Amid continuing economic uncertainty and increasing costs, financial managers are feeling the pressure to cut spending. One potential quick win you may have your sights on is your organisation’s fleet.
And you’re not alone. As part of the effort to cut costs, more than half (59%) of corporate fleets prioritise improving business efficiency above everything else. Sixty-three percent (63%) are also tracking key metrics to improve operational efficiency and asset utilisation.
The costs of running a fleet are on a lot of organisations’ agendas, especially for those reviewing or coming out of a long-term lease. With rising interest rates and vehicle prices, the cost of renewing your fleet contract could increase significantly. It’s important to plan accordingly. It’s a cost many organisations may not have planned for – and it can significantly impact budgets.
But before you cut the size of your fleet or contemplate taking management in-house, consider these four steps you can take to not only save money, but also transform your fleet operations.
1. Consider brand options
Once your workforce is used to one car brand, it can be hard to change. But making the switch doesn’t have to mean you compromise on quality. With nearly 30 car manufacturers to choose from in Australia, there’s no shortage of options. To further foster employee engagement, you could consider bringing your drivers on the journey and involving them in discussions around vehicle requirements and preferences as well. Exploring different vehicles could do more than save you money.
Exploring different vehicle options could lead to cost savings. Many affordable brands also offer high ANCAP ratings and advanced safety and driver technology.
“For businesses with larger fleets, even a slight reduction in costs per vehicle can lead to significant savings, while maintaining driver safety and experience,” explains Lycette Silvey, Business Development Manager at Interleasing.
2. Lean on data
Your fleet provides valuable data you can use to improve operational efficiencies, boost asset utilisation and cut costs. Looking at data around running and maintenance costs, driver statistics, usage and condition of vehicles allows you to understand your organisation’s fleet needs at a deeper level – and adjust your lease accordingly.
Interleasing helps clients proactively manage their fleet with the latest tools. Our Telematics system helps teams get visibility into fleet efficiency by providing data on location, movement, fuel consumption and diagnostics. Fleet Inspect provides a 360-degree view of the condition of a fleet at the right time, while Driver Manager helps report on driver safety and compliance, potentially reducing the risk of accidents, fines and unforeseen repairs.
“Using these insights, we work alongside our clients to realign their contract at no cost throughout the life of the lease to ensure they’re getting the most value out of their fleet,” Lycette says.
3. Look at the big picture
While it may be tempting to cut certain elements from your fleet’s contract, it’s important to take a step back and look at whole of life costs.
Consider maintenance. While the rental cost of your current vehicles may be lower than newer models or brands, the cost of maintaining them will likely be higher. Typically, older vehicles use more fuel, require more repairs and maintenance. Many new cars today come with extended warranty and capped price servicing models, helping you lower the running costs per vehicle.
Newer vehicle models often come with high ANCAP ratings and advanced safety technology. When combined with driver training, these features can potentially reduce the risk of accidents You should also review any future charges (or recharges) in your lease to make sure you’re getting the most value – rather than the cheapest option.
Look at your fleet’s data to understand usage and maintenance requirements. Do the services in your contract cover the extra costs likely to surface through the life of your lease?
For example, if your vehicles are traveling more than 40,000kms per year, you’ll likely need new tyres a couple of times during your lease. If they’re not included in your service coverage, you could be charged an extra $1,500 to $2,000 per vehicle each time a new set of tyres are required.
4. Review your current contract
When thinking about getting value out of your fleet, it’s important to think beyond costs. Your fleet also needs to help you deliver on your goals and priorities. That’s where having a partner who understands what matters most can be incredibly beneficial.
The role of a fleet management organisation (FMO) can be critical in making sure you’re getting the most value out of your fleet. They should understand your business strategies, educate you on what’s happening in the market and your options and work proactively to continually optimise your fleet’s operations.
They can help you:
- Select the right vehicles for your fleet aligned to your business objectives
- Negotiate rebates with manufacturers
- Monitor vehicle utilisation against budget to manage the risk of incurring additional kilometre charges or paying for unused kilometres
- Assess whole of life cost against CO2 emissions
- Choose a cost-effective fleet mix that aligns with your emissions targets
- Track and report against benchmarks on an ongoing basis
It’s a good idea to regularly review your contract and your FMO’s offering to make sure you’re getting the best services and most value.
Consider the below questions when reviewing your current contract.
Does it:
- Provide a clear and strategic roadmap for your fleet?
- Include regular check-ins including quarterly and annual reviews?
- Have potential recharges that may end up costing you more in the long run?
- Provide access to a dedicated relationship manager who understands your business and priorities?
- Give you visibility over your entire fleet, from driver safety to fleet utilisation?
Lycette encourages organisations to share more information with their FMO.
“Don't hesitate to give your FMO information – it will help them help you. Share your priorities and targets, because the better understanding they have of your business, the better solutions they can find for you. Just ask them to sign a non-disclosure agreement if you need that piece of mind,” she suggests.
Navigate the headwinds with the right partner
In the face of economic pressures and rising prices, a focus on cost reduction makes sense. But in the current market, that’s not always possible.
Lycette suggests keeping “an eye on the market and making sure you have the right systems and processes in place to ensure you can manage your fleet proactively. Because proactive management can help you stay ahead of potential issues and even realign your leasing contract.”
And having a trusted, strategic partner can help you look beyond the costs and find new ways to optimise your fleet – and uncover more value. Chat to us today to find out how.
Maintaining compliance helps you manage your budgets more effectively. Download our simple compliance checklist to learn the key issues to monitor.
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