Fleet News

Savings potential from cost model

A new ‘true cost’ model could save fleet managers more than 10% of their total fleet running costs, it has been claimed.

The University of Buckingham and Arval spent six months developing a model to measure and benchmark the entire cost of fleet operations.

During the model’s development, the research team concluded that “the whole field of car fleet management is destined to change radically in the next few years”.

It also found that there was a tendency for some managers to omit costs from their fleet calculations – a problem that is becoming more of an issue as costs rocket.

“There is a fundamental need for ever-tighter management of true costs of ownership,” explained Professor Peter Cooke, head of the centre for automotive management at the University of Buckingham.

“This is a revolutionary approach to fleet and cost management.”

Fleet management, with the associated operational, fiscal, environmental, financial and HR issues, is now one of the most complex areas of company management – even though it is rarely regarded as a core competence, said Professor Cooke.

To help manage the costs, the model was developed to provide the tools needed to ensure high levels of accuracy in fleet planning and decision making.

“The model does not seek to offer a panacea for business vehicle cost management and budgeting,” explained Professor Cooke.

“Rather, it offers a tool to assist in developing effective cost-management and budget programmes.”

Initially, the model will identify and then compare an individual fleet’s costs to benchmarks established by Arval-managed fleets.

The researchers found that in the past, fleet calculations have suffered from the absence of real costs.

Therefore, the model details areas such as vehicle selection, capital costs, residual values, operating/maintenance costs, tyre costs, fuel costs, CO2 footprint, accidents and road safety.

Following benchmarking, target costs are set and a plan agreed to achieve them.

While Arval clients will have access to the model, it will also be available to non-customer fleets.

The company says that following consultation and benchmarking using the new model, it expects that some companies will also ask it to take responsibility for the operational running and administration of fleets.

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