Significant costs

Company car and van fleets are often non-core areas of an organisation so reducing fleet costs may not necessarily be a key focus for directors and senior management.

However, the costs associated with fleet can often be a significant part of the organisation's profit and loss statement, especially in organisations within support services, construction, telecommunications and technology.

An example of the parts which make up fleet costs is shown in the chart below. Please note: the relative cost percentage is likely to vary between different organisations - for example, some may have a higher proportion of cash takers, or provide employees with private fuel, which will correspondingly increase these segments relative to other cost categories.

Typically, annual fleet costs represent £5,000 - £10,000 per vehicle (pre-tax) when all these elements are taken into account.

The actual cost will also be significantly impacted by car policy, for example, whether private fuel is paid, and whether there is a generous level of car or cash allowance offered to senior employees.

Chart of costs

 
 
There are six main areas to focus on when looking at reducing fleet costs.
  1. Fleet funding
    Is Your funding method efficient?
  2. Manufacturer discounts
    Are you offering your staff too much choice?
  3. Car policy
    Have you considered reviewing your car policy terms?
  4. Fuel and National Insurance Contribution (NIC) savings
    Are you mnaging the provision of fuel effectively?
  5. Operational fleet model
    Have you considered your operational fleet model?
  6. Risk management
    How can you minimise your risks and reduce costs?