Fleet News

News analysis: Study uncovers the high-risk shortcomings of small fleets

THE fifth HSBC Vehicle Finance Business Car Expectations survey has created a snapshot of the key issues facing fleet decision-makers today. Safety remains the biggest concern.

Smaller companies have a lot to learn from their larger rivals in fleet business. According to the latest research, more than half of UK companies running 10 vehicles or less have failed to recognise that they need to tackle health and safety issues involving their drivers.

Only 40% in this segment responding to the HSBC Vehicle Finance Business Car Expectations survey acknowledged this as a responsibility.

Tim Holmes, head of HSBC Vehicle Finance, said: 'It is disturbing to find that so many smaller fleets are apparently unaware of the high risks they and their employees run by not recognising the importance of proactive safety management.'

Holmes said it was up to all companies within the fleet industry to raise awareness of these important issues.

Professor Peter Cooke, of Nottingham Business School, who wrote the fifth annual HSBC report, said: 'The Government has now admitted that it will take a decade of heavy investment to resolve the UK's main transport infrastructure problems and the situation is likely to get worse before it gets better.

'During that time, the show still has to go on. Fleets have to be managed, planned, financed, implemented, controlled and disposed of at the end of their economic lives. 'At the same time, the legal framework is getting more demanding and the rules are being more tightly enforced.'

However, the report suggests that there does not appear to be any doom and gloom within the fleet industry.

Holmes said: 'Certainly, the survey results show a healthy degree of cynicism in some responses, but that is a sign of a buoyant industry well able to deal with the changes and new demands being thrust on it.'

  • For a copy of the HSBC Business Car Expectations Survey 2004, call HSBC Vehicle Finance on 08456 090608

    Business car policies

    A number of fleets now have formal policies for their drivers covering areas such as alcohol and drug abuse and the use of mobile phones. But this should be done as a minimum to meeting health and safety requirements, the survey found.

    It described health and safety as one of the biggest drivers for change in the industry today. The report said: 'This chapter highlights a real threat to small companies, as a disappointingly high percentage of organisations do not have basic malpractice policies in place. We find this short-sighted. Businesses are storing up unnecessary problems for themselves.'

    It also covers the issue of staff using their own cars for business and suggests, particularly to smaller fleets, that they use daily rental instead. The report said: 'In particular, it avoids much of the health and safety burden and, providing a reputable company is used, it also presents the correct image of the business to its clients and the wider public.'

    It warns there is a significant risk of insurance not covering business use.

    Fleet safety

    Although fleets adopt a lot of the basics of fleet safety, it is the larger companies that lead the way in this sector.

    The survey suggests that only 22% of fleets provide driver training and although 88% check the driving licences of new employees, the frequency of checking after that differs from fleet to fleet. It recommends that licences are checked at least every quarter.

    'If drivers lose their licence through fixed penalty points, the typical time for disqualification is two to three months. Some drivers may take the risk and not report it to the company and continue driving,' it added.

    On driver training the report said it was important that employees of all levels are sufficiently skilled to handle a car safely.

    'It is all very well to provide senior management with a sophisticated, powerful and desirable car, but is the finance or HR director qualified to handle such a vehicle?'

    The research also suggests that 79% of organisations allow employees to use their own cars on company business.It added: 'The insurance on those vehicles is only checked in some 63% of cases and, as important, the period of checking can vary hugely.'

    An HSBC spokesman commented: 'We find it alarming that those that could suffer the greatest consequence, smaller businesses with fleets below 20 vehicles, appear to be the most uninformed.'

    Replacement cycles/disposal

    The HSBC survey claims to have unearthed an anomaly – while replacement cycles appear to be extending, mileage thresholds are reducing.

    Survey responses show that fleets are being more proactive when it comes to controlling costs in their disposal policies.

    The report said: 'In determining the optimum period for replacement, businesses should consider both time and mileage, but increasingly we are seeing larger fleet operators looking at other factors.

    The one-size-fits-all model is becoming less applicable as driving habits change and vehicles improve.'

    On used values, it said: 'To maximise residual values, businesses should present cleaner cars in BVRLA defined condition at the time of sale, along with providing supporting documents, such as full service history and V5 documentation.

    Car provision and allocation

    The overriding conclusion from comparisons with previous surveys in the series is that the business car, whether a company-supplied or company-sponsored vehicle, is definitely back in fashion.

    The report found a trend among executives and partners to move out of the company car, the segment most likely to suffer most under the previous benefit-in-kind scheme, was reversing.

    A total of 84% are provided with a car, 6% up on last year's figure.

    It added: 'The new BIK system is also responsible for the surge in demand for diesel cars, particularly Euro IV diesels that are exempt from this year's increase in CO2 threshold payments.

    Fleet management

    As reported in last week's Fleet News, the role of the fleet manager is being outsourced or merged with other, often more senior, jobs.

    The number of companies using the services of a full or part-time fleet manager has declined, with a 38%growth in the number of firms saying they do not employ someone with that job title. Overall, only 17% of firms employ a full-time fleet manager, mainly in larger fleets of more than 250 vehicles, while 12% employ a part-time fleet manager and 71% have no-one in that role.

    The report said: 'When considering fleet management from a health and safety perspective, the role is the critical concern. This can be outsourced with little difficulty, but the company has to delegate responsibility at some point to manage the fleet and drivers.'

    Support services

    This covers areas such as business use of the internet and the types of insurance cover chosen by fleets.

    The report said: 'Insurance continues to be an under-examined cost centre.

    'Without undertaking regular reviews of claims history and terms available from the insurance market, the business could find itself paying too much for its insurance.'

    Its adds that although fleet decision-makers are aware of the benefits of using an accident management company, only a quarter of respondents actually use their services.

    And it stresses that with the increased take-up of cash alternatives to the company car, it is vital fleets check insurance cover for staff who drive their own vehicles on business use.

    With regards to the internet, it found that overall usage by fleets remains low, although usage is 4% higher than the previous survey.

    This increase is mainly among larger fleets.

    Use of the internet for gathering product information is down to 29% from 36% in the previous survey and gathering price data is down from 31% in the previous survey to 24% in the current one.

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