Fleets caught out by financial squeeze

Shock findings from a Lloyds TSB Autolease survey have revealed that only one in ten fleet operators (12%) were concerned by the state of the economy before the collapse of Northern Rock in September.

Companies were found to be preoccupied with the impact of fuel costs despite signs of an economic downturn from a struggling housing sector.

The views of 300 fleet decision makers taken less than three months prior to the liquidity crisis show that almost a third (28%) perceived that fuel costs were the ‘greatest challenge facing the industry at this time’, followed by raw material costs (14%) and the economy third (12%).

When asked to look ahead to the next 12 months, over half (55%) again stipulated fuel prices, while just a year earlier only 3% of respondents were hardest hit at the pump.

Marcus Puddy, Head of Consultancy Services at Lloyds TSB Autolease, says: “It’s not just fleet managers who were caught off guard before the credit crisis really took hold, but other influencers that we polled such as finance and operations personnel who are, arguably, better informed about the wider economy.

“The good news is that most companies are now fixing their sights firmly on ways to stop the squeeze and make cost savings across their fleets. Some are considering an overhaul of fleet policy, while others are looking to streamline in specific areas such as vehicle choice, mileage allowances and tax efficiency.

“Fuel is one area where most businesses struggle to maximise efficiencies. Those with more progressive policies have already capped their choice lists using C02 limits and are seeing immediate returns on their fuel bills and overall fleet running costs. Many businesses are also migrating to whole life cost policies to reveal the true running costs of their drivers’ choices.”

Changes in fleet policy

22% of those surveyed were inclined to incorporate more green alternative fuels as part of a change in fleet policy over the next 12 months, but this fell to only 14% among fleet managers. An equal number of finance and facilities managers propose making changes to vehicle choice, while 7% of fleet managers said they intend to rip up and rewrite their fleet policy altogether.

But most worryingly, while not one fleet manager saw it necessary to reduce their budgets, some of their peers in operations are seeking ways to reduce fleet expenditure.

Marcus Puddy says: “This suggests that fleet managers could be faced by resource cuts forced upon them by other areas of the business. That’s not necessarily beneficial to the longer term interests of the company and can even have a negative impact on operating efficiency and employee retention.

“Our approach is always to work with businesses to understand their strengths and weaknesses and have found that we can make initial cost savings of between 5-10% with relatively little pain.”

For more information on how to stop the squeeze on fleet costs, visit lloydstsbautolease.co.uk/cost