10 Ways to Reduce Your Business’s Fleet Costs

In a study released by AAA last year, the average cost of ownership for a single vehicle is close to $9,000 annually (Learn more). That’s no small amount of pocket change for a single person or family with one or two cars. The numbers can quickly hit 6 digits or more if you’re operating a medium sized fleet of vehicles. And that’s just for your average four-door sedan. If your business is driving 4WD SUVs, half tons, cargo vans, rentals, taxis, limos, and other high maintenance vehicles; fleet costs will be much higher.

Not all fleet managers have the luxury of running a fleet full of fully warrantied vehicles either. If your fleet maintenance costs fall solely on the company checkbook, the following fleet maintenance cost-cutting tips are for you.

1. Cut fleet costs by cutting the size of your fleet = Big cost saving potential

It’s important to do the math on this one. Do you really need every company vehicle in your fleet? Are there vehicles that barely, if ever, get driven? It’s quite possible you’ll save at least $5,000 per vehicle culled from your current roster, and actually make money by selling them in the process. It’s true that the operating costs of the remaining vehicles will increase slightly (ie., more fuel and maintenance expenses.) However, the potential savings from just one vehicle being eliminated are many (ie., maintenance, repairs, insurance, permits, etc.)

How to Cut Fleet Costs

2. Monitor distance traveled by employees = Moderate to huge savings potential

To be a good employer, employees should feel able to make very short personal trips throughout the course of their work day, such as heading to the gym on their lunch hour or on the way home from work. Or stopping by the supermarket if it isn’t too far out of their way. However, allowing them to drive the company car around during their downtime — or worse taking extended trips on company time — can really hit your bank accounts right where it hurts you most. If employees know they’re being tracked, they’ll be much more careful about when and what the car is used for.

There are plenty of car manufacturer add-on services (eg., OnStar), service providers, and apps available to track GPS equipped vehicles. If a vehicle doesn’t have GPS, you can buy a tracker like any one of these on Amazon (non-affiliate link).

3. Get more fuel efficient vehicles = Moderate to large savings potential

Does your corporate sales manager really need to drive around in an Escalade? Is there nothing smaller, yet still luxurious they could be driving, to save your business tons in fleet costs?

The answer is, probably.

Fleet managers and business owners need to be aware of employee’s vehicle needs out in the field, and come to a consensus on just what’s required. The smaller (and relatively newer) the vehicle is, the more costs you’ll save. And don’t make it about image either, driving a more modest vehicle just makes you thrifty, it won’t damage your company’s image in all but a few select industries.

4. Consider alternative powertrain technologies = Big savings potential

Next to depreciation expenses, fuel is the biggest drain on a fleet’s budget. While fuel costs have been consistently dropping for some time, there’s no telling when it’s going to surge back up (it always does, after all). There are a number of technologies to consider including hybrid and electric vehicles. Don’t let yourself get too image conscious either — driving a hybrid or electric makes you a model of corporate responsibility, and most will respect you for making this kind of decision.

Natural gas, diesel, and propane powered vehicles (see this article on the savings propane can offer large fleets) are also a great option if you operate a fleet of work trucks, taxis, etc.,  that travel really long distances every year (though keep in mind that both carry a lot of extra maintenance costs, so make sure the fuel savings balance out with the cost to buy and maintain these more expensive technologies.)

Tips for Reducing Fleet Costs
Image Credit: Mic/Flickr

5. Reduce vehicle lifecycle costs = Moderate to large savings potential

There’s a very delicate balance between getting letting an odometer go as long and as far as possible, to get the most out of a purchase, and dragging out a vehicle’s lifecyle so much that it starts chipping away more and more in maintenance, repair and fuel costs each and every year. Smart, seasoned fleet managers know this, but it’s a mistake still made by many small and medium sized business owners. Download the handy excel-based lifecyle calculator on this page to help determine when a vehicle’s tipping point has been reached.

6. Lower acquisition costs = Big savings potential in the long run

This involves a fair bit of pre-purchase research, but it can pay off in spades if done smartly (and if market conditions remain fairly predictable). It might seem like the best bet is to buy the cheapest, most reliable, and fuel efficient cars you can find. That makes a lot of sense, until you consider what the car will be worth when it comes time to dump it in a few years. Do lots of reading. Check out the Kelly Blue Book top resale value lists, the extensive vehicle specific depreciation information on Edmunds.com. And sign up for Black Book’s weekly vehicle valuation reports.

7. Ensure higher resale values = Moderate to large savings potential

This includes making sure maintenance is performed on a proper schedule and also making sure the vehicle’s upkeep is monitored and taken care of. Set up a schedule for employees to take the vehicle to a reputable detailer every few months. Don’t allow them to smoke in their vehicles. Inspect the cars regularly to identify employees who’re messy and/or careless (ie., spilling coffee, food stains, throwing trash on the floor, ripping seats and other damage.) Ensure scratches, dents and rust damage are fixed quickly and properly to avoid more costly, value-depreciating damage.

Save on fleet costs
Image Credit: Dr. Beasley’s/Flickr

8. Lower Maintenance Costs = Moderate to large savings potential

Unless you have a dedicated team of mechanics on duty, you likely go out-of-house for your maintenance needs. It’s important to know the exact schedule for all your vehicle’s maintenance needs:

  • Air and cabin filters
  • Fluid changes of all kinds
  • Fuel filters
  • Tire changes
  • Belt replacement
  • Major component inspections (brakes, suspension)

Knowing when parts need to be changed can save you a lot of money at the mechanics or quicky lube — many of these places will gouge you at every visit if you’re unaware of your vehicle’s actual maintenance requirements.

9. Reduce accident and settlement costs = Low to large savings potential

Every one of your employees that drive company vehicles are literally driving around with a huge insurance settlement target on their head. In fact, the employee themselves presents a huge liability risk if they themselves are hurt in an auto accident, too. All in all, you can’t necessarily control how they drive, nor can you prevent dangerous road and weather conditions erupting while an employee is out on the road.

What you can do is have a well-thought, iron-clad fleet safety plan in place that includes regular training, encouragement of feedback about the vehicles, and a willingness to provide employees with all “reasonable” requests for maintenance, inspections, and vehicle add-ons that can reduce their chances of being in an accident (ie., collision avoidance systems can be added to cars not currently equipped, along with back up warning sensors and cameras, and many other safety devices).

The savings are huge here, so don’t discount these relatively small added costs on your fleet budget. Insurance claims can easily go into the tens of millions for a single accident. Road safety has to be paramount due to the extreme potential for loss, regardless of upfront and continuing costs. And this is yet another reason why keeping your fleet modernized with cars equipped with the latest and greatest safety features actually saves you money rather than costs in the long run.

10. Look for carpooling opportunities = Low to moderate savings potential

Finally, fleet managers and business owners need to identify ways to fill their cars with more people. For instance, having your individual sales people ride to their respective destinations in a few cars instead of each driving their own vehicle. This tip won’t be do-able for everyone, but there are a large number of companies out there who’re far too liberal when it comes to handing out individual car keys to employees who work within close proximity to each other. This is especially true for companies operating in a small city or specific zone inside large cities.

Have any fleet cost saving tips to share?

Know any ways to save on fleet costs that aren’t listed? Do share…


Main Image Credit: Carl Spencer/Flickr