CLM identifies key fleet issues of 2014
At this time of year it has become almost traditional to look forward and predict the most important fleet issues for the year ahead. Here at CLM we have put together our own predictions and believe that cost cutting and reducing whole life costs will remain firmly at the top of the fleet agenda for 2014.
Cost cutting to remain top concern
While the economy is forecast to grow this year, recovery looks likely to be patchy at best. We believe that, after talking with many of our clients, cost control will again be the number one priority.
This means a careful balancing act between achieving lower costs while not compromising customer service – something we are passionate about at CLM.
Taking a whole life cost approach is the only way to get a true cost picture and this is something we will continue to advocate to our clients throughout the year ahead.
Fuel costs will continue to be an issue
Many fleet operators breathed a sigh of relief when the rise planned for this year was scrapped in the Autumn Statement, but we are not out of the woods by any means. Fuel costs remain the second highest cost after depreciation and their careful management should remain a priority.
The use of fuel management techniques, such as fuel cards, the use of supermarket forecourts and driver awareness training, should continue to be important to keep fuel costs in check.
As manufacturers continue to introduce cleaner and more fuel-efficient models, fleets can increasingly make smarter vehicle choices as a more sustainable way of managing fuel costs in the future. Any fleet review should include the identification and selection of the most fuel economical models as a matter of course.
Benefit-in-kind taxes will be a main focus
BIK rates will rise by 1% this year and we all know other rises are in the pipeline. Last year’s Budget revealed that low emission cars would no longer be exempt from company car tax and that the maximum tax threshold will increase from 35% to 37%.
In addition, the diesel supplement is to be removed from 2016 and drivers can expect increases to BIK rates in the years ahead. All of this puts the emphasis firmly on making the right vehicle choice for the next three years, with low carbon emissions and frugal fuel economy a priority to help keep tax bills in check.
Electric vehicles will make headway
Increasingly onerous carbon emission legislation plus Government incentives will undoubtedly encourage new developments in electric and plug-in vehicles this year. The Government’s pledge at the Autumn Statement to invest millions in developing infrastructure for EVs should be a signal of confidence for the future.
As mainstream manufacturers, such as BMW, release new models to meet emissions, cost saving and efficiency demands, we are likely to see an increase in EV uptake. How meaningful that increase will be still remains to be seen, but all the signs are for more significant fleet interest than hitherto.
Managing the grey fleet will remain essential
Key amongst duty of care responsibilities is the need to ensure that the grey fleet – those cars owned by employees but used for company business – is managed as effectively and with the same degree of professionalism as company-owned vehicles. The grey fleet was identified as a source of concern for fleet managers last year, and we see nothing to signify that it will not continue to be a key issue for the months ahead.
Our advice with the grey fleet is always to manage it as stringently as the main company fleet. That means regular condition checks, scheduled servicing and maintenance and electronic vehicle information capture.
Salary sacrifice will continue to grow
Salary sacrifice car schemes have become increasingly popular as a way of opening up the ownership of brand new, low emission, fully maintained cars to larger numbers of employees. And there seems to us to be no reason why this trend will not continue to gather pace, especially in larger organisations, as an intrinsic part of the flexible benefits packages available.
Finding a reliable partner to ensure the schemes are properly constructed with as wide a choice of vehicles as possible to meet staff needs will continue to be of paramount importance.
Switching suppliers will require due attention
More companies are believed to be looking to switch suppliers due to concerns about rising prices and falling service levels. Changing your fleet supplier can be a tricky proposition that often hinges on getting your tender document absolutely spot-on.
At CLM we have produced a free report that details how to get the best from any tender process and shows how to identify the key questions to ask of any prospective supplier.
Pay-as-you-go maintenance on the increase
Most contract hire packages today come with a maintenance-inclusive element, but many companies that use contract hire to fund their company cars this way don’t realise that there may well be a more cost-effective alternative.
One option could be to switch away from a fixed cost maintenance package and consider pay-as-you-go maintenance, managed by a fleet management specialist, instead. This can improve your cash flow, give greater transparency and improve flexibility. It also means that you only pay for service and maintenance as it occurs, rather than accruing for a future eventuality.