by Stuart Cunningham, General Manager Direct Sales, Alphabet
WHILE the number of businesses with smaller fleets continues to grow, fleet managers are facing increasing pressure. Organisations are navigating an uncertain and complex landscape, and as businesses evolve and priorities change, so do their requirements for vehicles.
However, for companies with smaller fleets, the responsibility for managing these requirements is rarely a full-time position. Instead, fleet management is often an additional, and sometimes unwanted, part of a much bigger HR, finance, or general management role. According to a recent Alphabet survey, this has led to nearly all (98%) small and medium fleet managers juggling fleet responsibilities on top of an already busy ‘day job’ and one in two feeling stressed when looking after 10-50 vehicles.
Managing a fleet comes with its own unique challenges and for those organisations that don’t have the benefit of a full-time fleet manager. It can be a stretch on existing roles within the business meaning the time that can be dedicated to reviewing and addressing changing fleet needs may be limited. That’s why it’s important that small and medium fleet customers have access to the same mobility solutions and support as larger fleet customers, to help ease the burden and make mobility as easy and stress-free as possible.
Businesses with fewer than 100 vehicles account for the vast majority of the UK’s total fleet population, yet larger leasing companies have typically served this sector of the market one step removed via brokers. Cars and vans sourced through brokers are generally acquired on a vehicle-by-vehicle basis and driven by price-point.
This is in place of a longer-term whole-life cost perspective that assesses the most cost-effective way to meet the transport and travel needs of each individual business. Full-service leasing providers can complement the role brokers already play by bringing access to a wider range of products and services, including consultancy, expert advice, driver support, and in-life solutions.
Finding flexibility
Decreased business mobility during recent years has really highlighted how many fleet contracts are too inflexible. Fleet managers now face additional pressure to ensure fleets are run as efficiently and cost-effectively as possible.
Leasing typically makes strategic sense for many organisations, enabling them to free up capital in the core business. There is still considerable scope for flexibility within contracts and no need to accept the benchmark three-year holding period. With contract hire terms ranging from one year to five, fleet managers can choose to limit long-term commitments or amortise depreciation over a longer timeframe to reduce monthly outgoings.
Personal contract hire and salary sacrifice solutions also offer smaller businesses the option to provide the HR benefits typically enjoyed by employees working for larger corporates to their broader employee population. These alternative funding methods are well-suited to cash allowance takers and employees who may not have previously been eligible for a company car, providing an attractive solution to some of the duty of-care perils that employers face when staff drive their own cars for business.
Alternatively, some businesses might find the most cost-effective and flexible solution is to rent vehicles, giving them the freedom to scale up their fleets for periods of peak demand or provide vehicles to staff on probation or fixed-term contracts without the long-term commitment of a lease.
Bringing total cost of ownership into the equation
With the economy heading into uncertain times as energy prices drive inflation skywards, cost is never far away from the decision-making process, and there’s no escaping the fact that company cars, fuel and rental vehicles are typically the biggest cost in an organisation’s travel budget and a significant general overhead.
This is where external consultancy can really help fleet managers with analysing operational and employee needs and identifying areas where efficiencies are possible. This might include re-evaluating existing funding methods, improving fleet utilisation to reduce downtime, and reviewing fleet policies and vehicle selection while taking total cost of ownership (TCO) into consideration.
Moving to a TCO approach can provide greater clarity and understanding of the true cost of running a fleet by factoring in things like fuel, tax, accident, and maintenance spend on top of vehicle cost so fleet managers can make more informed decisions. This is particularly important when it comes to understanding the economics of operating electric vehicles, with grants, tax breaks, National Insurance savings, and lower ‘fuel’ costs all combining to offset the higher acquisition or lease cost of EVs.
Making the switch
There is no doubt the popularity of electric vehicles is growing, but many businesses are still unsure whether electric fleets will suit their needs, or how to make the transition. The practical steps of transitioning to EVs, including the development of a charging strategy, can be a daunting prospect for any fleet, but particularly for smaller fleets with part-time fleet managers.
Not only is there vehicle choice, charging solutions and defining fleet policies to consider, but then there are also the wider industry movements around taxation, EV developments, and charging infrastructure to take into account. This is an area where fleets of all sizes can benefit from partnering with expert consults to ease the transition to ultra-low and zero emission vehicles as the 2030 deadline approaches. By working to analyse their current fleet and operational requirements, fleet managers can assess the suitability and cost associations for introducing EVs, as well as identifying how they can contribute to their business’ decarbonisation targets.
Running a small or medium fleet can be demanding. But by working with experts across the industry, smaller fleets can look to harness the same advantages as larger corporate fleets to unlock cost and time savings, allowing businesses to focus on what they do best.
