More and more, businesses are realising that having a fleet of vehicles sitting on their balance sheet is not the best use of precious capital; they are becoming savvy to the value that outsourced fleet management can deliver. According to the Australian Fleet Lessors Association, a decade ago, the outsourced fleet management industry operated 191,000 vehicles on behalf of clients; today this number is close to 355,000. This market demand has fueled competition which means better service and management solutions are available to help businesses of all sizes cut down on their overheads and loathsome administration time.
Getting value from your fleet can be complex and costly without the right support. Managing vehicle depreciation, residual and maintenance risk, and keeping the whole-of-life cost and management of the vehicle under control can syphon valuable time and money away from your core business.
What can a fleet management expert deliver?
- Maintenance management: Continual maintenance of your company vehicles is essential to avoid large costs further down the track. Understanding your maintenance and repair expenses can be a headache. Good fleet management programs will take control of your vehicle maintenance and repairs from preventative maintenance scheduling to emergency roadside assistance. This means lower costs and greater convenience for your business.
- Corporate level discounts: Fleet management companies can aggregate the needs of numerous clients to deliver greater buying power on fuel, labour, and parts. These discounted rates are then passed on to clients.
- Reduce your administration time: Fleet management offers flexible service options to handle your fleet administration and support needs, saving your business valuable time and money.
- Save money through better efficiency: Fleet managers provide customized vehicle selection, advanced technology and expert analysis to help your lower fuel consumption, reduce your costs and reduce your CO2 emissions.
The maintenance of your fleet is crucial, but so is its efficiency. As the country strides towards a greener economy, and as climate change is taken into account in the management of assets, reducing fuel consumption and maximizing the efficiency of your vehicle fleet becomes a more prominent factor in the business management mix.
In this context, the old mantra rings true that the most dynamic businesses adapt in anticipation of a change, rather than as an afterthought. The first step is examining your current operations; the second, the introduction of change.
While the Federal Government’s carbon tax scheme excludes transport fuels for light vehicles, a string of policy incentives to reduce vehicle emissions offer the perfect catalyst to reduce your fleet’s carbon footprint, but again, the right advice essential. On 10 May this year, the Treasurer announced as part of the Federal Budget, changes to the calculation of fringe benefits tax (FBT) for car fringe benefits to remove adverse environmental incentives for people to drive more and further to increase their tax concessions. The new FBT scheme applies a single tax rate of 20 percent, regardless of the kilometres travelled during that FBT year.
Initiatives like these targeted at the fleet industry are not surprising in light of recent Government figures highlighting that the transport industry contributes 15 percent of the country’s CO2 emissions, and light vehicles including passenger/sport utility vehicles and commercial vehicles account for 64 percent of transport emissions.
Business success in a carbon-constrained economy will be underpinned by how well businesses can adapt to more environmentally efficient operations. Good fleet managers can offer valuable guidance and products to help analyze business information to find out how to best run an energy efficient fleet. By becoming energy efficient, companies can simultaneously save money and reduce their impact on the environment.
Four simple steps to fleet energy efficiency
- Measure: First, a business needs to set a baseline for current fuel costs and carbon emissions. Without knowing where to begin, progress will not be effectively measured.
- Analyse: Determine where improvements should be made. Comparing the efficiency of different vehicles, retraining drivers and tracking routes to reduce fuel use are good first steps.
- Implement: Create cost and emissions-reducing strategies for the company. The faster new strategies are implemented, the faster savings will start.
- Track: Monitor the fuel-efficient performance. Highlight the areas where costs are going down and improve where they are not. Continue to refine goals to become more efficient.
The Minister for Infrastructure and Transport, the Hon Anthony Albanese, recently released a discussion paper that examines how to implement carbon dioxide emissions standards for new light vehicles from 2015. Cars and other light vehicles contribute around 55 million tonnes of carbon emissions to the atmosphere each year, so the light vehicle sector is an important area for action for achieving the national five percent target for carbon reduction by 2025.
According to the Federal Chamber of Automotive Industries, smaller vehicle adoption is already catching on in Australia, making up 36 percent of all vehicle purchases for 2011. However, the Australian automotive industry is on the cusp of a more profound change; elective vehicle (EV) adoption. Key players in the Australian automotive market for cleaner and more efficient energy generation have thrown their weight behind efforts to make EVs more feasible in Australia, significantly improving accessibility for business customers.
Recent strategic commitments by Better Place, GE and Renault Australia will help to build comprehensive infrastructure for EVs delivering convenience and affordability to customers that is equal to or better than petrol driving. GE recently made a commitment to add 1,000 EVs to its Australian fleet as part of a global pledge to buy 25,000 EVs by 2015.
While electric powered fleets might be a few years away for the majority of businesses, there are definitely benefits to putting a focus on fleet efficiency – both from an operational and financing perspective. A cooler economic outlook is breeding a more cost conscious approach among Australian businesses and according to a recent MYOB research report, more than half of SMEs believe an economic recovery is more than 12 months away. Businesses are also thinking more about how to extract maximum value and to manage their balance sheet effectively.
From financing through to remarketing, operational metrics to environmental performance indicators, re-evaluating your fleet management approach can help save time and money and turn your business vehicles into strategic assets.
– Neil McKay is General Manager, Custom Fleet, GE Capital.
