FRA
Media family: Professional media
Periodicity: Bimonthly
Audience: 64,800
Media subject: Auto-Moto-Cyclo
Edition: March - April 2023
P.26-31
Journalist: Ambre Delage
p.1/6
ECONOMIC DOSSIER
TO REDUCE THE COST OF ITS FLEET
Dossier directed by Ambre Delage
The cost of using fleets increased sharply in 2022, in particular due to soaring fuel prices.
Indispensable, fleet vehicles represent one of the main items of business expenses.
However, there are levers that are easy to use to save money.
We identified 11 of them.
1. Reducing the size of your fleet
For François Denis, General Manager France at Geotab: “A company vehicle barely drives 5% of the time.”
According to the law of large numbers, the larger the fleet, the more vehicles are underused.
Thus, “out of a fleet of more than 15,000 vehicles, nearly 10% are little used”, estimates Pascal Pilleyre, sales director at Fatec Group.
However, even forgotten at the end of a fleet, these vehicles must be maintained and insured, which is not very profitable.
At a time when the hunt for waste has become a priority, these vehicles are in the crosshairs of businesses.
The idea: get rid of what's superfluous or, at the very least, reassign it to another use.
First step: clearly identify which vehicles are in the hot seat.
To do this, mobility providers (rental companies, fleeters, telematics specialists, etc.) carry out fleet audits based on the frequency of vehicles driving, their immobilization time, their real uses, the kilometers traveled in a given time...
They thus draw up a kind of identity card for your park.
Once little-used vehicles have been identified, several areas of savings are available to you:
- Offer these vehicles to your employees by carsharing, in particular thanks to keyless opening and online booking solutions.
“We note that this sharing can make it possible to reduce its fleet by up to 25% and to achieve savings of up to 12% in the cost of use”, underlines Pascal Nouvellon, president and CEO of Watèa by Michelin. - Remove little-used vehicles from the fleet and offer your employees a mobility credit, more in line with their real needs and the concerns of new generations.
This alternative is a win-win, because according to Marion Achour, GAC Car Fleet Product Manager at GAC Technology, mobility credit would save “an average of 5 to 10% on the cost of owning a fleet of a hundred units”.
Some companies go even further by compensating for the absence of company vehicles with benefits in kind, such as additional teleworking days or the implementation of the 4-day week.
2. Choosing the right energy for your vehicles
The use of a vehicle determines its motorization.
Greenwashing has no interest.
Mobility players can help you identify the real uses of each vehicle and choose the most suitable engine.
Let's be realistic: the offer from manufacturers does not always keep up with your needs.
For passenger vehicles (VP), numerous options exist (100% electric, hybrid, plug-in hybrid, E85, gasoline, diesel, hydrogen).
For commercial vehicles (SUVs), the choice is narrower: no gasoline or hybrid models. Natural gas exists but is not well chosen. Hydrogen is coming, but it still needs to mature.
“Our customers often hesitate between staying on diesel or switching to 100% electric. The selection criteria are often linked to inflation or to the maintenance of long-term activity (ZFE, societal pressure, customer requirements)”, explains Pascal Nouvellon.
According to a study conducted last September by Geotab:
- 50% of fleet vehicles in France could switch to electric for equal use, which would be financially attractive.
- 60% of commercial vehicles could also do it.
Even if electric vehicles are more expensive to buy and their residual value is still uncertain (due to the weight of the battery, which represents around 70% of the price), the operation would allow significant savings in the overall cost of use.
Daniel Vassallucci, CEO of Optimum Automotive, details:
“Between government incentives, lower insurance prices, reduced maintenance, and a huge gain on fuel, we're saving around 15% in total.”
Currently, it is mainly government aid (TVS, bonuses, etc.) that play a key role.
Diesel still dominates fleets:
- 68% of the vehicles at GAC Car Fleet are diesel,
- 19% gasoline,
- around 12% clean vehicles (electric, hybrid and plug-in hybrids),
- 100% electric vehicles represent 5% of clean vehicles, against 1% in 2021, according to Marion Achour.
3. Train your employees in eco-driving
You don't have to be an expert to know that the more your employees are trained in eco-driving, the more it reduces costs.
These campaigns allow differences in fuel consumption of up to 35% between before and after training (Geotab data).
In the first year following the training, savings can be up to 10% on fuel.
However, regular reminders should be given because bad habits come back quickly.
Eco-driving also makes it possible to save on tires, brake discs, accidents... and therefore on garage and insurance bills.
Pascal Pilleyre states:
“This is especially true with electric and hybrid vehicles, as tire wear is greater, and a plug-in hybrid that is misused can be very fuel-hungry.”
