UK grey fleet reaches record proportions

The nation’s grey fleet comprises 14 million cars, some 40% of all vehicles on the road, and costs employers more than £5.5bn a year in mileage claims and car allowances, according to a new report.

Getting To Grips With Grey Fleet, a new report produced by the Energy Saving Trust (EST) and commissioned by the British Vehicle Leasing and Rental Association (BVRLA), says some 12 billion grey fleet miles are driven each year on Britain’s roads by employee-owned cars.

In the private sector, the grey fleet covers 11 billion miles, emitting 3.2m tonnes of CO2 and 7,038 tonnes of NOx and costs almost £5bn.

In the public sector, use of grey fleet vehicles costs £786m per year with the bulk of the 1.5bn miles driven by employees of the NHS, local authorities and civil service.

These vehicles emit 447,000 tonnes of CO2 and 1,118 tonnes of NOx.

The term ‘grey fleet’ describes the use of an employee’s own vehicle for business purposes. In return for using their own car, employees are reimbursed on a pence per mile basis.

What else did the report say?

Using government figures and data from real-life fleets, EST researchers developed a profile of a typical grey fleet vehicle and compared it to other alternatives, including rental cars, car club vehicles and company cars.

grey fleet old carThe research found that the average grey fleet car was older, more polluting and potentially more dangerous than its counterparts.

Grey fleet vehicles had an average age of 8.2 years and produced 8,156 tonnes of NOx.

Other findings showed that the UK grey fleet was responsible for:

  • 3.6 million tonnes of CO2 per year, the equivalent to the average annual emissions of 1.5 million cars
  • a significant portion of the £2.7bn costs associated with work-related road accidents
  • £5.5bn-plus worth of potentially unmanaged costs from mileage claims and car allowances

What happens next?

The BVRLA, the trade body for the rental and leasing industry, is calling on the government to tackle the challenges of the UK’s grey fleet by highlighting the alternatives to grey fleet use and offering best practice guidance, particularly for public sector organisations.

The Association wants to see a 50% reduction in grey fleet miles by 2020, and says that cutting grey fleet mileage by just 15% would be the equivalent of taking 225,000 cars off the road in emissions terms.

Duty of care issues with grey fleet

Not only are grey fleet cars more polluting, they also raise duty of care issues.

Current health and safety regulations stipulate that organisations need robust policies in place to ensure that every grey fleet car is fit for purpose, has a valid MOT, is insured for appropriate business use and that the employee has a valid driving licence.

If a grey fleet driver is involved in an accident and is found to have an invalid licence or incorrect insurance, a company could be held liable if the vehicle involved has not been kept in a roadworthy condition.

The costs involved can escalate in proportion to the seriousness of the incident, and businesses need to be able to demonstrate the steps they have taken to manage this duty of care and provide an audit trail showing that all reasonable steps have been taken.

Hidden grey fleet costs

As the report clearly identifies, grey fleet costs should be of major concern for companies, because the level of reimbursement for drivers using their own cars for business purposes creates a substantial cost centre that, like any other, needs to be managed effectively.

Under the HMRC’s Approved Mileage Allowance Payments scheme, grey fleet drivers can claim 45p per mile for the first 10,000 business miles they drive and 25p thereafter – which can quickly mount up if high grey fleet miles are being driven.

Combined with this level of mileage rates, which may also create the incentive for additional travel, companies should also look carefully at the impact grey fleet travel has on total emissions in the light of the corporate environmental policy.

As the report clearly demonstrates, grey fleet vehicles are older and create higher emissions than company owned or daily rental vehicles and are less likely to be well maintained.

How can grey fleet costs be managed?

One way of effectively managing grey fleet vehicles is to treat them exactly the same as if they were company-owned. That means that, as with all other company vehicles, all records of ‘grey fleet’ vehicles should be kept online on a central fleet database.

This allows them to be accessed at all times and any changes to their condition, status or ownership accurately recorded so that they are up to date. Exception reporting can then be employed to flag up when any potential issues are identified, and these processes clearly establish the necessary audit trail.

At a pre-agreed frequency, typically weekly or monthly, grey fleet drivers should be required to undergo vehicle condition, electronic licence and insurance checks.

This involves drivers being asked to verify their vehicle condition, including tyres, glass, lights and bodywork, produce valid licences and business insurance and confirm they have not incurred additional penalty points.

Delinquency reports should be generated for any drivers that fail to abide by these conditions which can then be discussed with the drivers. Remedial action, up to and including driver training, can then be put in place.

Grey fleet drivers should automatically be sent annual reminders regarding Road Fund Licence renewals and, where appropriate on older cars, MOT reminders.

To ensure that driver-owned vehicles are serviced regularly and in accordance with manufacturer warranties, drivers should also be required to input their total mileage on a monthly basis via an online mileage reporting system, from which timely service reminders can then be issued as the service draws near.

If you would like to discuss how CLM can help you manage your grey fleet, please get in touch or see read more here.