7 Areas Where You Can Cut Fleet Management Costs

Published on: 10/17/19 9:47 AM

fleet manager calculating fleet management costs

Having a fleet of company vehicles puts significant resources at your employees’ disposal, but it also creates significant liabilities in the form of ongoing fleet management costs. Organizations that feel that fleet costs have gotten out from underneath them may be looking for opportunities to reduce those costs and save overall on their fleet’s total cost of ownership.

As experts in fleet management, we have identified seven ways to reduce your ongoing fleet expenses, including tapping cost savings that can come from having an affordable and customizable fleet roadside assistance program. Use any or all of these suggestions to have a fleet that is cheaper to own and maintain — and hopefully one that provides more value to the organization as a whole.

Implement a Lifecycle Management Program

Most fleet programs consider the total cost of ownership (TCO) of an individual fleet vehicle when making business decisions, but they do not necessarily calculate the marginal costs over time.

To calculate marginal costs, fleet project leaders must estimate the depreciated value of a fleet vehicle over time as well as its expected yearly maintenance costs as it ages. What they may discover is that many models — particularly economy-class vehicles that tend to make up fleets — have a certain age at which they begin costing more and begin being less valuable on the resale market.

If project heads can determine the “sweet spot” at which a vehicle’s age begins to detract from its value compared to the value it once provided, that vehicle should be turned over for resale as soon as possible. This type of calculation can lead to a lifecycle management program where fleet vehicles are phased out and replaced before they can begin impacting the bottom line with a lower daily marginal value.

Seek Opportunities for a Fuel Contract

Fuel costs can occupy a significant portion of a vehicle’s monthly expenses. Making matters worse, the retail fuel market is incredibly volatile, creating risks and uncertainties that can make budgeting difficulties.

Organizations reduce their exposure to this volatility by securing a fuel contract with a wholesaler. Also sometimes called a “fuel hedge,” these agreements allow fleet owners to refuel at a lower overall cost while reducing issues that can come from driver reimbursement or loose refueling policies.

Audit Warranty Costs

Warranty programs can provide some of the most significant savings to fleet managers — provided warranties are operating as intended. Many times, repairs or parts are supposedly not covered by warranty, leading to delays and often unexpected costs.

Fleet managers should gather data from all vehicle maintenance and repairs and audit it to identify problem areas or types of service that tend to result in out-of-warranty costs. They can then target these issues by reviewing warranty terms, making efforts to reduce specific service requests, or training employees to avoid supposed out-of-warranty service claims with better knowledge of what is and isn’t covered.

Consolidate Fleet Programs Across the Organization

Some fleets are distributed to different departments, each with ownership and accountability for their individual fleet. While this type of arrangement can provide autonomy, it can also lead to inconsistencies and inefficiencies that drive up costs.

Consolidating fleet programs into a single unit can allow for fleets to be managed more effectively and consistently. Each individual department can secure their own terms and conditions of using the fleet based on their needs without having to have redundant management.

Most importantly, service agreements, vehicle purchases, and similar activities can be done in a larger volume, giving your organization more bargaining power and lower per-vehicle costs.

Train Drivers and Incentivize Collision Avoidance

Without a doubt, collisions can be a significant cost driver and a major variable when it comes to making fleet costs more predictable. A single accident can lead to increases in insurance premiums while likely necessitating out-of-warranty repairs.

Investing in employee driver training can encourage good practices that reduce the likelihood of a collision occurring — while having the added benefit of potentially reducing wear on vehicle components like tires or brakes.

Incentivize drivers by recognizing good performance. Installing telemetric devices can add per-vehicle costs but offset these in the form of improved driver behaviors and better monitoring of data used to back incentive programs.

Give Employees the Option to Purchase Fleet Vehicles

Employee purchases of fleet vehicles can be a bargain to both parties. Employees get a vehicle with minimal wear at far less than retail prices for used vehicles, while organizations can sell vehicles directly rather than through wholesale auctioning companies, improving value retention. Additionally, employees who know that the fleet vehicle they drive may someday be one that they own tend to treat the vehicle better, reducing maintenance costs and the likelihood of collisions.

Secure a Fleet Roadside Assistance Program

Roadside incidents can lead to out-of-warranty costs and increased repair or towing costs, in many instances. Securing a fleet roadside assistance program can protect your fleet and your drivers from these unexpected costs.

The most important trait of a roadside assistance program is that it can be customized to suit your organization’s unique needs, including your budget.

Find out what types of cost savings and peace of mind you could attain when you contact us to learn about available fleet roadside assistance programs.