Fleet World article

Making the most of lockdown: Key advice for fleets

Colin Tourick FICFM on how fleets can best spend the coming weeks and months in lockdown to good effect.

It’s April, the Chancellor has delivered his Budget and in a normal year I would now write an article about how the Budget will affect company car and van fleets. However, the coronavirus crisis is having such an overarching effect on everyday life that I feel it would be wrong to spend too long now discussing the Budget.

So let’s get that out of the way quickly so we can concentrate on more pressing matters.

The Chancellor froze company car Benefit-in-Kind tax rates for 2023/24 and 2024/25 at 2022/23 rates (hooray!), fuel duty was frozen again, plug-in car and van grants were extended to 2022/23, £500m was committed to increasing the number of rapid charging points, the inflation-linked increase in VED was confirmed and – broadly – the fleet industry drew a sign of relief. Plenty of Budgets have been uncomfortable for fleet managers. This wasn’t one of them.

Let’s turn now to coronavirus and the current lockdown.

There are always winners and losers at a time of national crisis. The winners today include supermarkets, delivery services, the private medical sector and companies that produce hand sanitiser and toilet paper. The losers include entertainment venues, retailers, manufacturers, conference organisers and many other businesses. If you’re amongst the winners you may well be rushed off your feet as your company ramps up to meet an unprecedented level of demand. If you’re amongst the losers, many of your drivers may be sitting at home with little to do.

These are all short-term phenomena. The virus will pass, people will go back to work, life will slowly return to normal. But it’s unlikely to be the normal we knew before. Some businesses will find their businesses boom – psychotherapists and divorce lawyers come to mind – but others will have been badly damaged by the downturn in business. Consumer confidence will have declined, government debt will have ballooned, there will be inflationary pressures and many people will be more interested in repaying debt, rebuilding their savings or looking for a job than in going out and spending money.

And let us not forget the other factor that hasn’t gone away: Brexit. I cannot imagine that in their wish to rebuild their economies as quickly as possible, the EU will be in the mood to deliver much by way of concession to the UK’s Brexit negotiators.

So, without wishing to be unduly negative, it’s probably fair to say that for many businesses the next year or two are likely to be quite uncomfortable. There will be pressure to do things more effectively, efficiently and at lower cost. And, as fleet costs are often the third largest overhead for many businesses after staff and property costs, it’s fleet managers who are going to be called upon to deliver those efficiencies and cost savings.

So let’s assume you’re a fleet manager sitting at home with rather less to do than normal. How best to spend the next several weeks – or months – until this crisis has passed?

Here are some suggestions I have been giving fleet managers:

  1. Clear your desk. You know all of those things that have been sitting on your desk or in your inbox for ages that you never had time to get around to? Good news, you have some time. Deal with them. At least that way when you get back to the office you’ll have a clear desk and a clear inbox.
  2. Redo your budgets – they’re out of date. The good thing is that you’re saving money on fleet costs (fuel, servicing, etc) at the moment. Indeed you may continue to save fleet costs once the crisis has passed if demand for your company’s services falls. However, used vehicle prices are falling which means that either you’re going to get less for your cars when you sell them or your leasing company is going to lower their residual values when calculating their rentals. Time to redo the numbers.
  3. Research new areas you had not yet considered, where you might reduce costs or increase efficiency. A decent fleet management system to replace all of those spreadsheets? A telematics system to help you manage your fleet more effectively? A better fleet reporting system? An automated mileage reporting or fuel cost management system so you can that would allow you to move away from all those bits of paper – and give you decent management information in the process? You can research all of these and more online, from the comfort of your home.
  4. Start benchmarking. There is plenty of fleet cost data available online. You should be able to benchmark many of your fleet costs from the comfort of your home.
  5. Get studying. Sign up for one of the Institute of Car Fleet Management’s excellent courses and get yourself a qualification. The ICFM (now part of the Association of Fleet Professionals) have stopped running face-to-face training for now but they have a range of online courses.
  6. Work out what value your fleet policy is delivering to your company and your drivers. Some of your cars are perk cars which, I know, deliver non-financial benefits to drivers, but let’s concentrate here on the financial side. For each car, calculate the cost to the employee of each personal mile driven. Some of those costs will be huge. Time to have a chat with them about foregoing their car and receiving a pay rise instead? Both the company and the driver could save money.
  7. Then do the same sums for your ‘business use’ cars, but this time work out the cost to the company per business mile. Once again, some of those costs will be huge. Time to look for a different solution?

This period offers a golden opportunity to do the things you always said you’d get around to if only you had the time.