10 ways to reduce vehicle costs by thinking mobilityFinance
At the end of the financial year, it’s not unusual to be thinking about ways to reduce vehicle costs or get more value from your fleet. It’s less usual to start with the concept of mobility before addressing your transport and vehicle needs. It shouldn’t be.
Take a step back from vehicle fleet management. Think first about reducing mobility costs. You’ll find it opens up all sorts of opportunities to better maximise the value of your fleet.
A step before minimising vehicle costs
Your vehicles should serve your business goals cost-effectively and efficiently. They should get you, your team and everything they need to transport where it needs to go at minimum cost.
There are all sorts of ways to reduce vehicle costs. Indeed, your approach to vehicle fleet management should be based on minimising cost. To name just a few cost saving opportunities, we’ve previously looked at:
- the importance of understanding total cost of ownership in maximising vehicle value,
- reducing emissions and costs through a “greener approach and best practice in vehicle fleet replacement.
But before you get to these things you need to ensure that your vehicle needs reflect a true picture of your business’s mobility needs.
Think “mobility” first and save
If you can minimise your mobility costs, you will go a long way to maximising the value offered by your vehicle fleet. So, how do you reduce mobility costs? Here are 10 ways.
1. Think hard about where your team really need to go
Some vehicle use is necessary. Some isn’t. Simplistic? Yes. But really thinking through whether vehicle use is necessary can pay serious dividends, in cost savings. You might even find that you could reduce your vehicle fleet without compromising the service you offer and that can offer serious savings. Taking the time to audit your business’s travel needs could reveal significant opportunities to save. Take a look at the NZTA business trip decision making process. It focuses on business travel for meetings but is easily modified to other needs like sales calls or client visits.
2. Understand the true cost of vehicle use
It’s easy to underestimate the cost of vehicle use. Hint: it extends well beyond the fuel you use. We’ve already touched on the importance of total cost of ownership in understanding the cost of vehicles. Every kilometer your vehicles travels incurs operating costs from wear and tear on the vehicle to increased need for servicing over time. And then there’s the total mobility cost of travelling to in-person meetings. For instance, is taking a vehicle into central Auckland, spending time negotiating Australasia’s most congested city’s traffic, fuel costs incurred idling in traffic, paying increased parking charges and wear and tear on the vehicle justifiable versus the value of your meeting? It might be. But make sure you consider the full cost versus benefit equation of those trips, before you add central city client visits to your vehicle needs.
3. Think hard about how best to get where you need to go
Businesses routinely choose public transport, in the form of air travel, over vehicle use for long distance travel. It easy to see why. Less time is spent travelling and it’s more cost effective. But considering the full cost of local travel in the same terms is rarer. The short trip into central Auckland we just looked at might start to look expensive, if you compare the full cost of the trip versus alternatives. Maybe a lime scooter would get you there faster for less cost. Maybe walking is an option or public transport. It’s all too easy to ignore other mobility options and the savings in vehicle and mobility costs they offer.
4. Get the vehicles you need not want
We won’t go to heavily into the question of the vehicles you need versus the vehicles you want. There are many reasons to choose vehicles that offer capabilities beyond what will “do the job” – brand, staff satisfaction, etc. But going beyond what is fit for purpose or exceeding your actual needs, in terms of number of vehicles, has a cost. Thinking carefully about what vehicles you actually need can offer savings in everything from reduced emissions to reduced overall vehicle costs.
5. Embrace communications technology
It wasn’t too long ago that video conferencing with someone in Europe required a trip across Auckland to a specialist video conferencing facility. Now that facility is available via an app on your phone. Communications technology can help you reduce mobility and vehicle costs in many ways. There’s a reason NZTA’s business trip decision making tree starts with the question: “Is telecommunication an alternative to travel?” Apply that question across all your vehicles’ trips. You might discover significant opportunities to cut costs.
6. Take advantage of public transport
Even Auckland’s notoriously poor public transport is improving and seeing more and more people use it as a viable alternative to vehicle use. Need the tools in your ute or van to deliver the service you offer? Then it might be hard to see public transport as a way to reduce your vehicle costs. But you owe it to your business’s bottom line to consider it as a possible way to get around where it is a viable alternative.
7. Embrace sharing vehicles
Have you got any lazy vehicles? Maybe that second pool car isn’t getting much use. Maybe that manager’s car isn’t used for anything business related apart from her trip to work. Under-utilised vehicles are often an unnecessary cost. Thinking about opportunities to share vehicles can lead to opportunities to cut back on both vehicle fleet size and vehicle use.
8. Embrace tracking technology
As FleetNews points out, “software shows the way to savings”. You can hardly manage vehicle use to minimise costs, if you don’t have a clear picture of how your vehicles are being used. Telematics makes understanding your vehicles’ use easy and reveals savings opportunities. The investment you make in it will deliver a good ROI. Telematics a bit beyond your budget? Use a tracking method that suits your budget.
9. Train staff to minimise vehicle costs
Poor driver practice will increase your vehicle and mobility costs. Anyone who has kept an eye on fuel use over a long trip knows that higher speeds mean more fuel used per kilometer. Indeed, aggressive driving (speeding, rapid acceleration, hard braking, etc.) can lower fuel economy by as much as 33%. Try experimenting with turning the air conditioning off around town; you might be surprised how much you save in fuel. An effort to keep your tyres at the right pressure, likewise, pays dividends in reduced fuel consumption…Train your staff to a) consider carefully whether they need a vehicle before using one and b) drive and maintain vehicles they use cost-effectively. The time and expense of the training will offer long term savings.
10. Route plan for efficiency
Whether you use telematics to do it or just compare routes via your phone’s GPS, it’s very important to be sure that you minimise the distances your vehicles travel. There are often lots of ways to get from a to b. Ensure your vehicles take the most cost effective one.
Interested in exploring ways to reduce your vehicle costs? Talk to a SG Fleet / LeasePlan consultant today.