fleet management ideas Archives - Fleet Management Backend Site

Groups of vehicles owned/leased by businesses, government agencies, or other organizations are referred to as fleet vehicles. Car rental companies, public utilities, taxicab companies, police departments, and public bus companies operate fleet vehicles.

Many businesses buy/lease fleet vehicles to deliver goods to customers or cater to the travel needs of sales representatives. Fleet vehicles are managed with the help of a fleet or transport manager through fleet management software.

A fleet management system (FMS) is employed to connect the vehicles to a telematics system for efficient management.

Buying vs Leasing

A variety of aspects should be taken into consideration to decide whether buying or leasing vehicles is more advantageous in your case.

Further, you find out whether you qualify for fleet leasing programs if you have a requirement for several cars/vans for salespeople or delivering products. It helps you to save a lot of money.

It has become easier these days to lease a small fleet of minivans, pickups, or cars. If you buy/lease more than 10 vehicles, you qualify as a commercial fleet buyer and you will be provided with a fleet registration number through the dealer.

This makes you eligible for all fleet incentive programs announced by manufacturers and dealers. Some dealers might offer programs designed by them for businesses. They may even obtain a fleet registration number for you even if you have leased less than ten cars.

In order to decide if fleet leasing is the right option for you, you must discuss with your accountant and work out the costs involved, taking into account the monthly lease payments; gas, oil, and maintenance expenses; annual insurance premium, and license fees involved.

Another aspect to be considered is whether you need to appoint a person to manage your fleet or not.

The costs and savings associated with giving an allowance to your employees and getting them to lease their vehicles should also be worked out before deciding to go ahead with fleet leasing.

One important aspect that you must clearly take note of is the penalties involved if you have to terminate a lease before the contract expiry date. This is crucial especially if you are likely to experience cash flow fluctuations every month.

Some of the possible pitfalls that you need to keep in mind prior to signing on the dotted line are as follows:

Insurance Coverage

Some dealers ask you to raise your insurance coverage. This is because they own the vehicles you leased from them. You should shop around a little bit before you decide on your fleet service provider because insurance can be quite high.

You should also find out if you can buy a blanket policy that covers both your fleet and business.

Overextending Your Hard-Earned Money

Seeing many new vehicles parked in your company’s parking area is definitely an ego booster. However, you need to decide as to how many vehicles you really need.

You must take care not to get carried away at the time of ordering a fleet. It is, therefore, highly recommended that you analyze your requirements before placing the order.

Neglecting to ascertain about mileage limits

The expenses involved vary radically and ranges anywhere from 15 cents to 20 cents per each mile driven over the prescribed limit.

So, if you cover, for instance, 50000 miles every year, buying a fleet may be a better option than leasing. Of course, you need to work out the details for your situation before going ahead with one of the options.

Failing to compare buying and leasing costs

Most dealers often have vehicles that they want to sell off as early as possible and they will offer special discounts and deals if you are ready to purchase rather than lease.

Discuss with the fleet manager in detail and work out the costs of buying and leasing in order to see as to which option makes more sense in your case. Always get the comparison in writing.

Spending too much

Never allow yourself to be talked into making a down payment that is higher than what is normal.

Typically, the down payment involves the instalment amount and license fees that are payable and a small deposit.

Forgetting state taxes

Indeed states like Nevada and Texas do not levy any taxes, but some states, for example, California, levy high taxes and registration fees. You have to pay them upfront when you lease vehicles.

Avoiding paperwork

Irrespective of the size of a fleet, you are required to keep track of the mileage and expenses for each vehicle. This is essential to budget your cash flow.

