06/08/2015

By Jenny Powley, Sales Director Corporate Business, RAC Business

Despite the recent fall in fuel prices and the mid to long-term prospect of cheaper diesel, there are a number of ways in which small to medium-sized businesses can further reduce the cost of running their vehicles.

Currently pump prices remain well below what they were 12-months-ago, averaging at around 116p/litre for petrol, up from a 12-month low of around 106p in late January. The cost of diesel is currently averaging at 115p/litre across the UK, however a recent supermarket price war has seen it priced cheaper than unleaded at supermarket forecourts. This competiveness between the supermarkets could explain why diesel has now become cheaper than unleaded across the board, something which will be welcomed by the many businesses running diesel vehicles.

However, regardless of the cost of fuel at any given time, businesses can introduce a number of measures which will reduce the cost and improve the efficiency of running their vehicles. This can be done through training and helping drivers to become more aware of bad habits and driving styles, and technology can play a key role in supporting that.

We know already that company car drivers are generally more conscious of fuel use than the private vehicle owner. In fact the RAC’s annual Report on Motoring, found that two thirds (66%) of company vehicle drivers said they monitored the fuel consumption of their vehicle, compared to less than half (44%) of private vehicle owners.

There are a number of reasons for this, such as the fact that in most cases drivers have to reimburse fuel usage for journeys classified as private. This will encourage them to keep costs down by filling up at the lowest cost retailers such as supermarkets. The driver benefits as they have less to reimburse, as well as the business as they are using the cheapest possible fuel, driving down costs.

However by using fuel cards, which are mainly only accepted at supermarkets, managers have much more reliable information about fuel consumption across their group of vehicles. This enables better management of costs and cash flow and also makes it much easier for the driver as they don’t have to worry about keeping hold of receipts and the administration that goes into differentiating between business and private journeys.

Aside from managing fuel costs at the pump, telematics technology is now increasingly used by utility companies of all sizes, providing firms with real-time information about the location, movements, status and behaviour of a vehicle using a GPS system. Telematics provides a whole range of data that can help with vehicle maintenance, driver management, fuel management, health and safety commitments and dynamic vehicle scheduling.

Often, the mere fact of having the monitoring system in the vehicle has an immediate impact on driver behaviour. The result of this is that drivers tend to take more care, to brake less harshly and drive less quickly, all of which makes them safer drivers and means they use less fuel.

This can be a very effective way of bringing down fuel costs as the RAC Telematics ‘driver score’ function can be used by firms to highlight to their personnel how they are driving. A good score is achieved by efficient and more careful driving and across a fleet that can see savings of up to 15% on annual fuel bills. There are also impressive savings in the region of 25% in wear and tear, as well as fewer accidents and speeding fines, all of which contributes to reducing the cost of running the fleet. Insurance companies are increasingly recognising the role telematics is playing in reducing the risk factor for business vehicles meaning lower premiums, another vital saving for a small business.

The future of effective and sustainable fleet management lies, in part, in the increased use of technology. We are now starting to see providers launching ever-more sophisticated technology that helps businesses understand their drivers’ behaviour so that they can advise on ways to improve fuel efficiency and reduce costs.

But at the most basic level instilling good habits to minimise fuel spend will also help to soften the blow of fuel price rises and efficient driving, leading to reduced carbon emissions. This will impact not only the environment, but also your business’s bottom line.