by Johan van Niekerk, Fleet Solutions Consultant, Fleet Domain, a member of the Argility Technology Group.

Fleet operating costs remain one of the top three expense items on any company’s balance sheet. This is not expected to change in the future. Over the past three years fleet expenses increased by 12%+ per annum. To manage or even reduce fleet expenses, companies must implement policies covering all aspects of fleet management.

Finance: Financing vehicle assets can be done in several ways e.g., cash, hire purchase, financial lease - with or without a balloon payment - or an operating rental. Each of these methods have distinct advantages and disadvantages.  

Where a third party takes risk for the final settlement or payment applicable - as in the case of a lease with a balloon payment or operating a rental with a residual value - excess kilometres and make reasonable costs (this is what we refer to in the fleet industry for penalty charges at the end of a contract for excess kilometres and vehicle damages).

These are influenced, by selecting a market related value on future terminations, at inception.

Maintenance and Tyres: Various options are available in the market all with benefits and risk attached.

Companies can elect to pay for maintenance/tyres as and when needed - allowing for future inflation trends and price increases on maintenance items. 

Alternatively, one can elect to make use of a third-party service provider which has the requisite products as follows:

• Maintenance card supplied by one of the financial institutions. At the end of the month, costs are recorded and approved for the company's account. The company bears the expense risk. 

• Maintenance Management cards are supplied by the finance institution. In this model, maintenance/tyre expenses are approved and authorised by the service provider. Approval limits must be agreed upon. Maintenance risk remains with the company, and vendors expect the provision of detailed monthly expense reports.

• Managed Maintenance as supplied by one of the fleet management service providers. Period and Kilometre usage are selected upfront as per model covering maintenance and tyres(optional). The company pays an agreed amount per month. In this model, the service provider takes care of maintenance risk, including future inflation. Restructures of the original contract can be done, allowing for changes in usage. If this is not done or managed effectively, excess mileage or abuse can apply, a cost not normally allowed by the company.

• Maintenance Plans or Extended Warranty plans can be purchased upfront that will cover maintenance costs based on period and kilometres. This is not normally available for tyres. The pricing of maintenance plans allows for future inflation and rising costs, with an allowance for a management fee. If these plans are financed as an accessory at the finance rate applicable to the contract, the cents per kilometre will increase versus any other form of financing a vehicle.

• Fuel Cards can be supplied by most financial institutions and record fuel usage linked to kilometres and litres per month. Reports flag excessive fuel usage, which is important as it can point to maintenance issues or possible fuel theft.

• GPS/Tracking devices are immensely valuable in assisting fleet management costs. These units are not a fleet management tool; however, good fleet management is impossible without them. By recording speeding, harsh braking, excessive idling, driver fines, no-go zones, and more, increased maintenance, tyre, fuel, insurance, and HR costs can be managed and reduced.

• AARTO may be on its way back into the fleet world, with negative point accumulation against drivers who offend. Companies must always know their driver’s licence status. Service providers can assist with this.

As noted above, companies and fleet managers find it very difficult to manage and control these expenses, as they receive multiple reports from different service providers.

The FleetDomain Fleet Management Information System (FMIS) enables businesses to receive all necessary reports and measurement tools on one consolidated platform. This system produces reports that flag bad driving behaviour, which in turn negatively influences maintenance, tyre, fuel, fines, and insurance costs, with great savings to the company.

Fleet expenses are currently 9% to 15% out of line due to companies not using available fleet management tools.

Organisations managing and operating fleets should have an FMIS tool that can manage driver behaviour and control expenses under thumb at all times.

It is a known fact in the fleet industry – “Without managing driver behaviour savings in fleet expenses will not be achieved”.

This brings us to the last point of a cost-saving influencer: driver training. On average, driver training costs 0.340% to 0.95% of a vehicle's total cost of ownership (TCO). This is calculated on averages for small passenger/light commercial vehicles to heavy commercial vehicles.

Significant savings can be achieved by using a Fleet Management Information System (FMIS) and Driver training. These savings will far exceed the cost of having these valuable tools and services on hand.

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Want more information as to how FleetDomain can help you – Contact our Business Consultants on 011 712 1300, email info@fleetdomain.net or visit our website, www.fleetdomain.co.za

A conservative estimate of the increase in Fleet Management operating costs for the past two years is between 6% and 12% per annum. This estimate factors in new vehicle prices, maintenance, and tyre costs.

It is becoming increasingly important for companies to put policies and procedures in place to manage all areas of their fleet operations and driver behaviour to ensure best practices are applied to minimise the impact of inevitably increasing costs.

There are many areas to which such policies can be applied, and these include:

• Vehicle procurement.
• Finance options.
• Maintenance and tyre management.
• Fuel costs.
• Driver behaviour via GPS/Tracking.
• Fines management.

