'In the challenge to keep the costs down, one of the most important things for fleet managers is to reduce fuel consumption. Tax now represents more than 70% of the price of one litre of petrol and thus a more radical approach is needed.
This is particularly relevant following a recent European court ruling in Holland. It restated the practice common in all other EU countries that unless fuels are purchased directly by the business, the VAT cannot be recovered.
As the UK is now the only country out of step with this VAT legislation, it is likely to be the subject of action by the European Commission to enforce compliance. You can be prepared by issuing fuel cards to your employees for purchasing fuel. In this way, you can avoid the risk of not being able to reclaim 17.5% of your fuel costs by becoming the direct purchaser of the fuel rather than your employee.
The real key to operating more efficiently is careful planning. In most UK fleets, there is still room for improvement in how fleet mileage is managed. In France, a traditionally higher cost economy, Total has worked closely with fleet managers to provide a whole suite of tools to reduce costs. These will be introduced shortly in the UK.
To give a few examples of the sort of solutions that will be available here, Total UK's customers will soon have the use of a route planner tool on our website, backed up by a telephone line to locate any one of Total's refuelling sites.
This route planning has particular relevance in England and Wales, where we have a large network of service stations and can thus provide drivers with fuelling points that fit in with customer locations to maximise efficiency and keep costs to a minimum. We also offer full management tools with online authorisation, plus detailed audits and reporting for managers, to carefully analyse expenditure.
This more systematic approach can generate many small but significant savings that add up to large benefits and far more than a simple fuel rebate could ever provide – every litre of fuel per vehicle you do not have to buy saves 75p (at current prices).
Even on a generous 0.5ppl fuel discount you would need to buy 150 litres of fuel to get the same saving.
These tools can also bring additional benefits, as closer management of fleet mileage helps to reduce fraud.
As illustrated by the recent AMP Pearl case (Fleet NewsNet June 12), card scams can add a huge amount to your fuel bill. Although the forthcoming introduction of PIN cards will decrease these incidents, having tighter control of where drivers are using cards can give an earlier warning of criminal activity.
It is also worth looking at the quality of fuel in your tank and clamping down on filling up with low-grade petrol or diesel. The superficial savings made here may be affecting your fleet costs.
According to independent research published by the Consumers' Association, the 2% saving in filling up on lower grade fuel may result in a 7% increase in fleet depreciation caused by increased engine damage.
So, working in partnership with your fuel provider, you can become more effective and keep down your variable costs.
By learning the lessons from fuel providers, you can keep competitive in a high tax environment.
And by cutting back on fuel consumption, you can be more effective and competitive, whatever surprises the Chancellor springs upon you next month.'