Cost containment biggest concern for 89% of fleets
By Kelly Mason
Thursday, April 10, 2014 - 12:30
CONCERN: Does cost containment worry you?
Containing costs is the biggest worry for fleet operators ahead of the coming financial year, research has revealed.
A study by Venson Automotive Solutions found 89% of their customers listed containment as their primary concern, with 80% insisting suppliers can help businesses by working harder to reduce costs.
Venson claim companies who calculate the expense of running a fleet on the basis of whole life cost will achieve the most effective reductions in financial outlay.
However, just one in five organisations use that strategy.
Alan McCleave, Business Development Director for Venson, said: “When we analyse companies’ car choices, within existing grades, the whole life cost deviation between the lowest and highest is frequently significant and that is money businesses are currently giving away, despite containing costs being their top priority.
“Despite significant savings to be made by selecting vehicles based on whole life cost data, a recent ACFO seminar highlighted only 20% of organisations use whole life costs when compiling choice lists; a figure I believe is slightly generous.”
Of those surveyed by Venson, 71% said they were under greater pressure in 2013/14 to reduce supply costs, with 29% also under pressure to reduce internal costs.
In addition, 40% said they were more closely monitoring the financial viability of suppliers.
Tellingly, the key areas fleet operators felt they would be spending less on over the next 12months was fuel cards (35%), as many look to implement an integrated solution.
Vehicle servicing maintenance and repair (27%) and purchasing cars (25%) were the other areas fleet managers felt they could reduce spend over the coming year.
In contrast to the cost-cutting areas, 21% of fleet managers felt that insurance was an area where they would spend more, with the natural rise in premiums.
A sizeable 21% also said they would spend more on daily rental and fleet management, while 95% felt they would spend the same amount on risk management and 87% on telematics.
“Rises in insurance premiums are often unavoidable, although there are ways to potentially reduce these,” added Mr McCleave.
“As well as daily rental and fleet management where working closer with a provider can help to reduce costs.”
Image courtesy of Images of Money, with thanks.