Fleet News

Fleet fuel choice more difficult than ever

The instability of fuel prices, rapidly declining used car values and varying manufacturer pricing strategies are making it harder to predict the right fuel type for fleets, experts have claimed.

Over the past five years, fleet managers have been able to apply a rule of thumb that diesel will generally provide the most economical choice.

This has led to many fleets adopting a diesel-only policy.

But the increased differential between petrol and diesel fuel – now as much as 12-13p per litre - allied to higher front end prices for diesel models, and improving petrol engine technology has meant many fleet managers are now unsure of what strategy to adopt.

Mark Jowsey, general manager at wholelife cost consultant Emmox Car Cost said the decision is now more complicated than ever.

“It is getting increasingly difficult for fleet managers, and without advanced wholelife cost software it can be a nightmare,” he said.

“Many manufacturers have different pricing strategies for diesel models, which combined with the big differential between petrol and diesel fuel makes it hard to come up with one rule for all drivers.”

Masterlease sales and marketing director Clive Forsythe still believes diesel is the best route for most drivers, especially if they choose smaller-engined 1.6 and 1.5-litre models.

“These engines will now be big enough for most business-related mileage and cheaper to run,” he said.

“This is why fleet managers wanting to make savings need to take a holistic view of the whole life cost of the vehicle.”

On fuel costs alone, the gap between the two has narrowed with over the past year.

For example, according to Masterlease’s research, a petrol Ford Focus 1.8-litre Style five-door (40.3mpg) travelling 12,000 miles a year would cost £277 more than its diesel counterpart, whereas last year that figure would have been £332.

The diesel model costs £1,000 more at the front end which would take three years of fuel savings to recoup, but then it offers lower BIK tax, slightly better residual values and lower NIC than the petrol, illustrating just how complex - and close - the decision is getting.

Mr Jowsey said fleet managers only using the contract hire rate as their guide to vehicle choice could be incurring unnecessary cost too.

“In many cases, 40% of a vehicle’s cost comes outside the contract hire rate in terms of fuel, National Insurance contributions and insurance.

"These costs need to be taken into account too and fleet managers need to look at models on an individual basis.”


 

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