Factors Influencing Fleet Costs

April 26, 2024

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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