FOCUS ON: Fleet Management

Fleet Management represents one of the major cost factors for business and organisations. Normally, it is within the top 3 of cost categories. On top of this, it is a very emotional subject, and there are very many stakeholders that all have their say in the matter.

There is always a tension between the wishes of the drivers (in general they want to drive as nice a car as possible) and the objectives of the company that wants to keep cost as low as possible. Then there are tax consequences, workers councils, employee and car policies, several suppliers and a lot of opacity in the contracts. Add to this that companies want to be an attractive employer as well, and it is clear that this is a complex matter.

And then there are other elements to consider:

 

  • Many companies have CO2 reduction strategies, where mobility is usually one of the major contributors.
  • There is a definite trend towards alternative power trains. Think of electricity, hydrogen or hybrid versions. At the moment, the ultimate solution has not been found yet, but for many situations there are already solutions available.
  •  In urban areas, young people tend not to want to own a car, but are looking for flexible mobility. How can a company adapt to this?
  • IFRS changes: the way leased assets (not only cars) are recognised on the balance sheet is changing the next few years. How do you take care of a good transition?

 

What would an external consultant bring?

In many companies, especially those with fewer than about 300 cars, fleet managers are not dedicated to this task and fleet management is one of their (many) responsibilities. We typically find this responsibility within procurement, HR, finance or management assistants. And even when there is a dedicated fleet manager, there usually is no information available about the cost components in the contracts. An external consultant can provide the information and make sure that the agreements with the lease companies are lived up to.

The challenge is that the contracts with lease companies are not transparent:

 

  • The main cost component of a contract is depreciation (around 40% of the total cost of the lease agreement) and depreciation is heavily dependent on the residual value of the car.
  • Many cost components (like maintenance, insurance and repair), contain invisible kickbacks for the lease company, that all add to the cost.
  • When contract is recalculated, it is not clear whether the new rate complies with the agreement or not.

In the tender phase, these are usually optimised virtually, but in due course, for example when new models enter the market, this is slowly changed to the advantage of the lease company.

Finally, an external consultant can help make mobility future proof, both from a mobility perspective as from a financial perspective.

 

Where can savings potentials be found?

Savings can be found in many components and are dependent on the strategies of the companies and what they want to achieve. Think of:

 

  • Purchase agreements with lease companies, importers, dealers
  • Insurance and damage repair
  • Mobility solutions instead of lease solutions
  • Policy adaptations
  • Fuel purchasing
  • Service level agreement with suppliers
  • Reduction of hidden cost components
  • Drivers’ behaviour

Where does corporate responsibility fit in?

Corporate responsibility is a subject that is of growing importance. Partly because of government policies (In public tenders this is more and more a subject that is one of the weighing factors), partly because of the growing awareness in the boardroom. An external consultant can help shape a companies’ policies in such a way that it complies with the objective they want to achieve.

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