What Is Fleet Management?
Fleet management is when a team of specialists manage your fleet of business cars or vans. This involves choosing, acquiring and maintaining the vehicles, plus handling all the paperwork which comes with this. Additional services include managing your drivers and how they use the car to improve fuel efficiency.
Want to know how fleet management can improve the way you run your business cars? Discover everything you need to know about fleet management and if you qualify for it.
What is the purpose of fleet management?
There are a few reasons why businesses consider fleet management for their company cars, including:
- Increased efficiency/productivity: a fleet of cars that are maintained according to manufacturer’s guidelines will spend less time in a workshop (also known as ‘downtime’) due to issues. As a result, a company keeps its cars on the road for longer, meaning more work gets done.
- Improving safety: the introduction of tracking and training drivers improves the safety of a business fleet by reducing the chances of drivers being involved in an accident on the job. Potential legal costs and the amount a company would need to pay for vehicle repairs, medical bills etc. can all be avoided too by improving safety procedures.
- Reducing running costs: fleet management helps reduce business car running costs by recording key vehicle data, mainly fuel consumption. Using this information, businesses can easily come up with ways of cutting vehicle spend (e.g. developing more fuel-efficient routes for drivers).
Who qualifies for fleet management?
Fleet management companies will only consider businesses that have a minimum of 10 cars, though this can be upwards of a thousand if you’re involved in logistics, for example.
Depending on the size of your fleet, a specialist management company will support you in the areas where you need help the most. This could include sourcing the right cars for your business if you need hundreds of them. Alternatively, each car and driver can be managed if you have a smaller fleet in order to reduce the amount your business spends on vehicle running costs.
What does fleet management include?
Whether you have your own commercial cars, vans or trucks already, or you have ‘grey drivers’ (employees that use their own vehicle for business purposes) you’ll understand the difficulty which comes with having to manage the various aspects that come with it.
Fleet management aims to take care of many of these headaches, and it can be tailored to suit the needs of each individual business, whether it’s an SME or a big corporation. Some of the main inclusions are:
- Managing drivers and suppliers
- Health and safety
- Fuel consumption
Specialist third-party companies can be hired to do this, or if you’re leasing your vehicles, some lease car providers can offer a package which includes the fleet and management of it. Alternatively, you can do it yourself as long as you know what needs paying for, which you can find out below.
Let’s take a look at specifically what each aspect of fleet management looks like.
Whether you’re looking to purchase or finance your business fleet, a fleet management company can help you find the right method to suit your company’s needs.
The multitude of options out there for obtaining a car can make it difficult to know what the right decision is. However, fleet management companies can offer expertise in this area, taking on the burden of trawling multiple sources of vehicles to get you the right option based on your budget and requirements.
Repair costs and downtime (the amount of time a business car is off the road) can lead to massive financial losses for companies if left unmanaged. According to Ford dealer group Ford Retail, SMEs in the UK are losing up to £30,000 per year because of vehicle downtime.
A big part of fleet management involves making sure your business’ cars are up and running on the road as much as possible. Most of these fleet management companies have access to a network of approved garages and will handle all arrangements and price negotiations for getting your cars fixed if they encounter any problems.
When you run a fleet of cars it isn’t just about looking after the vehicles, but also making sure your drivers are well managed.
You can hire a fleet management company to manage your business car drivers, which can ensure operations run smoothly. This can include:
- Risk assessments: records the history of each driver and assesses their behaviour and knowledge behind the wheel to generate profiles of each driver. This can help identify drivers that could potentially pose a risk, allowing you to create a solution to minimise this risk.
- Training: practical driving courses with qualified assessors help your drivers become more competent and safe while they’re out on the road.
- Telematics systems – i.e. black boxes fitted to each company car allows accurate reporting of each driver’s journey, so you can determine things such as driving style in order to ensure better safety of your drivers and vehicles.
Health and safety
Another inclusion of fleet management is health and safety risk management which guarantees that your fleet of business cars and drivers is compliant. A big part of this includes making sure stringent, regular health checks of each driver are in place to make sure they’re fit to use them.
On top of this, a fleet management company will handle frequent vehicle safety inspections so that you aren’t fined for having cars which aren’t road legal. This also means that costly lawsuits are avoided if one of your fleet cars is ever involved in an accident.
Most modern fleet management software or companies can access the onboard computer of each car to get accurate mileage and fuel consumption data.
These figures can provide key insights into how much fuel each driver is using on a journey. Using this information, you can then decide which routes should be used by drivers in order to conserve more fuel.
How much does fleet management cost?
The cost of fleet management ultimately depends on the size of your fleet, what vehicles you’re using and whether you decide to delegate any services to a third party company/software.
Most of the costs associated with managing a business fleet include purchasing/financing the vehicle, insurance, tax, maintenance and fuel. If you want to bring in a fleet management company/software to help organise your commercial vehicles, this can save you money but comes at a cost per vehicle.
Fleet management software/company costs
A good fleet management software such as Quartix or Kinesis Telematics costs around £20 per month per vehicle for fleets between 21 and 50 cars. Over the course of a year, this would cost you around £5,040 per year if you have the minimum of 21 vehicles.
Fleet insurance costs
The cost of fleet insurance will vary depending on how accident-prone your drivers are and the make and model of your business fleet, among other things.
Often you’ll be able to get a special fleet discount on insurance for multiple business cars you’re putting on one policy. However, you can bring this down by employing drivers with clean records that are over 25 years old and by considering electric or hybrid cars that are cheaper to insure because of reduced power and zero/low CO2 emissions.
Fleet tax costs
You can easily calculate the costs of your company car tax online to find out how much employees/employers will need to pay based on the type of fleet and its operating cycle. If you’ve not obtained your fleet cars yet, you’ll be able to compare the cost of tax for different models before making your decision.
Fleet maintenance/repair costs
It’s important that you take into consideration the maintenance and repair costs of your business fleet because these cars are generally driven for more miles than personal vehicles. The standard operating cycle for a single company vehicle is three years/60,000 miles.
Using a standard Ford Fiesta as an example, servicing, maintenance and repair costs are roughly 2.7p per mile using Fleet News’ car running costs calculator. Over the operating cycle mentioned above, this would equate to roughly £1,620 in total, or £540 per year.
Fleet fuelling costs
Fuel is one of the biggest expenses you’ll need to make when managing a fleet of cars. You can reduce this spend by making sure your drivers stick to the most fuel-efficient routes when they’re out and about, as well as choosing cars which are economical.
To get an idea of what the cost in fuel is of each journey one of your drivers makes in a fleet car, you can use a journey cost calculator online and compare up to four different vehicles. For a better idea of what you’ll need to pay at the pumps for your fleet, try a car fuel cost calculator so you can budget better for your fleet.
Are you considering getting a fleet of cars for your business, but don’t want to fork out on depreciation? Then why not consider fleet leasing? Compare prices on business lease deals to find great offers on multiple commercial cars for one affordable monthly payment.
Need more information on business cars? Head over to our business car guides to find out everything you need to know.