Each of the above will require a specifically designed and implemented practice to obtain the best results.

* Below is an example of a passenger vehicle's lifetime cost in a fleet.

• Contract Period in Fleet: 48 months
• KMs: 150 000
• Interest: 11.75%
• Retail Price: R 390 000
• Discount: 4%

Costs	Per Month	Lifetime	CPK	Retail%
Finance	7 163	343 824		88%
Maintenance	1 345	64 560		17%
Tyres	1 809	86 832		22%
Fuel	6 118	293 664		75%
Insurance	1 462	70 176		18%
Total	17 900
TCO		859 056	573	220%

You also need to factor in the following:

1. From a funding perspective, it is important to select the correct vehicle for the application and one that is funded correctly. Using " balloon values” can improve cash flow requirements. It is important not to select a value above market price.
2. Maintenance, tyre usage, and fuel consumption can be managed in-house or by using various bank card systems.
3. Alternatively, you can outsource the maintenance and tyre management to a third-party service provider.
4. The insurer will determine insurance requirements regarding driving restrictions, type of coverage, and driver licensing requirements.

One area that should be carefully examined and understood is the implementation of the nearly 20-year-old Administrative Adjudication of Road Traffic Offenses (AARTO) Act.

The act is being signed off by SA’s President, which can be a lengthy process. Once signed off, all the provinces and municipalities will become part of the legislative processes of AARTO, which is replacing the current Criminal Procedures Act (CPA). This change will benefit corporate fleet owners with drivers as well as private vehicle drivers.

The main objective behind this move is to simplify the management of road offences, which driver actions or vehicle conditions can cause. Both can attract fines.
Moreover, these changes should encourage drivers to become more responsible with driving habits and hopefully generate respect for traffic road rules and regulations.

Going forward, corporate concerns with company vehicles and drivers must be capable of redirecting fines received to the responsible driver who created the offence. Even more importantly, company drivers must be aware of the validity of their licences and negative penalty point status. Procedures must be implemented to create licence status awareness, possible training programmes, and human resource management intervention.

Drivers who continuously disregard road rules receive more fines and have more accidents, causing damage to vehicles and possible deaths. All the foregoing gives rise to increased fleet operating and human resource costs.

The FleetDomain Fleet Management Information System (FMIS) can consolidate these expenses on one platform. Various report options are available to best manage all areas of fleet expenses, which are expressed as a total cost of ownership or as a cents per kilometre value.
In the future, all fleet operating costs, plus driver behaviour costs and well-designed and implemented company policies, will combine to ensure a reduction in TCO with an improved return on investment.

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We'd love to hear from you if you want to learn more or have any questions! Feel free to contact us at info@fleetdomain.co.za or connect with us via our Website. We're always here to help and look forward to starting a conversation.

Johan Van Niekerk – Fleet Consultant - FleetDomain, part of the Argility Technology Group.

Managing a fleet of passenger or commercial vehicles is no easy task in today’s economy, with issues including inflation, interest rate hikes, and more playing a significant role. Key factors contributing to rising costs are best explained by looking at the Total Cost of Ownership (TCO) of a vehicle over its useful life in the fleet operation.

Let’s examine two vehicle scenarios: passenger and commercial.

Cost per category as a TCO is measured as a percentage of retail price for pass/LCV and Funded (Net Present Value) for commercial vehicles.

Looking at primary expenses over the life of a vehicle, there are areas in which savings can be achieved. The second major contributor to cost reduction is to ensure you purchase the correct vehicle for the required application.

A fleet management principle states, “Unless the behaviour of a driver can be changed, no savings will be achieved.” This is a sobering thought for fleet owners and managers.

The biggest contributors to vehicle costs are depreciation and fuel. The table below shows some driver actions that influence fleet costs:

Managing driver actions will require deploying a reputable GPS/Tracking device. The information obtained from these devices assists in managing fleet costs and drivers.

A Fleet Management Information System (FMIS) will help effectively manage fleet operating costs. Driver training will add to the overall savings, enhance safer driving, and minimise risk for the company.

The FMIS can record all vehicle and driver details flagging - service intervals, license renewals, COF tests, PRdPs, GPS/Tracing, accident history, and driver and vehicle fines incurred with excellent and detailed reports.

By using the information and effectively managing the reports produced by these two systems, fleet costs can be reduced by a healthy 3% to 12%.

On a passenger vehicle with an operating cost of R 726 240, a 5% saving represents
R 36 315. FMIS/GPS/tracking/driver training cost for the period is R 17 760 (2.5% of TCO)

On a commercial vehicle with an operating cost of R 4 802 460, a 3% saving represents a saving of R 144 073. FMIS/GPS/Tracking/Driver training cost for the period is R 50 400 (1.05% of TCO)

Focusing on fleet management costs supported by technology that gathers information, produces good reports, and assists in changing driver behaviour will yield savings due to the improvement of safety and risk.

