In a recession we all need to re-think our strategies and policies and see where real costs can be saved to ensure the survival of the business. One such area where large savings can be made is your vehicle fleet.
10 ways to survive the Economic Downturn:
1) Review your fleet policy and funding methods. For example; if you are buying vehicles, consider leasing. In either case using "Whole of Life Costs" can save a company serious money. Leasing vehicles will benefit a business, as residual values are becoming harder to predict, and vehicles in the used car market are worth far less.
2)Choosing the right cars for your fleet is crucial to reducing costs. By using Whole of Life Cost analysis you are able to determine which vehicles are more cost efficient. By choosing a car that is 3p per mile less than equivalent car covering a total mileage of 75,000 miles over 3 years, the saving would be £2,250 per car.
3) Consider other areas that may affect your business. One major change coming into effect in April, that will affect virtually every company, is the reform of the corporate tax regime on company cars. This will have a considerable impact on companies balance sheets.
4) Accidents. What was the average cost per car, per accident to your business in real terms? Consdier your insurance excess - are you paying too much (high excess) or too little (low excess) and what saving can be made by changing this?
5) Purchasing vehicles ties up valuable capital. If you have vehicles on your fleet that have been purchased you may be sitting on an asset that can be turned into valuable cash. As an example, by using Automotive Management's Sale and Lease Back product, an average fleet of 20-25 vehicles can bring a £300,000 cash injection to your business.
6) Review the allowances given to your employees for provision of company cars. The amount allocated may be more than you need to provide at the moment. A better solution is to use benchmark cars, rather than an allowance.
7) Do you provide a cash sum in lieu of company cars? Due to the changes in Duty of Care responsibilities and legislation, businesses are moving away from cash in lieu of company cars, because they have little or no control over the vehicles being used for their company business. Due to these liabilities, businesses are either leaning towards providing company cars or Managed Car Schemes, but in our experience the biggest trend is towards managed schemes, due the benefits.
8) Cars Schemes can save a business tens of thousands pounds and are worth investigating, but be aware, many show massive savings that often do not materialise. The key to any scheme is the benefits that it can bring to your company, and its employees. Make sure that the scheme is managed for you, and that it includes Duty of Care.
9) Review the cars that have high Vehicle Excise Duty (VED). Looking for greener vehicles could save a considerable amount of money. As an example; by using a car with lower emissions, the company will pay a lower VED tax; a high VED rating of £400.pa (Road Fund Tax) actually costs £1,000 over 3 year term (2nd & 3rd year plus half a year), or a monthly cost of £27.77pm. By choosing a car that has a VED of £35.pa the equivalent cost is £87.50 or £2.43pm.
10) Review how and who manages your vehicles. Many companies pay little or no attention to this, and often the responsibility is given to someone who has little time and no real knowledge of what vehicle management really entails. Using a vehicle company like you would receive the benefit of our experience, valuable information, and can include other areas such as re-taxing vehicles (VED), and notifying vehicles that an MOT is due is all part of the service.
Conclusion:
1. Use Whole of Life Costs to operate a greener fleet, and reduce your vehicle operating and VED costs.
2. Review your company's fleet policy and funding methods, the management of your vehicles, Duty of Care (Managing On-Road Risk Policy), accidents policy, repair costs, insurance premiums and excess limit.
3. Consider the changes to the Capital Allowances coming into force in April 2009, and the affect this will have on your business by having company cars.
4. Either Lease your company cars to remove residual value risk, or a Car Scheme that will also remove residual value risk, remove capital allowances, and reduce your costs.
For more information visit http://www.auto-man.co.uk/
