Fleet management information systems from FleetDomain – tackling spiralling post-COVID costs

November 25, 2022

Determination of the precise total cost of ownership (TCO) related to operating fleets has always been difficult. According to Johan van Niekerk, Fleet Solutions Consultant at FleetDomain – an Argility Technology Group company, this is due to various issues including lack of information due to not capturing a holistic view of all vehicle expenses from a central source.

“As South Africa moved out of the full impact of the pandemic, significant cost increases were experienced with regards to vehicle ownership – regardless of whether they related to individual citizens or businesses managing fleets. Inflation of vehicle purchase prices, maintenance, tyres and fuel over the past three years have combined to contribute to a staggering 20% to 30% cost increase for an average passenger and light commercial vehicle,” says Van Niekerk.

According to Van Niekerk, the only way to tackle this spiralling TCO escalation is to implement a fleet management information system (FMIS) as supplied and supported by FleetDomain. “To improve the costs and risks associated with fleet operations, businesses must take an all-inclusive management approach and ensure they have the information necessary regarding accidents, fines, management and personnel.”

Van Niekerk reveals some cost comparison models in the attached table:

Total cost of ownership (TCO) increases following COVID-19

Comparing a selection of vehicles purchased in 2019 and 2022

  • Period: 48 months; 160 000kms
  • Resale: 43% of retail

“Examination of the numbers in the attached table shows that expenses must be managed, controlled and reduced in line with, or below, inflation. Unmanaged vehicle expenses can end up incurring 10% to 23% greater costs than necessary. This can be explained when one considers that fixed costs are managed by accounts, and variable costs are managed, in most instances, by fleet operations. The latter can either capture all expenses, or they can implement the use of a maintenance or fuel card. In some instances, maintenance, tyres and fuel are all managed on one card,” he explains.

Van Niekerk says companies often add a GPS/tracking device to enable them to locate assets and monitor driver behaviour. By scrutinising GPS/tracking kilometre usage and comparing it with card kilometre usage, the actual usage per month can be determined.

“It is important to understand that a GPS/tracking device is not a fleet management system. Change in driver behaviour and meaningful savings will not be achieved without relevant information regarding speeding, harsh braking, acceleration, excessive idling and all the other actions performed by drivers that cause increased maintenance, tyre and excessive fuel usage. All of the foregoing can only be achieved with an FMIS.”

Van Niekerk says in post-COVID South Africa, vehicle price increases of between 27% and 32% – dependent on models and country of origin – have contributed significantly to TCO. “However, resale values of some models improved due to the shortage of new vehicles. Maintenance and tyre replacement come in at 17% to 21% of TCO, with the actual percentage increase being manufacturer/supplier dependent. Fuel has been identified as the most changed value, having been measured as a percentage of the overall at 96% to 145% (depending on mileage and application) in the TCO stakes.”

FleetDomain’s FMIS can integrate with finance institutions, maintenance, tyre, fuel and GPS/tracking service providers placing all costs on one platform. “The FleetDomain online FMIS can assist companies to receive and analyse all vehicle-related expenses and in turn aid informed decision-making regarding model selection, driver behaviour, safety and risk management,” he concludes.

Source: IT Web

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