Fleet cost reduction: 10 instant changes that can save you money

Rising operational costs are a pressing concern for corporate fleet managers in 2022. When looking at fleet cost reduction, there are many ways that businesses try to cut back. However, many of these can yield less than satisfying results. Our top 10 tips on how you can reduce your fuel costs, which consider both short and long-term adjustments, are:

1. Analyse fleet costs
2. Manage maintenance
3. Replace old vehicles
4. Optimise fleet structure
5. Track fleet data
6. Manage staff
7. Evaluate routes
8. Encourage economical driving
9. Track superficial vehicle condition
10. Use fuel cards

How can fleet costs be reduced?

1. Analyse fleet costs

The key to fleet cost reduction is planning and data collection. To make sure fleets are running as efficiently as possible, fleet managers need to know the full details of their fleet’s outgoings. A good method to measure this is to work out the total cost of ownership (or TCO) for each vehicle. To work out a vehicle’s TCO, fleet managers will need to calculate:

1. The procurement cost: The purchase price, leasing fees, and interest rates together all make up the complete procurement cost.
2. The lifetime costs: These include the money spent on fuel, tax, and insurance. Fleet managers will also need to consider the vehicle’s value depreciation.
3. The maintenance costs: This consists of routine and ad hoc charges, including MOTs and parts changes, as well as any unexpected breakdowns.
4. Area and route fees: These are charges to scrutinise if a vehicle operates in an area that accrues fees, such as congestion charge zones or if they pay regular toll fees as part of their routes.

Once fleet managers have calculated their fleet’s TCO, they can identify any areas or vehicles in need of further attention. After this analysis, they can work to budget effectively and reduce fleet costs using the following strategies.

2. Manage maintenance

Additional fleet maintenance and care may seem counterintuitive when it comes to saving money. However, caution and diligence with vehicles will lead to reduced downtime and increased fuel efficiency. Faulty parts, such as clogged fuel injectors or worn tyres, can lead to greater fuel consumption, negatively affecting your fleet cost management and increasing the likelihood of breakdowns.

A common issue that fleet managers are currently experiencing is the widespread MOT delays due to the large backlog after COVID-19. This has left MOT providers with limited availability. A way to avoid vehicles being off the road while they wait for an appointment is to schedule them more frequently. Vigilant fleet managers are now opting for an MOT every 8 months instead of every 12, giving them some wiggle room and preventing downtime. A complimentary approach is to schedule MOTs alongside other maintenance to be as cost-effective as possible.

Another example of spending to save is the use of premium fuels. Although they come at a higher price point, the occasional use of premium fuels that contain cleaning solutions, such as Shell’s V-Power or BP’s Ultimate, can increase a fleet’s longevity and fuel efficiency by cleaning out fuel injectors.

3. Replace old vehicles

With regular maintenance and monitoring of vehicles, it becomes apparent when they are no longer cost-effective to keep. When it is time to replace older vehicles, fleet managers should consider the depreciation figure and lifespan for the replacement models, as this will help cut down the overall TCO. They should also look at past fleet vehicles that have given a good return and use this data as an asset to reduce their procurement expenses.

As we also move closer toward carbon-neutral fleets, fleets need managing in a new way. The UK is not far away from seeing the lifespans of diesel and petrol vehicles cut short by their infrastructural phasing out. Fleet managers can transition to carbon-neutral options on a larger or longer scale to assist in fleet cost reduction. Currently, electric vehicles typically have a more expensive upfront cost but are cheaper to maintain. Although, this may change as they become the dominant vehicle type.

4. Optimise fleet structure

For fleet managers, it is important to continuously develop and improve a fleet’s structure. A streamlined fleet, with deliberately chosen vehicles, is much more efficient than one preserving an outdated framework.

When in the process of selecting new vehicles, there is an opportunity to look at the fleet structure and potentially choose more conservative vehicles. Namely, if it is appropriate to downsize parts of the fleet to boost fleet cost reduction. For example, if staff are now carrying less or lighter equipment, a smaller vehicle may be a valid option for them, those with lower mileage may be better suited to a petrol vehicle, or alternative arrangements, such as vehicle sharing or adopting grey fleet vehicles, may be best for those with especially low mileage.

5. Track fleet data

Accurate data and analytics, such as telematics, have many benefits for fleets. Advanced data collection leads to optimised routes, informed fuel purchasing decisions, and better road safety among drivers, all of which lead to fleet cost reduction. With telematics, there is the additional advantage of dashcam footage, which can save your company in costly legal fees should an accident occur.

6. Manage staff

Unclear leadership and low levels of staff support can lead to poor morale, diminished performance, or even high turnover rates. Within widespread fleets, it can be easy for drivers to feel isolated and like they are not part of a team.

Rather than fleet costs being spent on recruitment, it is better practice as a manager to value and prioritise your current team. By working to make staff feel motivated and connected, managers will notice an improvement in most facets of their business and fleet. Read our tips on how to best manage drivers here.

To save on spending, you can also encourage staff to make more economical decisions regarding their fleet usage. For example, office-based staff who regularly travel for meetings could replace a portion of their travel with virtual meetings.

7. Evaluate routes

Along with using fuel cards, one of the most prudent ways to save on fleet costs is to stay informed on where vehicles will get the best refuelling rate, which is often a changeable detail.

When you choose fuel cards from Fuelmate, we give you access to our online portal and journey planner, which is an advantageous resource for fleet managers. With our journey planner, you can find the most cost-effective route for your drivers and save your fleet money on unnecessary detours. With our detailed invoices, you can also see where your drivers have been refuelling and what you could be saving.

8. Encourage economical driving

Efficient driving is one of the best ways to reduce fleet costs. As mentioned previously, uneconomical driving habits lead to increased fuel consumption and safety risks. By using telematics, fleet managers will be able to assess which drivers may need further training, and promote the following practices among drivers:

• Removing excess weight from fleet vehicles,
• Driving smoothly instead of braking or accelerating harshly,
• Avoiding unnecessary speed,
• Avoid idling,
• Where possible, such as when slowing down or on a decline, using engine speed as opposed to continued acceleration,
• Moving up gears at about 2000 rpm,
• Skipping gears where possible.

9. Track superficial vehicle condition

A common complaint with communal cars, such as pool cars, is that staff members will leave them in a poor condition for other drivers. Often, we have seen fleet managers have to frequently pay to valet vehicles because of drivers leaving them in a subpar state. Another issue is that damage caused to vehicles while on the road, even superficial, can lead to end of contract charges when a lease agreement expires.

A way to reduce these expenses is to create a level of accountability for staff. This includes a clear and consistent assessment of vehicles before and after staff drive them. This can be a task that staff can complete when they are first taking the vehicle and when they return it via a form or checklist, either physical or digital. Some fleets include QR codes linked to online forms with their pool car keys, so that staff have easy access.

10. Use fuel cards

Fuel cards are a popular and effective way for fleets to save money on fuel as well as make their administration and budget tracking simple. When compared to the national average, fuel cards can offer an attractive discounted rate and, as well as refuelling, can be used for a range of fleet items, such as AdBlue.

Here at Fuelmate, we offer a range of fuel cards that cover all of the UK’s major fuel networks to improve your fleet cost reduction and management. Our team of trained fuel experts will select the best fuel card solution for your business based on your fleet’s requirements. Our invoices supply you with advanced and itemised data that will help you to assess your fleet’s fuel usage for further savings opportunities. To find out more about how a fuel card can save you money, click here, or get in touch with our team to start your fuel card journey today.