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.