Fleet management is a blend of maths and magic. Liz Swanton finds the delicate balance of practicality and prediction is becoming more acute in a climate of rising petrol prices. On the plus side, there are more options for tailoring management solutions for fleets, from one car to hundreds.
That bumper sticker, ‘I own the car, the petrol is on hire purchase’, isn’t so funny these days, especially if you happen to be paying for the petrol and have more than one vehicle to feed.
Fleet management is no longer just about paying the cheapest price for the cars the organisation wants. It’s about keeping the “whole of life” cost of a vehicle under control, from purchase to re-sale, and everything in between. That includes service, maintenance and tyres, registration and insurance—and fuel.
“The rising price of fuel is very much at the forefront of our members’ minds right now, but falling residual values also remain a concern because that also has an impact on pushing up the cost of the fleet,” says Marja Thompson, executive director of the Australasian Fleet Managers Association (AFMA).
AFMA is a professional association for fleet managers across all types of government, emergency services, and private organisations, as well as associated suppliers. It provides information for its members and lobbies governments regarding any legislation likely to affect those members. “Our members are concerned about finding ways to make their fleets more efficient, not just immediately but also in the purchasing decisions they will make in the future.”
Thompson says many members are now questioning the rationale for having vehicles and, if the vehicle is necessary, they are being far more specific about what that vehicle has to do and making sure they match the right vehicle to the job. “The association does a survey each year and what is coming through very clearly is a move to smaller vehicles. Our members are very much looking at fit-for-purpose and often find that a smaller vehicle will do the job where they might have previously used a larger one.”
Thompson says members are also evaluating alternative fuels such as LPG (predominantly) and diesel (more limited options, but growing). Hybrid petrol/electric cars appeal to some, but she says questions over residual values and replacement costs on the long-life battery means these are not yet a viable mainstream alternative.
For some companies, that evaluation process will be done in-house while others may choose to ask their fleet management company to do it for them. While Thompson says there are arguments in favour of both full in-house management and outsourcing, she suggests a company needs a fleet manager either way, especially if they are re-evaluating their fleet. “You need someone in-house who really understands the company’s needs. If you’re outsourcing, you need to be quite clear in terms of what type of vehicles you want and what they need to do, so the supplier works with the in-house fleet manager making decisions in that company’s interest.”
Vehicle Payment
When it comes to the business of payment for a vehicle, the possibilities include buying, a variety of leasing arrangements (for individual vehicles or a real ‘fleet’) and even ‘hire’ (which is effectively what an operating lease is).
Easifleet knows them all. A specialist fleet management company, operating since 1992, it provides both ‘unfunded’ fleet management which means managing the fleet, as well as the ‘funded’ option. That involves providing a selection of financing alternatives (such as operating lease, novated lease, chattel mortgage) and managing the purchase, maintenance, and sale of the vehicles involved.
Clients range in size from a fleet of around 1,700 cars, bikes and ‘booze’ buses—Western Australia police—through to some one owner/one vehicle arrangements. “Our job is to take the pain out of the whole vehicle purchase and management experience,” says Easifleet director, Tim Roberts. “We can do the entire funding and management of the fleet, or just manage the fleet they have, even if that fleet consists of one car. For the single vehicle owner, we can offer better purchasing power as well as economies of scale when it comes to regular maintenance and repairs, that one person simply does not have access to.”
Roberts says your financing decision will come down to the results of an in-depth chat with your accountant, and the state of your company, your finances and credit rating. “There are no golden rules that offer watertight guarantees. Buying and outright ownership may work for you, or some form of leasing arrangement may be better if you want a ready cash flow.”
Management of a leased fleet will depend on what sort of vehicles are involved. A novated lease (‘user chooser’) may keep your staff members happy, but because you have less control over the type of vehicle, you’ll also have less control over the whole-of-life efficiencies.
A ‘tool of trade’ fleet, such as light commercials or a one-make fleet for the sales representatives means you have more control over the type of vehicle being ‘bought’ and the subsequent whole-of-life costs. “You need to work out exactly what you want to do with your vehicles and what you can afford. If you decide to outsource your fleet management, make sure you talk to the established names in the business so you will be looked after properly,” Roberts adds.