Some Helpful Tips

1. Be clear about the different types of vehicles you need – minivans, pickups, and/or passenger cars

2. Be sure as to what purpose each of the vehicles will be used for

3. Pick the right vehicles and not those that are cheap; If you do not choose the right vehicle, your job will not get done; some of the questions you must answer for selecting the right vehicle are:

What will you haul using the vehicles?
How much space is required?
What should be the payload (weight capacity) of the vehicle you need?
How would you organize the payload? Will you need special shelving, ladder racks, or toolboxes? Consider whether the pickups and vans need to be specially equipped
How many people would be present in the vehicle at any point in time including the driver?
If the vehicle has to pull a trailer, what should be its size and capacity?
Whether a four-wheel drive is required for your vehicles? Will the vehicle be driven off-road to justify the additional expenditure of using four-wheel drives?

4. Know clearly the features needed on each vehicle – radios and air conditioning may be required but it is better to avoid fancy features

5. How much cargo space is required for accommodating your product?

6. How many miles do you need to cover in a year? The limit set by most leases is 12,000 to 15,000 miles in a year

7. Leasing a fleet from one dealer is more economical and efficient

8. When visiting dealerships, always discuss with their fleet manager

9. In addition to shopping for vehicles, shop for a lender as well

There are several fleet financing companies out there that are ready to discuss incentive programs, your buying needs, and payment modifications. You can find them by asking your dealer for providing a line of credit.

Or else, you can ask the dealer to recommend a leasing company they are already doing business with. Check with other lenders as well before finalizing anything.

You can also ask your bank if they have any fleet leasing programs. Alternatively, you can make use of a buying service for negotiating a deal and setting up financing arrangements.

If you operate a fleet of vehicles for running your business, one of the key performance parameters would be the fleet maintenance costs. You need to reduce the costs involved to improve the bottom line of your business. Read on to know the different ways in which you can cut down the costs associated with fleet maintenance.

#1:Consider changing your funding methods, especially if your fleet operation was started three-four years ago. The decisions you have taken a few years back might have become obsolete because of the changes in your business operations and other external factors.

#2: Create a new vehicle choice list based on carbon dioxide emission levels (140 gram per kilometer) and mileage considerations (45 miles per gallon). This will help you to realize significant savings in fuel consumption. There is no need to worry, you will have enough options.

#3: You will be able to save big time if you remove vehicle choice and adopt a policy of one management model and job requirement vehicle. This policy may not be popular with drivers, but their concerns can be addressed by offering better vehicles.

#4: Choosing vehicles on the basis of whole-life costs is another way in which you can reduce maintenance costs. Fleet managers often select vehicles based on their price. This does not provide a true picture of the actual cost of operating a vehicle across its lifetime.

#5: Study the economics related to paying cash allowances instead of providing company cars by working out the costs incurred for each grade of employee. Choose an option based on the savings you can accrue over the life of the vehicle.

#6: You must encourage your employees to be mindful of fuel efficiency all the time. This will enable you to reduce your fuel bills substantially and, in turn, cut down fleet maintenance costs. You can give the drivers several tips to drive efficiently.

#7: It is a good idea to choose the right fuel card provider. The fuel card provider chosen by you should make it possible for you to track your expenditure online. As the efficiency of the fuels can vary considerably, the use of fuel-saving additives might be helpful.

#8: Find out if free fuel is an attractive perk in terms of taxation point of view. Based on your findings you can decide how you would want to implement your policy so that it is beneficial to both parties.

#9: Another way in which you can achieve your goal of reducing your fleet maintenance costs is by encouraging refueling at appropriate places. Planning their journey in advance and refueling early helps to eliminate the need for filling fuel at expensive places.

#10: It is important to identify ways in which drivers can help the company save a fortune on fuel costs. However, you need to communicate the same in an effective manner to your drivers and make sure that the momentum is maintained.

#11: Most of the tips provided in this post work for both car and van fleets. However, here are a few tips that are specific to van fleets: Consider using software for route and route and journey planning. Use smaller vans wherever possible. Opt for white vehicles. Odd colors tend to reduce residual value.

#12: Fleet vehicle downtime impacts profitability, disrupts work, increases admin time, and affects your relationship with your customers. A study carried out recently showed that accident rates are 30 percent to 40 percent higher in the case of fleet vehicles when compared to private vehicles.

