Fleet News

User-chooser threat to financial controls

DECISION-makers could be saving money with one hand and throwing it away with the other because of mismatched fleet policies.

Companies need to make sure their vehicle acquisition and fuel usage policies work hand-in-hand, with experts warning that growing numbers of user-choosers threaten to upset tight financial control.

Industry experts have noted that growth in vehicle choice for fleet drivers is otentially causing problems for companies which want to manage and control fuel consumption.

One area that has seen a lot of recent growth is the 4x4 market.

Figures from the Society of Motor Manufacturers and Traders (SMMT) show that last year 6% of new car registrations were for 4x4 off-roaders, with the market having more than doubled in the past 10 years.

However, these vehicles tend to have higher fuel consumption than similarly priced cars. The warning comes from Arval PHH, the UK’s largest fleet and fuel management company.

James Langley, head of customer policy at Arval PHH, said: ‘There is no point in operating vehicles that have excellent depreciation rates and low maintenance costs if their fuel consumption is through the roof. The same goes for cars that might be fuel-efficient but have poor residual values.

‘Fleets should ensure that all the wholelife costs are taken into account when it comes to vehicle selection – with all costs within reasonable boundaries.’ Arval PHH is advising companies to introduce matched policies on fleet acquisition and fuel consumption. The latter is especially important as fuel is the second highest element of transport costs after depreciation.

Langley said: ‘Companies keen to manage fuel costs should introduce fuel cards, analyse forecourt prices and keep track of their spend, but also keep a close eye on the cars their employees are driving.

‘Some have chosen to introduce fuel consumption caps, so that cars with a ‘miles per gallon’ rating below a certain threshold cannot be acquired. A similar method is to prevent employees driving vehicles with CO2 emissions above a certain level.

‘By introducing policies like these, companies can rein in fuel costs and ensure their fleets become more environmentally-friendly. Without them, they’ll be losing money hand over fist.’

Fact file

  • For most companies fuel is generally the second largest element of transport costs after vehicle depreciation
  • A company with a fleet of 100 diesel cars, each doing 10,000 business miles a year at 45 mpg, and with diesel costing 83 pence per litre, will be spending nearly £84,000 a year on fuel
  • It will also have seen over £5,600 added to its annual fuel bill solely because of the increases in forecourt prices in 2004
  • 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