How To Reduce Costs When Managing Your Business Car Fleet
Regardless of your business location, your pain points are probably similar regarding business car fleet management expenses. Several things go into car fleet management expenses, from the indirect ones like employee productivity to the more direct ones like fuel costs and insurance. For many business owners that depend on their car fleets for the day-to-day running of the business, fleet management expenses cannot be avoided. While that’s true, it doesn’t mean it should cost our business a fortune. You can reduce these car fleet costs with the following fleet management tips.
- Consider reducing your fleet size
One of the most proven ways to reduce fleet expenses is to reduce the number of vehicles in any given fleet. According to some fleet financial experts, the average total cost of owning one light-duty vehicle ranges from $5,000 to $8,000 every year. That means if you own about 100 light-duty company vehicles, that’s at least $500,000 worth of expenses eating into your business budget every year.
You can argue that reducing your fleet size will place more pressure on your remaining vehicles, increasing their operating costs as a result. But this increase will not be significant when you juxtapose it with the net decrease in your overall fleet operational expenses.
- Reduce the miles of your fleet
If reducing your fleet size isn’t a favorable option for you, perhaps you can consider reducing the number of miles of your fleet. Shortening the routes your company cars need to travel can significantly lower your maintenance expenses. Start by looking for alternative routes that are shorter or less difficult to travel. Your new routes should be more direct, faster and allow your drivers to reach their destinations without enduring long journeys.
Beyond your maintenance expenses, such reduction can lower your vehicle insurance or pay per mile insurance costs. And how does pay per mile insurance work? It’s simple – if you drive your vehicle less, you pay less on insurance.
- Find opportunities for fuel contracts
Aside from maintenance and insurance, fuel consumption is another thing that eats into car fleet management budgets. To make matters even worse, the retail fuel market is pretty volatile and will remain that way in the foreseeable future. That means you’ll probably continue to deal with uncertainties and risks that make it difficult to budget properly.
You can look for a fuel contract as a way to reduce your exposure to this volatility. Also known as fuel hedging, you can secure a fuel contract with your preferred wholesaler to purchase large quantities at significantly reduced prices. This way, not only will you cut down on fuel costs, but you’ll also protect your business from volatility.
- Educate your drivers to be more efficient
You can only do so much at the managerial level, but if your drivers are careless, chances are they’ll continue to flush money down the drain. Try holding regular workshops and training programs to educate your drivers on ways to drive more efficiently to reduce fuel usage and place less burden on your company vehicles.
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