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In 2023, FleetDomain took our Corporate Social Investments (CSI) to the next level. Our aim is to give back to the communities we serve, not only those in which we live but also those who are not as fortunate as us.

At FleetDomain, it is all about making a positive impact.

We extended our support, love and heart to the following initiatives:

• CHOC – An NGO that aims to provide support to children with cancer and life-threatening blood disorders and their families with cancer.
  • Our donations helped to provide much-needed treatment for low-income households who cannot afford it.

• Cheryl Lyn’s Rescue Organisation - An NPO that rescues abused, neglected and lost animals with the aim of rehabilitation and re-homing.
  • Our donations helped feed the animals and provided needed vaccinations and medication.

• Hellen White in the Community - An NPO that assists the community with education in animal care, responding to animal emergencies with veterinary support and paying bills.
  • Our donations helped feed the animals and provided needed vaccinations and medication.

Our corporate social investments reflect our transformative impact on people and communities. We’ve established a strong foundation for responsible corporate citizenship and sustainable change by aligning our CSI efforts with our company values. As we look ahead, we're continuing to innovate and collaborate with stakeholders to address evolving societal challenges and create a better, more equitable future.

"We may make a living by what we get, but we make a life with what we give." - Winston Churchill

By Wanda Kriel - ATG People Lead and Special Projects

Fleet Domain, part of the Argility Technology Group, has announced best practices aimed at reducing fleet management costs and delivering a successful fleet management programme.

“Cost savings are fundamental to successful fleet management. They impact bottom line, operational efficiency and the ability to remain competitive in the market,” says Johan van Niekerk, Fleet Solutions Consultant, Fleet Domain. “Implementing strategies to control costs while maintaining high-quality services and safety standards is essential for any business that relies on a fleet of vehicles. Fleet cost savings are driven by having enforceable fleet policies in place that govern corporate safety, health and risk issues. Fleet costs are recognised to be managed and reduced by following internationally accepted principles that cover:

• Policies and procedures
• Operations
• Cost management

Van Niekerk confirms that without having all three of these pillars in place, a company will be unable to manage safety, risk mitigation and operational fleet costs. “All the above are geared to focus on reducing and improving the cents per kilometre (cpk) cost of a fleet.”

Fleet Domain recommends the following best practices:

• Policies and procedures: Procurement rules and regulations – businesses need a fleet management committee comprising the company’s executive: finance, HR and the fleet department. All these entities must agree on predetermined procurement procedures in keeping with regulatory requirements.
• Vehicle selection and application: Vehicles must be selected for appropriate application and usage.
• Funding options from cash to operating rental: All options from cash to operating rentals need to be evaluated. Using a discounted cashflow (DCF) approach is one way of addressing this.
• Company vehicle or car allowance: The fleet management committee can evaluate the options of supplying employees with a company car or an allowance. There are pros and cons attached to both scenarios, which must be carefully weighed up before choosing which method best suits the business.
• HR – disciplinary actions covering accidents and fines: Disciplinary policies/actions regarding company car drivers or car allowance receivers must be clearly defined and circulated to all concerned. If such policies are to be successfully implemented, all drivers – including management – must form part of the process.

Operations

• Vehicle acceptance: Acceptance of a new vehicle and additional vendor product suppliers must adhere to the specific rules agreed to by the fleet management department.

• Maintenance, tyre and fuel: The suppliers of a maintenance management programme must be evaluated and selected. Such vendors can hail from banking institutions with bank cards or independent fleet management companies. Moreover, the business needs to agree on how information from these vendors will be supplied.

• Tracking integration – tracking with routing and driver behaviour: The selection of a tracking vendor is crucial. The quality and nominated touch points supplied by the vendor must be critically evaluated to enable the fleet department to influence and improve driver behaviour. It is generally agreed in the industry that unless driver behaviour can be changed, no fleet savings will be made.

• Insurance: The fleet management committee needs to agree on the insurance method for all vehicles and assets of the company. Various options are available, such as an aggregate excess option, individual vehicle insurance, a participative scheme for car allowance users and shared self-insurance with limits.

• Accident procedures for repair or replacement: Accidents affect the depreciation, maintenance and resale values of a vehicle. The business needs to select – plus acquire upfront approval from insurers – service providers for company vehicle repairs. Strict accident procedures and repair instructions should be agreed on. The rules around repairing a vehicle or replacing it following an accident must be clearly defined.

• Driver interaction: Drivers of company and car allowance vehicles must be advised of all the policies and procedures that will apply to them regarding accidents, fines received and feedback reports from the GPS/tracking company. The new revived AARTO regulations could have serious effects on company or car allowance driver relationships.