It is therefore necessary to convince employees that eco-driving is not a cop.
Some companies send their best drivers for training to motivate others.
Others measure safety and consumption, and pay a monthly premium based on the scores.
The fun and motivating aspect is essential for the success of these courses, explains François Denis.
4. Use telematics
With telematics boxes in your vehicles, fleet management becomes simpler: consumption, mileage, alerts maintenance... everything is monitored automatically, without depending on manual readings or fuel cards.
Without telematics, reducing the size of your fleet or choosing alternative energies would be more complex and time-consuming.
Telematics also makes it possible to go further in the analysis and support of employees.
For example, for logistics companies, engine stops are very expensive.
Thanks to telematics, it is possible to detect these shutdowns and correct behaviors.
Some companies save up to 50,000 euros in fuel per year thanks to this, according to François Denis.
The same goes for tire pressure: 85% of tires are under-inflated, which accelerates their wear.
Telematics can prevent these additional costs.
With increasing electrification, telematics is even more useful:
For example, if a vehicle parked in the evening is not charging, the user can be alerted.
This prevents running out of battery for the day.
Likewise, telematics can guide you to the cheapest charging station, geolocate a missing object in the vehicle, etc.
Optimization is maximum, even on unexpected aspects.
5. Equip yourself with software for fleet management
The savings associated with software depend on the size of the fleet, but savings are generally estimated between 5 and 10%, or even more with an in-depth analysis, according to Marion Achour (GAC Technology).
Using telematics without software would be useless, as you need tools to process, understand, and analyze data.
Francois Denis:
“Software makes data truly intelligent. It makes it possible to optimize a complete fleet, even if it is geographically dispersed.”
In particular, software allows:
- to calculate and optimize the TCO (total cost of ownership),
- to adapt the fleet to employees,
- to automate time-consuming tasks (offenses, invoices),
- to constitute a refined carpolicy,
- to be connected to more than 200 partners (repair, rental, insurance, tolls...),
- to integrate internal services (HR).
It is a daily assistant for the manager, which represents a real gain in time and productivity.
6. Choosing the right financing method
💰 Buying, renting or leasing: which financing method should you choose for your fleet?
Own purchase, lease or rental... The financing methods available for fleet vehicles are numerous. And of course, the best choice depends on the equity of your company, the type of vehicles considered, the size of your fleet or even your sector of activity.
Today, the preference of businesses — and not only — is clearly towards long term rental (LLD).
According to Cyril Châtelet, commercial director of LeasePlan France:
“The advantage of LLD is that it does not immobilize cash, and it is more reassuring for the company that a third party takes the risk on the residual value of the vehicle. Morality, in 2022, LLD contracts represented 27.3% of start-ups, both for individuals and professionals. And in companies, 3 out of 5 registrations are in LLD.”
But the trend is changing...
With the rise of electric vehicles and the desire of some companies to keep their vehicles longer (LLD contracts are generally limited to 60 months), companies are beginning to mix financing methods more effectively.
“More and more businesses are reorienting themselves towards buying. They want to keep their vehicles longer. And with rising rates, those with cash flow are better off buying than renting. This is a real trend, especially in large companies with very large fleets,” explains Daniel Vassallucci.
Each financing method has its advantages
• LOA (rental with option to buy) : offered over periods of 24 to 72 months, it adapts to the company's situation. She can exercise her purchase option as early as the second year, return the vehicle at the end of the lease or buy it.
• Leasing : Works in a similar way to the LOA, but with a taxing and specific accounting treatment. Interesting for planned acquisitions.
• LCD (short term rental) : for specific needs or to test a new engine before making further commitments. Lasts less than 12 months
Key quote:
“The advantage of LLD is that it does not lock up cash and that it is more reassuring for the company that a third party takes the risk on the residual value of the vehicle.”
— Cyril Châtelet, commercial director of LeasePlan France
Financing methods and business trends
In companies, 3 out of 5 registrations are in Long-Term Rental (LLD). However, with the transition to electric vehicles or the desire to keep their vehicles longer (LLD contracts being limited to 60 months), companies are now more willing to mix financing methods.
Indeed, “More and more businesses are reorienting themselves towards buying because they want to keep their vehicles longer but also because with the increase in rates, those with cash flow are better off buying than renting. So it's a real trend, especially in big companies that have very big fleets,” explains Daniel Vassallucci.
Each financing method has its advantages:
- LOA (Rental with Option to Buy) : leasing offered over periods of between 24 and 72 months, flexible enough to adapt to the situation of the company, which can either exercise its purchase option as early as the second year, or return its vehicles at the end of the lease, or buy them.
