Discover four steps CFOs can take to make sure they’re getting the most from their fleet in terms of financial planning, sustainability and safety.
Today’s fleets are grappling with rising costs, mandatory emissions reporting and pressure to increase efficiencies – all while trying to maintain a positive employee experience and high safety standards.
The complexities increase when you consider many fleets have delayed replacing vehicles due to shortages that started during the COVID pandemic. But while supply issues have resolved, cost increases have meant many fleets are holding on to their current vehicles long past the lease term.
While on the surface level this keeps rental costs down, older vehicles can impact safety and results in an increase in incidents. And when it’s time to replace their fleet, today’s costs can come as a shock.
For CFOs trying to set and maintain budgets while also juggling priorities around carbon emissions and employee vehicle policies, the process can be challenging.
At Interleasing, we can help you set and manage your fleet budgets and forecasting so you can get maximum value from your fleet while optimising efficiencies. Here’s our simple, four-step process.
Step 1 - Understanding
Fleets are operating in a different market than they were a few years ago. Understanding the current context can help you set realistic budgets and forecast effectively. One of the main considerations is cost increases due to supply chain disruption that continues to impact the manufacturing industries.
“We’re still feeling the effects of manufacturers that have increased their prices 15-20% just on the retail price of the vehicle,” explains Anthony Perri, General Manager Sales and Customer Relations at Interleasing. “This is more relevant to fleets that have sweated their assets – held on to vehicles after their four-year lease period ended and only now looking to replace them.”
Car prices in Australia have risen on average almost 20% since April 2020 – exceeding inflation. This means using previous year’s figures for your forecasting may not apply – especially if you have not replaced your vehicles for several years.
Step 2 - Acknowledging
Once you understand the market, the next step is to acknowledge the need for vehicle replacement and the inevitable increase in cost that will involve.
“When CFOs are budgeting, they reflect on what they spent the previous financial year, so their forecast might not be in line with market trends, “says Perri. “If they bite the bullet now, they can create a new baseline for the future. But until they do, they’re comparing the new forecast to what worked during the crux of COVID.”
Acknowledging that vehicle replacement costs will inevitably increase, will allow you to start to look at other ways to reduce costs with the help of your Fleet Management Organisation (FMO).
Step 3 - Planning
Planning ahead and using data to inform your decisions mean when you do decide to bite the bullet and replace your fleet vehicles, you can reduce the impact by identifying other areas you can save – especially around choosing the right vehicles for your fleet.
While many fleets prefer the continuity of having the same brand and model of vehicle, looking around to see what else is available can save you money, without compromising on safety and quality.
When deciding whether to upgrade your fleet and replace vehicles, it is also a good time to look at how efficiently you are using the vehicles you have and if you can make any cutbacks. Data can help you identify where there are opportunities to achieve the same business objectives with fewer vehicles as part of the financial planning process.
“Have you got the right size fleet and are there any alternative vehicles that can provide financial benefits while still being fit for purpose?” explains Perri. “For example, if you have a bunch of supervisors driving expensive vehicles, could they be driving a more modest vehicle that might be half the cost?”
Perri also suggests CFOs work with HR teams to evaluate their motor vehicle policy and review who gets a vehicle and why.
As part of the planning process, it’s also important to be aware of mandatory emissions reporting requirements. This also provides opportunities to use data to check for inefficiencies or areas where you can make improvements to reduce both emissions and costs. A FMO like Interleasing can support you to make informed, data-led decisions around your fleet. With insights from data, you can make sure your fleet is compliant and optimised for sustainability and costs.
“You may have a pool of vehicles, but employees are choosing to use their own and get a reimbursement instead. Reporting and data give you the transparency over the cost of scenarios like this so you can make data-led decisions and set policies accordingly.” adds Perri.
Step 4 – Taking action
After your own financial planning, it’s time to take action and this is where a FMO can really help. At Interleasing we help CFOs with budget setting, forecasting, planning and execution. This can include benchmarking vehicles to make sure they’re fit for purpose, transitioning to electric vehicles and installing infrastructure, procuring vehicles and setting up leases and technology tools and platforms to continue optimising in the future.
Get in touch to learn more about how we can help you meet your fleet’s financial goals this year.
Other resources
Seven Features to Look for When Assessing Fleet Management Technology
Effective Supplier Evaluation in Fleet Procurement
Choosing the right Fleet Management Organisation (FMO) isn’t just a box-ticking exercise; it’s a key decision that can make or break your operations. A well-managed fleet is crucial for keeping customers happy and ensuring your business runs smoothly.
But when it comes to supplier selection, there’s a lot at stake—financial impacts, operational uptime, and risk management all hang in the balance.
To help you navigate this terrain, let’s break down three fundamental pillars that should guide your supplier choices:
