Lowering Fleet Costs: Optimizing Processes/Rethinking Financing

The red pen is once again king in corporate policies. Even fleet managers are now being held accountable for contributing to reducing costs.

CO2 tariffs, insurance, maintenance and repairs—prices are increasing in nearly all areas. And, almost as an afterthought, fleets are in the midst of the biggest transformation process in recent economic history.

Below are the most important measures.

Overarching Collaboration

Fleet planning extends across department and location boundaries. Internal customers as well as purchasing and fleet management must be included in processes and have clearly defined roles. The goals are reduced friction and fewer mistakes, higher quality, and overall an improved price/performance ratio in purchasing.

TCO-Focused Management

All cost data related to a vehicle, from financing to the operating phase, to remarketing must be centrally collected, continuously analyzed, and reviewed in terms of cost drivers and cost-reduction potential. In reality, only about one-fourth of fleets know their total cost of ownership (TCO).

Centralized Acquisition

Purchasing all types of vehicles (cars, commercial and special vehicles) as well as vehicle-related services should be available from a single source. Advantage: Needs can be strategically bundled and met at the best-possible conditions. Strategic purchasing optimization generally leads to savings in the double-digit percent range. But purchasing is currently integrated into fleet processes in no more than half of all fleets.

High-Performance IT

One important factor is the use of a fleet-management software program that records all processes centrally, ideally with integrated telematics—data regarding consumption, wear and tear, driving behavior, and much more.  Evaluations that enable objective assessments of the cost-effectiveness of vehicles and logistics as well as highlight operations options are available in seconds at the click of a mouse. A professional fleet-management system also generates data for sustainability reporting.

Decarbonization Step by Step

Misguided decisions in the transformation process would be difficult to correct. Whether and when the changeover to alternative drive systems makes sense can only be determined on a case-by-case basis—taking into consideration the individual use profiles of the vehicles, the available alternatives, and their costs. Changing over step by step allows fleet managers to determine individually for each vehicle type and vertical how fleet performance—including CO2 results—compares to fleet costs, and if and how the process needs to be modified.

Leasing at Actual Cost

The TCO principle focuses not only on operational costs, but also on financing costs. Traditional “closed” leasing contracts prove to be too expensive if the user deviates from the contractually fixed term and mileage conditions to meet business requirements, which is generally the case. One alternative is switching to “open” leasing contracts, such as Holman’s FlexLease, which are invoiced based on actual costs. The FlexBack option uses the same principle as an economical sale-and-leaseback solution. FlexBack ensures that a portion of the increased liquidity is not immediately wiped out.

Optimizing a fleet means changes in the organization and in the distribution of responsibilities. It is a strategic decision made by organizational leadership, the heart of which is nothing less than the degree to which the fleet can cover its own transformation costs.

Perhaps the best solution is working with an external fleet service provider.