According to research by Arval PHH, by the end of January this year the price of unleaded fuel and diesel throughout the UK had reached its highest level since May 2003. For corporates with fleet car schemes, managing fuel costs is a priority, especially as fuel represents one-third of the cost of running fleet cars. There are two ways to gather management information: expense forms and fuel cards. Fuel cards record when and where fuel was bought, calculate the miles per gallon consumed by each vehicle and give an overall view of the company’s spending on fuel. There are proprietary cards that include AllStar and Overdrive, often branded with a fleet management company’s name, such as Velo (Overdrive) and Arval PHH (AllStar), and oil company products such as the BP Card, which has reciprocal rights at Shell stations.
“We have a Velo-branded card with Overdrive,” says Velo marketing manager Spencer King, “which is accepted in a large network of garages across the UK. We recently launched technology to help with the management of business and private mileage. Card users telephone a number from their mobile and key in mileage, price and everything needed to run a report and breakdown, which Overdrive then produces and sends to the client,” explains King.
King believes drivers still take the view that since the company is paying, they do not have to worry about cost. “They feel more accountable when they have to declare what they’ve spent on fuel,” he says. “It is also a matter of education and treading a line between asking drivers to fill up at the cheapest petrol stations without having them drive out of their way to look for cheap fuel.”
Fuel consumption is not only driven by what people pay at the pump. Incorrect tyre pressure, aggressive driving and a fault in the vehicle will all contribute to high petrol and diesel bills. “Drivers can be made conscious of the fact that prices vary considerably across the country and education can ensure safer, more responsible driving and higher awareness,” says Louise Dickinson, managing director of Arval PHH’s customer division. “But managing fuel costs is part of overall fleet management.
“A lot of companies think fuel is a distress purchase and nothing can be done about it, but we monitor outlets where petrol is bought, how people are driving and ensure companies have their vehicles serviced regularly,” she says. King explains that the added prospect of having to do a defensive driving course also acts as a deterrent against aggressive driving.
Dickinson recommends using a fuel card. “Clients can only know what they are spending on fuel if their spend is all in one place,” she says. The company also looks closely at where vehicles can be downgraded or changed for a more fuel-efficient version. “We have a high percentage of diesel cars because they are more fuel efficient,” says Dickinson.
Hogg Robinson has a fleet of 360 cars and has issued BP fuel cards to 98 drivers. The company has also negotiated volume discounts with suppliers.
“The card gives management information data and shows where fuel is bought, frequency of petrol stops and driver patterns,” says business services director Kevin Ruffles. “The information helps us ensure cars are not overdue for a service because mileage is recorded when drivers go into a fuel station.”
Hogg Robinson pays the AA published rates, which are within Inland Revenue guidelines. “The tax hit on personal use of petrol is only efficient for a driver covering 15,000 miles a year or above. For those driving between 10,000 and 12,000 miles, it is more efficient to opt out of a card and claim through expenses,” says Ruffles. “We give a cash allowance for that.”
However, like the company car benefit charge, fuel benefit charge is based on CO2 emissions ranging from 15-35%, multiplied against £14,400 (the mandatory set figure for 2003-04), multiplied by 40% for a driver in the higher tax bracket. If a driver’s tax on personal fuel comes to, say, £1,300 – and they would not have spent that per year on personal fuel consumption – then it is not worth taking the free fuel.
Putting drivers in diesel cars is one way to make savings, but cars are an emotive issue and there are other ways to exercise efficiencies. “If you take people out of the cars they want to drive, you will demotivate them,” says Andrew Cope, chief executive of Zenith. There are fuel-efficient cars in all price bands and size, so you have to balance consumption with performance. Just because a car is good on fuel consumption does not mean it performs well in other areas.”
Download our Whitepapers
Although there are ways of monitoring expenditure on fuel, it has to be viewed alongside a number of other factors, ranging from driving skills to regular servicing and residual values. Or, as Cope says: “You have to look at fuel in the round.”