

    During 2000, she issued guides on fatigue and announced that driver training would be compulsory for anyone driving on business.

    The firm also introduced full risk assessments for staff, covering everything from accidents to the safety rating of the car they were driving.

    If there is an accident, the company has introduced face-to-face meetings between drivers and line managers, while it also operates full safety checks on cars, including replacing car tyres at 3mm – the legal limit is 1.6mm.

    During 2000, OCD's accident rate was 11.6 per million miles, which the company felt it could improve upon, so it launched a fleet safety workshop for managers. A penalty scheme for drivers involved in own-fault accidents was also introduced. Staff are also fined for any thefts from their cars when they had left something on display.

    A mobile phone policy that only allows calls while the vehicle is stationary is now in force, while the firm has also introduced advanced driver training and annual appraisals.

    Since the schemes were launched, OCD's accident rate has fallen to 3.67ppm so far this year.

    Caution not to put fleet safety issues on the back burner

    A GOVERNMENT decision to put fleet safety on the back burner should not mean fleet decision-makers can ignore the accident risks at-work drivers face on the road, the Hit for Six conference heard.

    David Faithful, a partner with law firm Amery-Parkes, warned the 250 delegates attending the event that there is a raft of legislation already in place that law firms and the authorities could use to prosecute companies for failing in their duty of care to drivers.

    Legislation such as the Management of Health and Safety at Work Regulations 1999 and the Provision of Work Equipment Regulations 1998 already state that employers must be certain they are training employees to do their work safely and ensuring they are using equipment safe for the job. Speaking during a session sponsored by Town & Country Assistance, Faithful warned that this applied to company cars as much as it would to someone operating a lathe or working on a building site.

    He said: 'If you are taking steps to ensure staff are safe in factories or offices then you should be making sure that they are also safe in their company cars, even if they are using private cars for business journeys.

    'Even if the employee is in their own car, if they are using it for work, then the employer is responsible. If a vehicle driver has an accident because of defects on their car, then you as an employer could become liable.'

    Recent cases affecting other industries could be applied directly to fleets, he claimed, including an incident when a postman fell off his bike and was injured after his brake calipers failed.

    It was found in court that the employer was 'strictly liable' for the incident, effectively meaning it had no defence, so the employer had to pay compensation for the drivers' injuries.

    Faithful said: 'The trades unions have been rubbing their hands with glee because this means there is really no defence in these circumstances when a case is brought against an employer.'

    Fleet NewsNet exclusively revealed last month that the Trades Union Congress had mobilised thousands of union members to demand companies make at-work road safety a top priority.

    Faithful also reminded companies the police were taking an active interest in checking whether drivers involved in road accidents were on business at the time.

    Guidelines for the police on how to prosecute managers and companies failing in their duty of care to drivers were set out for the first time in a manual from the Association of Chief Police Officers in July. The 200-page Road Death Investigation Manual includes a call for deaths on the road to be treated in the same way as homicides.

    Faithful warned: 'You may have passed responsibility for maintenance to an outsorced company, or even moved to cash for car, but at the end of the day, you are responsible for the vehicle and the driver while they are at work.'

    Call to stand up and be counted

    Fleet decision-makers need to stand up and be counted and not shy away from taking tough decisions to ensure they do not become obsolete and have their jobs outsourced.

    Stewart Whyte, managing director of Fleet Audits, told delegates that they needed to become indispensable through innovation, training, communication and a more proactive approach.

    Whyte said: 'Get heard. Get senior management interested. Fleet managers have a very important job – they are responsible for huge expenditure and it is hugely variable.

    'Good management will keep such expenditure low. Make sure your voice is heard. Do not wait for the managing director to be persuaded by somebody who wants to outsource your job. Fleet is all too often the poor relation because managers will not stand up and be counted.'

    Whyte used the example of Ray Stark, the transport manager at Scottish and Newcastle Breweries in the late 1970s, who 'went to his bosses and said if they changed their fleet to diesel they would save a million pounds a year. It changed the face of the UK fleet industry'.

    He also made a plea for more communication and training. 'Meet other fleet managers, compare notes and pick up new techniques.'

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