Cost management is all important

• Fleet audits: Annual fleet audits must be conducted to ensure the correct fleet mix, service delivery, vehicles required and managing replacement cycles. Keeping vehicles past the recommended replacement dates affects depreciation, maintenance, and resale values.

• Structure of fleet department in a company: The rules and authorities of the fleet department must be such that they can operate and take responsibility for a budget accepted by the fleet management committee. The daily decisions and operational issues are their responsibility.

• Fines management: The company must understand the responsibility for the receiving and management of issued/received fines. Not managing fines correctly can seriously impact safety and costs for the company. Disciplinary motivations regarding fines and subsequent actions should be clearly defined and understood by all.

• Driver training: It is important to have a driver training programme in place with a well-recognised and experienced service provider. Taking the cost of driver training into consideration as a percentage of the vehicles' lifetime operating cost is a good approach that results in improved maintenance, tyre, fuel, fewer accidents, fines and HR costs.

• Reports that manage and guide business: Report generation focused on fleet enables companies to manage costly vehicle expenses and driver activities. Developing reports will influence future costs and must be deemed to be paramount to future cost reductions and improvements regarding the return on investment (ROI).

"FleetDomain's Online Fleet Management Information System (FMIS) produces comprehensive centralised information reports. These encompass all facets of fleet management, spanning vehicle selection, acquisition, procurement, delivery and termination, as well as tracking integration, accident records and fines. Succinctly put, our FMIS provides the market with cost-effective, innovative and dependable fleet management," Van Niekerk concludes.

For further information, click here to be redirected to the FleetDomain website.

Source: ITWeb | Security Solutions

by Johan van Niekerk, Fleet Solutions Consultant, Fleet Domain (Pty) Ltd, a member of the Argility Technology Group (ATG).

Effective fleet management and cost savings can be achieved when the vehicle life cycle is well planned from start/selection to end/remarketing. The lifecycle of a fleet follows a logical process that encapsulates all the events that have a bearing on costs. It covers: vehicle selection; purchasing; financing; operations; replacement, and re-marketing. All of the foregoing form part of a total business programme that involves vehicles and drivers. The lowest and most efficient fleet costs are achieved when all these elements are synchronised to work in harmony.

• Vehicle selection: Choosing the correct vehicle must be based on several matters including: work environment; area of use; application, and the all-important question – is it fit for purpose? A total cost of ownership (TCO) exercise needs to be performed to determine the most competitive vehicle in terms of cents per kilometre usage over the lifespan of the fleet.

• Purchasing: The brand and dealer group that you consider purchasing from must have a good understanding of your business and requirements. Dealer groups spend money on training and developing fleet sales consultants to deliver the required service and support to fleet owners. Discount is not everything. The TCO expectation of any model selected must meet the criteria.

• Financing: The different options for financing a vehicle must be taken into account and in a manner that is to the best advantage of the company. Businesses can purchase for: cash; hire purchase; financial lease; lease with a balloon or an operating rental. Companies can perform a discounted cash flow exercise on all options to determine which works best for them.

• Operations: This covers all of the variable costs attached to the ownership of a vehicle. There are many options available to manage maintenance, tyres, fuel, insurance, accidents, and fines. The challenge is that all the expenditure information received is not available on one platform. Fleet managers and companies must work through reams of paper to get a clear picture of all variable expenses. The use of a reputable GPS/tracking device in each vehicle is also very much a part of the operations exercise. Managing driver behaviour, over and above vehicle tracking, is an even more important feature.

• Replacement: Fleet operating companies should have a clearly defined vehicle replacement policy that ensures vehicles are removed from the fleet at the precise time indicated by the life span and usage curve. Extending the life of vehicles beyond this calculated time can result in excessive repair costs, expensive maintenance, loss of resale value, the risk to drivers/operators, tarnishing of company image, increased down-time and out-of-line replacement costs.

• Re-marketing: Vehicles that are replaced when they still have some calculated useful life in them, attract a better resale value. A re-marketing strategy should be in place that will result in the best sale value. The market value of the vehicle, linked to time and kilometres, should be known to the company selling or trading-in the vehicle. There are various methods of selling end-of-term company vehicles – e.g., staff purchase, independent auctions, selling to trader groups or own online selling.

Being able to manage a fleet effectively, taking all these matters into consideration, is not an easy task.
All the foregoing processes and requirements can be managed by well developed and tested fleet management information system which is available on the market.

FleetDomain Online Business Systems (Pty) Ltd have specifically designed and developed systems available that can cater for the different levels of fleet management.
Kindly contact us via email info@fleetdomain.net or our website so we can determine your specific requirements.