#13: You should never assume that diesel vehicles are cheaper. Petrol vehicles are expensive in the long run. However, a petrol vehicle is a better option for if the distance covered is less than 10,000 miles in a year.

#14: Optimize daily rental usage by following a policy-driven decision rather than a driver-based decision to realize savings. Consolidating suppliers will help rationalize rates and makes monitoring costs and usage easier.

#15: Try to reduce grey-fleet journeys by putting them in the spotlight. This will encourage your employees to make informed decisions with respect to work-related journeys they always make.

#16: It is important to ensure that the fleet partner you are working with is the right service provider. This is to ensure that the fleet partner delivers cost savings without sacrificing customer service irrespective of whether you have a fleet size 1000 vehicles 40 vehicles.

#17: You should make a concerted effort to minimize the charges applicable when a fleet contract comes to an end. The fair amount of wear and tear allowed varies from one leasing company to another. So, it is important to go through the terms of the contract with a toothcomb before signing on the dotted line.

#18: Reducing driving speed helps you to save on fuel costs. Excessive speeding is not only risky but also consumes more fuel. While driving at 70 miles per hour increases fuel consumption by up to 9 percent than driving at 60 miles per hour, it is nearly 15 percent more when compared to driving at 50 miles per hour.

#19: It always pays to seek expert advice from the account manager. There are two aspects to managing a fleet: day-to-day interaction with drivers (it should be manned by employees who understand your vehicle policy) and strategic analysis of data.

#20: Deploying a vehicle tracking system encourages drivers to assume responsibility for their driving and avoid bad habits. When you monitor the behavior, driving speed, and fuel consumption, the drivers exercise care at the time of driving company vehicles.

#21: Reallocation of vehicles is another way in which you can cut your fleet maintenance costs. For many organizations, the cost associated with vehicle fleet maintenance is by far the second largest in terms of overhead expenses. Therefore, drawing out a reallocation policy is very helpful in cutting costs.

#22: You need to have a management information system in place to quickly access data related to your fleet costs. It is not easy to identify the tricky areas in the absence of a powerful tool for reporting fleet operations. This will help your Account Manager to provide you with the required information promptly.

#23: When it comes to avoiding excess mileage, some of the aspects include the following: Aim for the lowest realistic distance possible when signing a new contract.

Work closely with your leasing company to avoid any surprises at the end of the contract period. Consider returning lease vehicle and utilizing daily rental vehicles if the charges related to excess mileage are too high. Employ telematics systems for capturing accurate mileage readings.

#24: If an online presentation, conference call, or video conference can resolve an issue, avoid using a fleet vehicle to meet a client.

#25: Most companies leave pool car management to those who are not directly involved with the overall fleet usage. When used in the right manner, the pool car fleet becomes one of the most cost-effective options and saves you a lot of money.

#26: To help your drivers understand the benefits of achieving fuel efficiency when driving fleet vehicles, you can arrange formal training programs. However, this initiative will work best when used in conjunction with sending out frequent reminders through other means.

#27: Who doesn’t enjoy independence? However, you must find out whether your team members should always drive in separate vehicles. If your team has to attend a program or an event at the same venue – for example, a client visit, trade exhibition, or conference – make sure that they share a vehicle and travel together.

#28: If you try to do a lot of things in-house, you might end up incurring unnecessary costs as a result of allocating valuable resources to activities that do not contribute to your core business at all. You should consider outsourcing some of your routine fleet tasks to another company. For that company, it is their core activity and they will follow industry best practice to deliver efficiencies and cost savings.

#29: Outsourcing fleet administration is one thing, but you should not overlook the time you invest in management. As time is money, you must consider the time you invest so that you can work smarter and not harder.

#30: Focus on continuously improving efficiencies. This is more of an attitude than an action plan.

#31: If you are operating your own vehicles, it is important to manage depreciation and sell a vehicle at a point in its lifecycle when it offers optimum value.

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Buying Fleet Vehicles – Everything You Need To Know