One way to monitor at least one part of the cost equation is to consider providing staff members with a petrol card. You can choose to allow certain fuel types (and quantities) to be bought with the card, and even some access to shop items, as you see fit, and a good provider will offer online reports and invoices for easier data management. You should also be able to pay by direct debit, so you have detailed records and can track costs accordingly.
If a fuel card is not the answer for your business, at least you can now keep track of the best petrol prices on offer. Road service organisations (such as NRMA, RACV, RACQ) offer advice on their websites in terms of saving fuel and the cheapest prices around. Advice on petrol prices is also available on the specialist site, www.motormouth.com.au which covers Brisbane, the Sunshine and Gold Coasts, Sydney, Melbourne, Adelaide and Perth.
Fuel-Saving Tips
• Shop around: check specialist sites for the cheapest fuel, and top up when prices are low, rather than waiting until your tank is empty. Saturday is often the day of cheapest prices. And use your shopper dockets.
• Avoid hard braking or accelerating: if you’re smooth and consistent, you could reduce fuel consumption by up to 30 percent.
• Reduce your speed: if you have the time, don’t hurry. Your fuel bill will be lower.
• Remove unnecessary bull bars, roof racks, even toolboxes and golf clubs in the boot. Extra weight causes drag and ups the fuel consumption.
• Service your car regularly to make sure it’s running efficiently, and keep your tyre pressures at the correct inflation. Consider investing in a tyre pressure monitoring system such as Permagard 3rd Eye (available through JAXQuickfit tyre centres).
• If the weather is fine, turn off the air conditioning and open the windows. Using the air con increases fuel consumption.
• Stuck in traffic? Turn the key to ‘accessory’ (not ‘off’) and shift to ‘park’ while you wait. Better still, plan your trip to avoid traffic if you can.
Fleet management Case Study
As Australia’s water situation gets worse, the idea of ‘washing’ the car seems like a luxury, which is precisely why Ecowash Mobile was created and keeps on growing.
According to o
perations director, Stewart Nicholls, the company now has a fleet of 35 vehicles: 12 are Daihatsu Charades and the rest (and those to come), Hyundai Getz.
“We go wherever our clients’ cars are, so we need something that is small and easy to manoeuvre,” Nicholls says. “To keep overheads low, our owners need something that is economical but they also need guaranteed reliability and a good dealer network to back that up. Also, because they are on the road for long hours, they need comfort and safety.
“When we started nearly three years ago, the Charades were the perfect fit but with Daihatsu leaving Australia we had to look around for something else. The Getz is ideal for what we do. We buy the cars direct from Hyundai and then prepare them ourselves. Our franchisees then buy or lease from us.”
Roy Andrade, managing director of the Just Squeezed (fruit juice) Group tells a similar tale regarding his nine Citroen Berlingos, used by the company’s sales representatives. “We have tried various vehicles but this one works for us because of its size, shape and quality. It’s a great little car that suits our image and is incredibly economical to run.
“We bought our first one five years ago and clocked up 255,000km without spending a cent. The only disadvantage I can think of is, the tyres are not a common size so they are perhaps a little more expensive to replace. But we do get good tyre wear, so that’s a very minor issue.”
Andrade says his company, established in 1991, is growing strongly and he expects to keep buying Berlingos.
Fleet Management Questions
Marja Thompson, executive director of the Australasian Fleet Managers’ Association suggests a fleet owner should ask—and answer—questions such as:
• Do we need vehicles, and why?
• If we don’t, what are the alternatives (such as bus, taxi, more couriers), and is that a saving?
• What vehicles do we already have? Can we change the way we use them to reduce the costs?
• Do they need to do local or long distance work or carry loads and, if so, should we replace them—having four-cylinder models instead of six?
• What would be the change-over cost?
• What about switching to a vehicle using an alternative fuel, such as LPG or diesel?
• How often should we turn over the vehicles? Consider that in the US, many companies are now holding their vehicles for five years rather than three. What makes the best economic sense?
