Simon Pavey
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Apart from capital costs, fleet managers need to consider the operational costs of running commercial fleets. These costs are a result of the day-to-day car activity, it’s important to have an understanding of what they are and how you can better manage them by cutting unnecessary expenses.
This guide will cover:
Fuel cost is a big part of running a fleet. The cost can vary depending on a range of factors such as mileage, fuel type, having the right type and size of the fleet for the task, and tyre conditions.
There are various ways to reduce fuel costs:
The second largest expenditure that fleet managers incur is maintenance, service and repair. The rate at which you carry out repairs and service of your fleets will affect your cost of ownership or monthly leasing payments if you are renting your vehicles.
Often, this can be a hard area to manage as maintenance work can be unexpected. However, there are is software such as Vehicle Maintenance that can be used to monitor all servicing and repair work with price guarantees, service level agreements and KPIs for suppliers. This will give you full visibility and control over your fleet operation management and reduce fleet downtime by ensuring all vehicles are in their best condition.
There is also a simple way to reduce and manage your maintenance cost, by opting for packages offered by fleet management or leasing companies. These packages include servicing, repair and general wear and tear, allowing you to manage your overall business operations in an efficient way.
Over time, your insurance costs could increase due to accident or damage, especially if you haven’t set a minimum drivers standard. It’s highly important to do a risk assessment to analyse your claim history to check what types of accidents are occurring, how often and any common causes.
This will allow you to train your drivers on their weak points and enforce a minimum standard of driving, whether that involves online safety training or in-car training. The less accidents the lower your insurance costs.
When hiring drivers, carry out thorough checks and ensure they don’t have any points on their driving licence. The more points on their licence, the higher the insurance premiums. So, hiring drivers that have a clean driving licence and are safe road users is extremely preferable for both the safety of road users and for reducing costs.
You can use fleet management software such as Motia Telematics to store and analyse all the data for easier analysis and understanding. This is a tracking system that automatically stores data, reduces costs and offers improved safety to drivers by setting geographic alerts based on defined parameters, setting up crash detection alerts to inform a chosen contact, and monitoring dangerous speeding.
Always review your insurance before renewing as you may be able to get better deals with new insurers. Gathering information to show them that you are taking all the necessary steps to increase safety measures and reduce accident rates may also help you negotiate your insurance rate.
Adding new vehicles can also affect your premium rate, so before committing to a vehicle, check whether it would be viable and not increase your current insurance premiums.
Apart from road tax and vehicle tax, fleet companies need to pay Benefit in Kind, National Insurance and costs related to how much CO2 emissions the car produces. These taxes are:
The good news is that fleet operators are able to reclaim 100% of the VAT if their vehicles are solely used for business purposes. Lease costs are also 100% deductible unless CO2 rating is over the LRR household, in which case only 85% is deductible.
An easier way to reduce taxation cost is through EV vehicles, due to them not producing CO2 emissions, you won’t have to pay National Insurance or Benefit in Kind.
Fleet operators that carry goods on a van or truck with a gross weight of over 3,500 kilograms or unladen weight of more than 1,525 kilograms, need a Goods Vehicle Operator’s Licence.
Taxi fleets also need to have licences depending on the number of vehicles they operate. There are two types of Taxi Operator Licence (TOL):
At Motia, we specialise in fleet maintenance and have developed a full suite of tools that you can use to become more cost-effective in your operations. Every good fleet management operation requires a desire to both protect drivers and profits, the right people in place, and the right technology to make an efficient operation possible.
To see how we can support you with the right technology, including advanced telematics, view our range of fleet services today, and get in touch with one of our friendly experts for a tailored quote.
Providing Fleet Solutions to optimise operations, cut costs, and keep your business moving.
