If a car could have a dream job, then perhaps this would be one of them: taking groups of happy holiday-makers around some of the UK’s most beautiful natural landscapes: the Isle of Skye, Hadrian’s Wall, The Lake District.
That’s the job done by the 52 vehicles that make up the fleet at Rabbie’s, an award winning small-tours company operating in Scotland, Ireland and England. As one might expect, this kind of rugged existence can incur significant vehicle costs.
The company was founded in 1993 but has seen “substantial growth” in the past five years, says operations manager Alec Lee, who manages the fleet. He has been “constantly looking for ways to reduce costs”, and shares one of the tricks he’s found to do just that.
“Fuel is our biggest expense,” Lee says. “So we had been monitoring fuel efficiency for the last few years”. Lee says a turning point came when the company was approached by the Energy Saving Trust, a non-profit promoting energy efficiency, which run a government-subsided course in eco driving. “The eco driving course teaches our drivers how to operate the vehicle so that they use less fuel; before the course they might be doing 25 miles per gallon, after they could be doing 28 or 29.”
Lee says the cost of training his drivers was offset by the eventual savings on fuel, and recommends that other small businesses look into taking advantage of these resources. “Obviously we pay the drivers for their time, but these government-subsidised courses come at a low cost or are even free,” he explains. “Our efficiency has increased, and in turn we’re also decreasing the general wear and tear on the vehicle.”
Doing the audit
Running a fleet can be a significant expense, but as Lee’s story shows there are always ways in which efficiencies can be made, and money saved.
Taking time to audit your current fleet – from acquisition methods to vehicle model to CO2 levels – is an important first step when seeing where you might be haemorrhaging cash, says Grant Boardman, regional sales director at Fleet Alliance, a company that specialises in providing fleet management services to SMEs.
“It’s about understanding the whole-life costs of a vehicle,” he explains. “Not just looking at the purchase or hire price, but other consequential factors over the next three or four years.”
So what are the typical areas that a business might be overspending? Boardman says this depends on what sort of fleet the company has: commercial vehicles (such as vans) or cars (such as a company car).
“For a commercial vehicle, the key things to look at are fuel consumption, lease costs and choice of manufacturer,” he explains. He says a “classic mistake” when it comes to commercial vehicles is leasing from just one provider, rather than searching around for a mix of providers which could offer the right deal.
When it comes to company cars, look out for its level of C02 emissions, because the amount of tax paid per car depends on its “emission band” (the better the C02 rating, the less tax you pay). “If you’re a traveling sales business or an estate agent in London, for instance, you really want to be getting the most out of eco-friendly vehicles,” he advises.
John Hargreaves, head of fleet and remarketing at Kia, offers some advice on how to manage fleet expenses. “In many businesses, the vehicle fleet will be a significant overhead and should be managed professionally, whether by a dedicated person within the company or by outsourcing to a specialist vehicle management company,” he says.
Keeping watch
A recent survey conducted by the RAC found that small businesses are paying, on average, almost £1,700 per year to maintain each of their company cars. This can put significant pressure on cashflow, especially if these costs are unplanned, says Jenny Powley, the RAC’s sales director for corporate partnerships.
Certain fleet costs will always be present – such as fuel, tax and insurance – but thinking about the most effective ways to monitor your fleet can help focus cost-saving efforts. She recommends installing “vehicle tracking systems” (such as RAC Telematics) that “collect data on the vehicle and give business owners a much better picture of wear and tear, enabling them to take cost-effective preventative measures.”
Fuels costs can be kept down by using fuel cards: payment cards offered by a variety of companies (such as the RAC) that offer deals on fuel prices. Aside from lowering the fuel bill, “they also help with administration because the business owner receives regular reports and can see exactly what is spent, rather than having drivers submit receipts,” Powley adds.
Lee says he uses both fuel cards (Rabbie’s is currently trying out three different ones) and vehicle tracking systems that monitor not only miles per gallon but the driver’s behaviour, too. This gives him a daily report. “The main thing is always planning ahead,” he says. “Vehicles are like animals, you can’t predict what they’re going to do. But be prepared for the unpredictable.”
Content on this page is paid for and produced to a brief agreed with Kia Fleet, sponsor of the Guardian Small Business Network Accessing Expertise hub.
