The grey fleet is outdated for businesses

Organisations of all shapes and sizes often permit employees to drive their own cars for work and recharge the miles, even though this type of business travel is informally procured and thus low in accountability and lacking in audit transparency.

The fact that the permitted ‘grey fleet’ AMAP recharge rates set by the Government have recently gone up by 10 pence per mile may potentially encourage even more users.

Customers have reported an increase in their grey fleet miles for a range of reasons, often saying that it is preferred by employees themselves, who would rather use their own car parked just outside their house or that they used for their daily commute, rather than another mode of transport.

Letting employees use their preferred vehicle for work seems like a logical and optimal choice, yet beneath the seemingly simple and harmless appearance there are complexities and risks involved.

Allowing employees to use their own cars can lead to greater risk and higher costs per mile than using company cars, rentals or other forms of transport.

And while the increase in AMAP rates is a welcome and necessary step toward fairly reflecting the real cost of driving for work, it also highlights the growing financial and operational risks of unmanaged grey fleet for the employee.

Managing the unmanaged

Grey fleet is increasingly an anomaly as businesses set up policies and systems to ensure that all their business travel is managed and measured.

Company or rental vehicles are formally procured and have strict performance measures in place, with transparency, accountability and continuous improvement requirements at every step of the implementation process.

They are usually overseen by dedicated contract managers, with formal service reviews and social value commitments.

They will be compliant with the organisation’s travel policy and can help to match strategic business goals such as cutting costs or reducing emissions.

On the other hand, the use of a personal car is entirely reliant on the employee to ensure that the vehicle is fit for purpose, roadworthy, insured for business use, and has a valid MOT certificate.

Age is another factor in an age of increasing scrutiny over emissions and road safety.

The average age of a car in the UK is now ten years, the oldest it’s ever been. Many employee-owned cars will be even older.

This means grey fleet travel drivers are using vehicles for business trips that lack the most modern safety equipment and may produce higher CO2 than newer cars. Some might also have delayed regular maintenance and MOTs due to increasing costs.

Employers can potentially be held liable in the event of an accident caused by the condition of grey fleet cars used for work journeys, even though the business had little or no control over that vehicle.

Bringing out hidden costs

Invisibility is a key reason why grey fleet proliferates. There’s a reason why it is often referred to as an ‘iceberg’.

It is because 90% or more of the costs, risks and emissions accrued with grey fleet lie concealed beneath the surface, across thousands of individual retrospective mileage claims.

These claims are buried in an expense management system that may not be reviewed by those people in charge of business vehicles, business travel, or employee wellbeing. Often the data is not aggregated so there is no way to see the extent of the problem.

In fact, those responsible for business travel or fleet might be surprised by just how much budget is being casually deployed in grey fleet while their own activities face enormous scrutiny.

In some cases, a grey fleet may in fact far exceed the size of an organisation’s regular fleet.

Responsibility for mileage reimbursement is often split by individual departments or finance teams, with no involvement by HR or the fleet manager, further hampering a single view of impact.

There are also hidden emotions bubbling under the surface, as the perception that grey fleet is the preferred option that employees ‘want to use’ is often incorrect.

Our research has shown that many people are reluctant to add additional wear and tear to their personal vehicles, and that some might actually view access to more managed travel options as a reason to change job.

Start supervising the grey fleet

Encouraging employees to use more managed mobility options instead of their own cars is a step in the right direction.

This may require reviewing the travel policy and available travel options in light of current mobility requirements, while engaging and communicating with employees to ensure they are on board with why change is on the horizon and why they should leave their own cars at home.

Where that is not viable, organisations will need to bring the same level of oversight to the grey fleet.

This means ownership, accountability, and proper management.

Are there ways to track who is taking a journey in their own car, where they are going and why they have chosen that option? How can mileage reimbursement be managed more centrally and effectively? What can the organisation do to ensure cars used for business are fit for purpose, insured and properly maintained?

Organisations, whether in the private or public sector, should now take the opportunity to review how they deliver their business travel – ensuring it is cost-effective and meets their strategic goals. And then think about where grey fleet fits into that wider picture, if at all.

Ryan Bushell is head of public sector UK & Ireland at Enterprise Mobility