Jo Why Lee

London - United Kingdom

    8 Insider Tips for Lowering Vehicle Fleet Costs

    September 18, 2013

    Fleet maintenance is far from inexpensive, but there are a number of ways that you can save money by being resourceful and reducing running costs. It does not matter if you have a fleet for transporting goods domestically, for delivering orders locally, or for providing services to a customer base in your neighbourhood, all businesses in all industries need to find ways to successfully lower their companies expenditures by lowering how much is spent on the fleet for fuel, maintenance and even fleet insurance. If your company's fleet costs represent a significant proportion of all of your operation expenses and overhead costs, here are 8 tips that can help you hold onto more of your revenue so that you can successfully generate more cash flow.

    1. Do You Have a Vehicle Policy?

    You should never have a fleet of company vehicles without a very detailed vehicle policy that your employees are aware of and must comply with. If you do not have a vehicle policy, or you put together your policy in a rush, the very first thing you need to do is create or modify the vehicle policy contract. Make sure the policy that you have built takes the important factors into consideration.

    Build a fleet that combines the perfect mixture of vehicles that are suited for different purposes in operations, setting mileage limitations, analyse the contract terms on vehicles you are financing, and you can maximize the residual value of the vehicles that make up your fleet so that the values do not depreciate quite so quickly. With a good vehicle policy that is well thought out, you can also reduce your maintenance costs by selecting vehicles that last longer without breaking down.

    2. Accident Management Helps You Identify the Risky Drivers

    Accidents may be inevitable, and the more vehicles that you have in the fleet, the more likely accidents will be. A minor accident is not necessarily means to fire a driver, but you should have a procedure in place that helps you track all accidents no matter how big or small. As you may know, part of being a defensive driver is about making smart choices behind the wheel and paying attention to your surroundings.

    Your drivers may make risky decisions, speed to make deadlines, or get easily distracted so there is a good chance that they will experience more than just one accident. The bumps and scrapes present immediate and long-term costs. Your insurance premiums will go up, you will have to pay for vehicle repairs, and the residual value of your fleet will be diminished. By keeping a detailed log, you can see if the accident statistics highlight a bigger problem. Paying closer attention will ultimately help you lower your costs.

    3. Investing in a Vehicle Information System

    You may think that equipping your vehicles with trackers and investing in a vehicle information system is an added expense and not an approach to reduce costs, but this technique can save your company a significant amount of money over time. Vehicle information systems have advanced dramatically over time, and now this technology is capable of telling you where vehicles are located real time from a web-based platform. You can see the position of all of your vehicles, identify start and stop times, and verify that your drivers are not violating vehicle policies. This is a great way to analyse routes so that you can improve efficiency. These tracking systems may even qualify you for more discounts with your insurer.

    4. Managing Your Fuel Expenses

    How can you really manage fuel expenses when thousands of gallons are purchased by your fleet drivers on a monthly basis? There is technology available that makes it possible to manage how much fuel is being purchased, by who it is being purchased, and how frequently purchases are being made. There is no such thing as free fuel, and the last thing you want is employees using stops for fuel as an excuse to obtain free fuel for themselves. Setting up a fuel account with a range of leading fuel companies is a great way to manage your fuel expenses by employee, so that you can assess what needs to be changed to improve efficiency. Doing this is also a great way to reduce unauthorised use of fuel that was purchased by the company for personal trips on the road.

    5. Be Sure to Qualify Drivers Thoroughly

    You want to hire drivers who have experience in the industry, but qualifying candidates who will be driving goes deeper than just calling prior employers. Every driver on your fleet insurance policy is rated, and every driver's driving record can drive up your premiums. Studies show that it is common for about 6% to 10% of your fixed vehicle fleet costs to consist of insurance premiums. This percentage is even higher if you hire drivers with blemished driving records. If you take your time to qualify each candidate during the recruiting process, you can keep fixed costs down so that you save on expenses on a monthly basis.

    6. Improve Your Vehicle Performance

    Did you know that your tyres are a variable cost? You never know how often you will need to buy new tyres, but this is an expense that you should not postpone. By investing in new tyres and inspecting tyre tread and inflation, you can improve vehicle performance, reduce repair expenses, and even reduce fuel expenses. Tire maintenance is a great way to make vehicles more efficient, and the savings will really add up.

    7. When you Replace Vehicles, Choose a Greener Option

    Not only does the government offer incentives to companies who go green with their fleet, new engine technologies are much more efficient than the older engines. Not only will replacing your older and retiring vehicles with newer vehicles help reduce fuel and maintenance costs, it will also help you improve your reputation with an environmentally conscious target audience.

    8. Invest in a Routine Maintenance Program

    Maintenance is imperative if you do not want your drivers to be stranded on the side of the road on a regular basis. By setting a schedule and sending each vehicle to the shop to be inspected and maintained, you can improve efficiency, reduce breakdowns, reduce repair costs, and extend life expectancy so that you get more out of each vehicle.

    Keeping costs in check is a must in today's competitive business environment. While many businesses focus on building a book-of-business to raise profits, smart business owners focus on building a book-of-business and lowering expenditures at the same time. Reduce your fuel costs, make your cars more efficient, lower your fixed costs, and keep an eye on your drivers, and you will see a noticeable difference.

    This was produced for my blog by:

    Nigel Malcolm is the founder and CEO of Australia's largest fleet management company, Fleetcare. Why not reach out to Nigel on LinkedIn or Google+ now.

    Read Jo's other blog entries >

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