CAR FINANCE writer Brian Rogerson examines how small businesses can move to smarter, greener, and more cost-effective management of their company cars.DURING April this year, an event took place which, although insignificant in itself, gave small and medium-sized businesses an inkling about which way their company cars are likely to be handled in the future.
Archant, a 160-year old privately-owned publisher of regional newspapers and magazines, completed a deal with car management company CLM. The deal was for CLM to manage Archant’s 550-strong national car fleet. Archant’s chief executive, Adrian Jeakings, explained that the company chose to tender its company cars and subsequently received submissions from some 21 separate fleet organisations before selecting CLM.
The Archant car fleet consists of a mixture of relatively low mileage petrol and diesel vehicles which are provided through a solus arrangement with Vauxhall and are predominantly Astra models. It also includes perk cars for senior managers who have an open choice. The car fleet is operated on a 48-month/80,000 mile replacement cycle.
Lowering CO2 emissions
On CLM’s recommendation, the job-needed cars were moved to diesel with the intention of driving down the current CO2 emission levels from the current average of 146g/km to around 118g/km.
Jeakings explained: “To help make the move to lower emissions, Archant drivers will be incentivised by having their benefit-in-kind tax bills paid by the company if they downsize from the benchmark Astra 1.7CDTi Life to the Corsa 1.3 EcoFlex, which has emissions of just 98g/km.”
The switch to diesel across the car fleet will also help significantly in lowering carbon emissions.
Another area of cost saving is that of service, maintenance and repair (SMR). Archant is switching from fixed cost maintenance to a pay-as-you-go SMR profile. “This,” said Jeakings, “should produce an anticipated saving of around 12% over fixed maintenance costs.”
The final link in the cost-cutting chain for Archant is selecting the most appropriate contract hire solution. Here CLM, acting in its broker role, selects the lowest monthly rentals for each new car on the car fleet from a panel of preferred leasing suppliers. This has been proven to reduce acquisition costs within its existing clients – by around 8% to 10%.
The ‘greening’ of UK company cars is continuing apace, and Archant’s example is only part of a wider series of trends for small businesses as they seek efficiencies and economies.
2009 saw the greatest single-year decline in average CO2 emissions as the urge to put cleaner cars on the road was accelerated by increased customer demand for more fuel-efficient vehicles. This was augmented by the introduction of CO2 based taxes in several European countries and the national scrappage schemes which favoured smaller, cleaner cars.
David Di Girolamo, head of Jato Consult explained: “The pace of improvement is remarkable and shows just how rapidly the industry has reacted to environmental demands. In 2003, only 24% of the market achieved an average of 130g/km. This was 40% by 2007, 51% in 2008 and 69% last year. This achievement is even greater when set in the context of new cars becoming larger, safer and better equipped, as consumer demands reach ever higher.”
More fuel-efficient company cars available
Most manufacturers now offer environmentally-oriented cars, combining many features such as efficient petrol and diesel engines, hybrid powertrains, more sophisticated transmissions, low rolling-resistance tyres, improved attention to detail, aerodynamics, stop-start technology and regenerative charging systems.
Similarly, and to match, there is an ever-growing range of contract hire plans available that can be tailored to fit the low-emissions vehicles that are becoming part of small businesses’ company car fleets.
At the beginning of 2010 Fleeteye, a study produced in association with The University of Buckingham, revealed that since the previous year’s survey, the number of respondents utilising contract hire for essential car users jumped from 52% to 63%. Equally, in the case of non-essential users, there was a growth from 22% to 28% of those using contract hire. “These figures between essential and non-essential users,” said the author, “would suggest a steadily increasing sophistication in terms of fleet management.”
How sophisticated is your business in its approach to company cars?
Fleet Alliance comment on smarter company car management
Martin Brown, managing director of business car solutions provider, Fleet Alliance, comments: “The highlighted case study lends further weight to the long held assertions of Fleet Alliance; a fleet of two vehicles or 2000 can be run in a sustainable, green and cost-effective manner simply by utilising two key tools.
“The first of these is competitive tendering – working with a panel of funding providers ensures market leading prices every time. Think of it as real-time tendering!
“And, the second, is whole life cost analysis: lower CO2 means lower fleet costs. Always look beyond the rental price if you want to see the overall cost impact.
“If a small business does nothing other than utilise these tools they will be well on their way to having a cost-effective and green fleet.”
