By Simon Barter, head of SME Direct at Lex Autolease
Although cars and vans are an essential cog in the day-to-day operations of many small and medium-sized businesses in the UK, their maintenance and repair can often become a low priority. I will discuss how this approach is coming back to bite small and medium-sized enterprises (SMEs) at the garage with surprise costs that could otherwise be spent on growing their business.
Small businesses across all sectors, from tradespeople operating as one-man bands to sales teams operating across the UK, rely on their company vehicles to do their day-to-day job to some extent. Despite this, the issue of keeping cars and vans well maintained and in a good state of repair is often pushed to the back of the queue when it comes to business priorities, and as a result, businesses are putting themselves at risk from being hit with large, surprise costs at the garage.
According to recent research conducted by Lex Autolease on 500 UK SMEs that own company vehicles, the problem is quite significant. The findings highlight MOT failures are a common problem, with more than one in four SMEs having failed an MOT at a total cost of £350 million. To add to this, unexpected trips to the garage cost small businesses an average of £4,300 each last year, which resulted in firms losing a total of 3.3 million working days due to their company vehicles being off the road.
With the economic upturn producing improvements in business confidence and growth prospects for UK SMEs, it’s concerning to see so many exposing themselves to significant spending on vehicle maintenance that they could otherwise be using to invest in growing their businesses. However, what’s most surprising is the fact that the majority of these costs appear to be avoidable. According to the findings, it isn’t accidents or pot-holes at fault for the costs, but poor maintenance and poor driving – more than half the companies (51 per cent) surveyed admitted that neglect on their behalf was the reason behind the most recent trip to the garage.
Company drivers lack basic knowledge
So what’s the root cause of the problem? According to the research, a lack of practical knowledge on behalf of those that drive company vehicles appears to have a key part to play. Indeed, many of the SME drivers surveyed don’t possess the basic knowledge to carry out run-of-the-mill checks or detect common issues that result in the significant, surprise costs we’ve seen.
Some of the statistics are quite surprising - more than a third of drivers said they are unable to check their tyre pressure, 49 per cent don’t know how to make sure their tyre treads are legal, 45 per cent can’t change a tyre and more than one in four aren’t confident in making sure they have enough oil.
While some SMEs may consider these as very basic - perhaps taking for granted that their employees already have the know-how - many are not ensuring the knowledge is universal across their workforce by putting the right policies or training programmes in place. More than half (53 per cent) of the businesses we spoke to in the research don’t offer basic maintenance training for their company drivers, and 49 per cent don’t have any policies in place to make sure their staff perform regular checks before they use vehicles for work purposes.
Given this, it’s not surprising that a significant proportion of company car and van drivers continue to use vehicles for work that are in need of repair or at least some sort of maintenance. Again, the issue of maintenance falls to the back of the queue when it comes to business priorities - 40 per cent of senior managers surveyed said they have driven a vehicle for work with a known fault.
Protecting against avoidable costs
To eradicate these issues, we’re seeing an increasing number of businesses looking to change how they operate their company vehicles so they can plan and budget better. A large, unexpected van repair bill – together with the time spent off the road - can have a significant impact on cash flow for a small business, and as a result the movement towards vehicle leasing is growing. We saw a 29% year-on-year rise in the number of vehicles leased to SMEs last year, with firms feeling the benefits of reducing their upfront, maintenance and running costs to free up cash to for growth, helping them capitalise on the improving economy.