News
Recession brings company car costs into focus
Cost has overtaken fuel as the single biggest issue for fleets with just 14% predicting further pain at the pump, compared to over half (55%) last year when there was a huge surge in oil prices.
And, despite CO2 emissions dominating the current motor industry agenda, fleet decision makers are now less preoccupied with environmental factors. Just 18% say green issues will impact on their business over the next 12 months, compared to almost a quarter (23%) in 2007.
“Fuel and environmental issues seem to be playing second fiddle to overall cost control at this moment in time. This is partly because vehicle manufacturers have already made significant advancements in these areas, but also due to firms becoming more prudent with their overall fleet spend. But what many companies have perhaps not realised is that fuel, environment and cost saving measures are intrinsically linked.
“The modern car is clean, fuel efficient and emits less CO2, which also reduces the tax burden, so a significant amount of cost reduction can be derived from introducing more control over which new cars come onto fleet. Policy changes are much easier to implement in the current climate, so the time is ripe to act.
“A clean car is usually a fuel and tax efficient car, which is why we’ve been working hard with our customer base to ensure the link between cost and CO2 is brought home to employers and their business drivers. Both are now reaping the rewards of playing the taxation system to their own advantage”, says Steve Osborne, Head of Fleet Management at Lex Autolease.
Manufacturer advancements with conventional diesel and petrol engines have accelerated to the point where only one in ten (13%) firms expects to introduce more green or alternative fuels in the year ahead. This is a return to 2006 levels (10%) and well down on last year (21%).
Steve Osborne continues: “Many fleets are using CO2 as the main instrument to control fleet costs, but there isn’t the appetite or need right now to radically switch fleets to electric or hybrid technology. Electric cars are getting all the headlines, but the more compelling choice in cost, performance and reliability terms is for the new breed of diesel and petrol models.
“To put it into context, almost 80% of our customers choose diesel engines which are both fuel and tax efficient, but with comparable performance to petrol. In contrast, we have less than 100 electric vehicles on a fleet of over 300,000, which is partly because of cost, but also because the infrastructure and technology is in its infancy.”
Against the background of firms looking to squeeze extra savings from their fleet policies, the biggest challenge facing firms on a company-wide basis is ‘getting enough work’ and ‘the economy’. Well over half (59%) of those polled said this was the biggest threat to their industry against just 18% last year, prior to the financial meltdown.
One in ten (11%) are facing challenging costs levels but, surprisingly, cash flow and funding register very lowly with just 4% of those polled, respectively.
Steve Osborne concludes: “These findings mirror the wider economic picture. There’s a need to bring down costs over the year ahead, but right at this very moment in time, the overriding concern is drumming up more business and the wider impact of the economy.
“Firms are reluctant to reduce costs to the extent where productivity and new business is jeopardised. Cutbacks can only go so far and it needs to be in the right areas, but greater efficiencies can be derived with relatively little pain by making small changes to the big expenses.
“For example, introducing a CO2 cap is a fairer and more effective measure than reducing vehicle choices based on list price or monthly rental. It actually puts money back into the pockets of employers and employees, so a smart move in this direction is one way of keeping your best staff mobilised, motivated and managing your way out of the recession.”
Lex Autolease supports businesses, large and small, with a standalone team of experienced fleet management specialists. To benefit from the Fleet Consultancy team’s holistic and impartial advice, call 0844 824 0270 or email fleetconsultancy@lexautolease.co.uk.
