How to reduce your grey fleet costs
The cost of running a company car fleet is more often than not one of the largest overheads that a company has to face throughout its life. Fleets are regularly under pressure to reduce costs whilst maintaining a forward-facing mentality.
The term ‘grey fleet’ refers to vehicles which are owned by employees but driven regularly on company business. Managing the financial and time costs of grey fleets can be a challenge in any organisation as well as managing the associated risks.
That’s why this month we’ve created a list of our top ways to reduce your grey fleet costs. We hope you’ll be able to implement these strategies when you’re next reviewing your fleet offering.
Cut down unnecessary mileage
The current HMRC Approved Mileage Allowance Payments (AMAP) is set at 45p per mile (up to 10,000 miles in a business year), and 25p per mile for mileage over 10,000 which can very quickly become a substantial cost if high grey fleet mileage is done.
For most fleets, unnecessary mileage is a contributing factor in rising fleet costs, especially grey fleet costs. If you want to keep your costs down, then it may be time to embrace the power of technology.
Where possible, utilise conference calling, Skype or VoIP communications. This helps to reduce expensive mileage claims and will also have a benefit in other areas such as reducing a company’s carbon footprint.
However, if this isn’t possible for your company, then why not utilise mileage audits and reporting. Occasionally (we’re not saying it happens all the time), employees will take a longer route when they think that no one is watching.
Encourage car sharing
Everybody enjoys their own independence, but the next time you’re planning a large gathering of employees (e.g. conferences, client visits, trade exhibitions) then why not encourage car sharing between attendees. You could also encourage the use of pool cars or car club schemes to avoid the use of private cars altogether and again avoid those hefty mileage reclaims.
If your team are car sharing, you’ll only be paying the business mileage on one car compared to (for example) four different journeys.
Incentivise the use of public transport
If you really want to help cut the cost of your grey fleet, then you should consider incentivising the use of public transport.
If you work in or near a large city with good transport links, then one option could be to offer travel loans to your employees to help them purchase a season ticket.
Employees can book train fares up to 12 weeks in advance, so if employees are able to plan far enough ahead, then taking the train could be a time and cost effective mode of transport.
Understand your employee’s journeys
It’s always a good idea to set measurable mileage targets, but you won’t benefit from this as much until you understand the routes that your employees are taking on a regular basis.
For example, if a lot of your journeys are taking in towns and cities, why not incentivise public transport routes as suggested above. However, if your team are regularly taking longer journeys on motorways, then setting up an agreement with a rental company may work best for you.
Rental as an alternative
One of the best ways to cut your grey fleet costs is to provide car rental as an alternative. This way your employees are able to drive the safest, cleanest and most reliable cars on a basis to suit them and this will also minimise the headaches related to duty of care and your grey fleet.
Rental can often become a more cost-effective method of getting your employees from A to B by avoiding expensive AMAP rates and you know your employee is in a roadworthy, safe and legal vehicle.
So there we have it, our advice on reducing your grey fleet costs. Please remember, these tips are just advice that we’ve accumulated through years of industry experience.
What do you think? Do you have your own experiences of reducing grey fleet costs? We’d love to hear your thoughts, so please do let us know in the comments below.