Fleet News

Fuel costs are more significant as fleets downsize

DOWNSIZING among fleet operators is making fuel a much larger part of wholelife costs, increasing pressure for companies to keep expenditure on petrol and diesel under control.

As a result, fuel card suppliers believe their services can offer a vital benchmarking tool to make sure that fuel use among drivers isn't higher than it should be.

Janet Eastwood, head of product management (fuel) at Arval PHH, operator of the AllStar fuel card, has revealed research that shows that as a car gets smaller, there is less depreciation in cash terms, while servicing, maintenance and repair costs decrease, fuel spend takes a larger share of wholelife costs.

She said: 'One of the effects of fleet downsizing is to make fuel costs more significant. Fuel accounts for just over a quarter of the running costs of a 2.0-litre car but nearly 40% of those of a smaller, 1.4-litre hatchback.

'As fleets move towards smaller and cleaner cars, managing fuel usage becomes even more important.'

For example, a 1.4-litre Astra will have a fuel pence per mile (ppm) cost over three years/60,000 miles of about 9ppm – 37% of the total ppm cost of 24.5ppm.

A 1.8-litre Vectra, with a wholelife cost of 32ppm, will have a fuel rate of approximately 10ppm, or 32%. But many firms are still leaving this essential part of running costs unmanaged, Eastwood believes.

She said: 'Fuel cards are adopted by a large proportion of companies, those which want to manage fuel effectively.

'However, that still means a lot of businesses are leaving about a third of their vehicles' running costs unmanaged.

'Considering the care fleet managers take to control their vehicle, maintenance and accident costs, why are they not concerned with fuel? It is, after all, the second highest cost after depreciation.'

Besides the obvious benefits of tracking spending patterns and identifying cost areas, Eastwood believes fuel cards are also integral to forming a fuel policy.

Eastwood added: 'Given that fleets are under pressure to have clear policies on areas such as health and safety and maintenance, it makes no sense to leave fuel out of the picture.

'Furthermore, if there is a policy in place that drivers should use the cheapest petrol stations, only the information from a fuel card provider can demonstrate if it is working and also how costs are going down. Significant manual resource is needed to track individual receipts to check if they are from less expensive sites.'

  • Subscribe to Fleet News.
  • Get the news delivered to your desktop
  • Leave a comment for your chance to win £20 of John Lewis vouchers.

    Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

    Login to comment

    Comments

    No comments have been made yet.

    Compare costs of your company cars

    Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

    What is your BIK car tax liability?

    The Fleet News car tax calculator lets you work out tax costs for both employer and employee