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:
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.
| 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:
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.
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.
