Fleet management was never simple, but trying to give a company car to a member of staff is becoming so complicated it is a wonder the keys are ever handed over. Employees' choice used to be limited to whether the car came with red or blue paint, but now they can expect an extensive list of vehicles and variants, engines and fuels. As the choice increases, so issues such as cost, finance and safety become more complicated.
Fleet decision-makers must ensure each choice is cost-efficient to run, reliable and above all safe to use for its intended business purpose. The extent of research and preparation facing fleet decision-makers is laid out in 'Business & Fleet Car Management: A Boardroom Briefing', a Kwik-Fit Fleet-sponsored report on modern fleet management, focusing on managing risk.
Author Professor Peter Cooke, of the Centre for Automotive Industries Management at Nottingham Business School, has identified a huge range of issues fleet decision-makers need to consider. He warns: 'For the past 50 years, commercial vehicles have been carefully specified against their business use. Too rarely does this happen for business cars.
'Yet the range of body styles, engines, doors and options available mean it should be possible to plan the car against a work profile.'
Cooke admits that employers are walking a tightrope when it comes to putting employees in specific cars, when they have to pay tax on the vehicle.
He said: 'Why should they pay tax on a vehicle with paid for features or specification they do not need or use for their private benefit? Risk management in this case means ensuring the employee has a car with which they will be pleased, is suitable for the job, is economic for the organisation, fulfils its image requirement and is reliable.'
Cooke has identified a 12-point checklist that fleet decision-makers need to examine to ensure a company car is right for a driver and for the employer, which are listed below.
Twelve areas of concern for fleet decision-makers – and how to tackle them
1. Specification and application
Getting value for money vehicles must be set against ensuring employees are happy and, above all, safe. Employers should create a 'vehicle utilisation profile', Cooke says, capturing all aspects of vehicle use and employee aspirations.
Will a vehicle be used for long or short journeys, what loads or number of people will be carried and are expected residual values acceptable?
Check security requirements, restrictions on engine size and bodystyles and determine what additional equipment is necessary.
2. Vehicle maintenance
Prepare an audit trail showing key safety work has been carried out on vehicles. How will service intervals be managed and checked, who will organise servicing and what quality controls are in place?
Firms must also identify who will be responsible for random checks on vehicles and who will control maintenance work between regular services, while the firm must also create a policy on minor damage.
3. Tyre management
Tyres are the vital link that keep an expensive fleet car on the road. Fleet decision-makers must ask how tyre safety is monitored and how employees are encouraged to look after them.
Who makes replacement decisions and what procedures are in place to prevent fraud? Are there sanctions for tyre safety lapses and who will provide replacement tyres, particularly if there is an urgent demand?
Cooke said: 'It is important that an organisation is protected through stringent management procedures for tyres, while remaining flexible.'
4. Vehicle finance
Companies need to find the right kind of finance to match their needs but also need to avoid exposing themselves to risks, such as excessive rates.
Firms should look at how stable their provider is and if necessary perform credit checks. Could their finance supplier be subject to takeover or amalgamation? Decision-makers must check that any terms of finance are stable and are not liable to any sudden changes.
Cooke said: 'A similar exercise should also be made for checking a supplying dealer, however large they might appear to be.'
5. Fuel management
FUEL is a volatile substance, but there is more than one way in which careless handling can leave a fleet decision-maker with burnt fingers. Explain how to fuel vehicles safely and take a tough line on attempted fuel fraud. Pay for all employer- provided fuel through fuel cards, while all documentation must include mileage, date and journey details.
Cooke added: 'A critical part of fuel risk management is to ensure the audit trail is always completed and is foolproof. The company requires random checks, audits and constant vigilance.'
6. Vehicle security
PETTY crime may seem a low priority for a fleet decision-maker, until one of his drivers loses vital company secrets held on a lap-top to an opportunist thief. All employees should be issued guidance on car security, parking and contents, with regular reminders being sent out.
Quarterly reports should also be made to the board on vehicle security issues and there should be regular risk assessments of company cars in the field.
'Vehicle security is not rocket science,' Cooke said, 'but it has to be watched all the time.'
7. Incident management
THIS is one of the most traditional areas of risk management, which includes extensive record-keeping to help spot trends as they appear. Cooke said: 'Small changes can have a great effect. Unduly narrow gates are a classic case and some remedial work could save thousands of pounds in vehicle damage.'
Check first whether your company has a risk management policy and whether risk managers are employed. Ask if all incidents are reported fully and promptly. Ensure there is a proper evaluation process and look at how any significant findings are implemented.
AS insurance costs rise, employers must focus more intently on getting the best cover for their drivers and also examine how they can limit their costs. Assess the benefits of different types of supplier, whether broker, underwriter or direct.
Firms must also look in detail at whether the level of insurance is adequate, or too generous for a company's needs.
Fleet managers should be aware if there is a significant difference in claims between divisions and regions, working with suppliers to concentrate on problem areas to get to the root of the problem.
9. Used vehicle disposal
SIMPLE checks can include examining how used prices compare to other models and the range of disposal methods available. Are replacement cycles ensuring vehicles are sold at the right time and is pre-sale preparation of vehicles an effective investment? How is payment made for vehicles. Are buyers' credit details checked and do their funds clear before a vehicle is released?
10. Sales territory
This could apply to any territory that members of staff have to cover in their cars. Fleet decision-makers need to consider the maximum driving time and miles covered each day, along with any congestion staff may face.
What number of calls are they asking their drivers to make and where does the employee live in relation to the territory?
Cooke suggested that companies needed to set a policy towards the maximum driving per day, covered in either time or mileage and monitor current levels of vehicle use.
11. Employee-provided car on business
THIS is a growing issue for fleet decision-makers to deal with and it creates a whole new area of risk management. Companies must give staff freedom to choose cars while also limiting that choice to models that are safe for business purposes. Clear rules must be set down to avoid confusion, while insurance and licence checking is essential.
Regular checks on cleanliness, tyres and other maintenance is essential. Cooke said: 'A totally wrong car, or inappropriate car, used on a client meeting can easily damage a carefully nurtured corporate image.'
12. Daily rental
There are advantages to using rental cars instead of company cars or employee-provided cars, but it does have risks. Check on insurance arrangements when car hire is agreed and consider staff rules on the level and cost of car that is allowed. Examine the cost of daily rental compared to providing staff with company cars or cash. Get regular requotes to keep rates competitive.
Cooke said: 'The critical issue is a simple one – is the preferred rental company providing the best service the organisation could require?'