Fleet News

Company drivers cut business mileage

Fewer company car users are getting behind the wheel for work resulting in a drop in annual mileages and fuel costs.

Fleet managers said factors, especially the rising cost of fuel, better communications technology and appalling levels of congestion, were all leading to a decrease in company car mileage.

As a result some fleet managers are returning to their lease provider to renegotiate contracts and lower annual mileage allowances.

The BVRLA, whose members provide hundreds of thousands of lease vehicles to company fleets, confirmed that it is seeing a noticeable reduction in the annual mileages of company cars.

“Annual mileages continue to decline as fuel costs go the opposite way and companies keep a tighter reign on costs,” said John Lewis BVRLA director general.

“While this situation remains, our members are expecting to see some customers asking to amend their leasing contracts as their employees fail to hit mileage targets.”

With fuel costs continuing to escalate and uncertainty over the economy becoming more evident, fleet managers are also negotiating their vehicle lease contracts to give them more flexibility.

“We may also see more customers choosing to extend their existing contracts for another 12 months instead of taking on new lease vehicles because it gives them the benefit of a shorter contract time during this period of economic uncertainty,” said Mr Lewis.

“The general view across the industry is that the supply of new cars into fleets is looking very healthy

"We believe that organisations are encouraging their employees to opt for a company car instead of the cash because it gives them a tighter control on vehicle costs, safety and standards.”

This move back to company cars is shared by the fleet managers association, ACFO.

“The ease and relative simplicity of telecoms in all their forms has certainly reduced the demand for business travel,” said an ACFO spokesman.

“Businesses have also responded to the challenges of climate change and the many messages about cutting mileage, and more top management teams are now addressing just why so many employees need to spend time out on the road.

“However UK plc still needs a significant amount of business travel by motor car and although fuel costs and congestion are major problems, there are few options that offer anything like a commercially viable alternative.”

This view is backed by a new report, which found that while there is a decline in company car mileage, the majority of fleet managers still believe that company car numbers will rise.

According to GE Capital Solutions, Fleet Services in its quarterly Company Car Trends report into developments in the fleet sector, despite business mileage falling, the provision of company cars for employees is rising.

Accordingly, 72.4% of fleet decision makers said they expect demand for company cars to increase in the next 12 months.

“Company Car Trends has consistently shown in the last few years that the company car is increasing in importance as a business tool.

"However, there is a definite trend towards less – but perhaps more thoughtful - car use,” said Rich Green, managing director at GE Capital Solutions Fleet Services.
 

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