The start of a new financial year is a great time to review costs in your business, as we emerge from another year of disruptions. The challenges ahead in 2022-2023 are forcing many fleet operators to consider different ways to reduce fleet operating costs.
Here’s four ways you can control your fleet costs this financial year.
1. Focus on fuel
Average pump prices have been on a roller coast ride the last three years which has impacted fleet budgets. In 2019 the national average pump price for ULP was $1.42 per litre. It dropped in 2020 to $1.23 per litre, and jumped again in 2021 to $1.48 per litre, rising further in 2022. Diesel pump prices have followed a similar pattern.
Pump prices normally work in cycles, and we all know the areas that sell the cheapest petrol. Having a conversation with drivers and employees about pump prices is the first step. Get them to become part of the solution and acknowledge them when they find a cheap price.
Fuel is approximately 16% of your total fleet running costs so even small savings will increase your profits.
2. Vehicle maintenance
You can shop around to get a good deal on vehicle servicing and maintenance. There are advantages to using dealerships to service your fleet, however it’s not a requirement to maintain the warranty. An independent mechanic can provide the same services so why not get a few quotes when the next service is due.
Optimising the timing of tyre replacements and major services can also save you money. If you can schedule your fleet replacements before a major service, or before the tyres wear out, you can save a lot of money.
3. Total Cost of Ownership (TOC)
Before buying a new car, build a TOC calculation that includes depreciation, finance costs, maintenance, registration, insurance, and fuel. Using TOC helps you pick the right vehicles for your business by comparing different makes and models.
Once you understand all your fleet costs, you can schedule fleet replacements to avoid paying an extra year of registration; or sell one of your spare fleet vehicles when the prices are higher than the book value, which has been happening in Australia since COVID began.
4. Prioritise Driver and Vehicle Safety
This one isn’t as obvious as the other three, but it’s about prevention rather than a cure. Motor vehicle accidents cost your business money in several ways, even if it wasn’t your employee’s fault, and with more time on the road, the risk becomes higher.
The damage to the vehicle is often the lowest cost. Lost productivity, injury rehabilitation, and increased insurance premiums aren’t always attributed to the fleet budget; though they are costs your business will need to absorb.
Businesses can approach fleet safety from many angles. The first step is to buy the safest vehicles you can afford, and avoid the cheapest model in the range. Use the ANCAP ratings as a guide, and then look at the active safety technology which can help drivers avoid an accident.
Driver training is the other important activity. It doesn’t need to be complex, time consuming, or expensive. Simple tips and regular conversations can increase employee awareness and support the existing safety processes in your business.