- Short Term Rental (LCD) : granted for a period of less than 12 months, perfect for occasional needs or for testing new types of engines before making further commitments.
- LLD : major advantage, this does not immobilize cash and it is more reassuring for the company if a third party takes the risk on the residual value of the vehicle.
Morality, in 2022, 3 out of 5 registrations are in LLD.
Getting started with used vehicles (VO) in LLD
A new model has recently emerged: the long-term rental of used vehicles. This trend, partly linked to the economic situation, makes it possible to rent less expensive vehicles with all the traditional associated LLD services (maintenance, tires, fuel card, etc.).
At a time when finding new vehicles without having to throw in the first model is a challenge, SUVs are gaining ground in all fleets, small and large. These SUVs are often old new vehicles (NVs) that rental companies already managed, with a known maintenance history.
Delivered in a maximum of three weeks, these SUVs benefit from particular attention: “Before delivering a used vehicle, we carry out 140 checkpoints. This allows our customers to have vehicles maintained, in excellent condition, and to benefit from contained rates with the same advantages as the classic LLD. For its part, this allows us to optimize our fleets.”
When you think that 10 years ago, only new vehicles were offered in LLD, today the LLD of refurbished used vehicles is an activity in its own right, according to Barbara Blanc, director of partnerships, digital and marketing at Arval France.
Beyond availability and price, the CSR dimension makes perfect sense here. In addition, the average duration of LLD VO contracts is shorter (around 24 months and 45,000 km), which offers more flexibility and less risk taking. An LLD VO contract can cost up to 20% less than a traditional contract for the same duration, says Cyril Chatelet.
Calling on Outsider Actors
The corporate fleet market, long dominated by national manufacturers and major premium brands, is now seeing the arrival of outsider brands such as MG, Seres, Aiways or Fisker, which mainly offer electric vehicles at very competitive prices.
For example, the American Fisker Ocean SUV starts at €41,900 (excluding the ecological bonus), while the entry-level Tesla Model Y starts at €46,990.
“The economic situation is pushing us to broaden the range of offers by integrating new American and Asian manufacturers, in order to offer alternatives adapted to all the budgets and uses of our customers,” explains Barbara Blanc.
All the leasers have opened their chakras, but you should not be blinded by the prices. “The company vehicle is a reward for employees, so you don't do anything stupid. The brand must reassure, especially with regard to after-sales, because these brands do not always have local agents,” adds Cyril Chatelet.
To overcome this problem, some rental companies first have their own teams test these vehicles so that they can talk to customers with expertise and human advice.
These outsider players are thus increasingly gaining their place in fleets, including with the rental companies themselves. In addition, we are also seeing the emergence of small, very specific rental companies with competitive offers (examples: Altus Utilities in Rennes, FlexiFleet and specialized VTC). Contrary to expectations, the market is not only consolidating around big players.
Have your vehicles maintained outside the manufacturer's networks
Although LLD contracts dominate, fleet maintenance is generally done in manufacturer networks, where rates and appointments are negotiated and facilitated.
However, the cost is pushing more and more companies to turn to independent maintenance and repair networks, which are organizing themselves to address BtoB customers.
“Some major players in LLD, historically linked to manufacturer networks, now call on us for routine maintenance (revisions, tires) or even for minor mechanics, including the revision of batteries for electric models”, explains Benjamin Filippi, director of Eurofleet (Côté Route, First Stop, Speedy), explains Benjamin Filippi, director of Eurofleet (Côté Route, First Stop, Speedy).
Independents maintain the manufacturer's warranty, which democratizes this trend. They also become the relay for outsider brands without a local network, like Fisker, which chose Speedy for its after-sales service.
Their strength: several hundred points of sale, standardized rates throughout the country, single billing, simplified appointment scheduling thanks to a digital interface. In addition, their costs are lower, with fewer loads, bays and infrastructures. Result: savings that can range from simple to double on certain services, and on average 30% on the bill.
On the other hand, for heavy mechanical interventions, the independent network declares a forfeit and the repair is returned to the manufacturer.
Lowering Return Costs
The costs of returning fleet vehicles are often an unpleasant surprise, varying on average between €900 (light vehicle) and €1,400 (commercial vehicle). These costs can be even higher if you are used to accumulating small body shocks.
To limit these costs, foresight is the key. Many players such as WeProov (WeProov Fleet) or Autogriff (Fleet Control) offer digital tools using artificial intelligence for drivers to perform vehicle tours themselves with photos, making it possible to detect and quantify damage in advance.
Thus, the manager can organize the repairs before the return, avoiding additional costs. According to Alexandre Meyer, CEO of WeProov: “With our tool, we are able to lower the return bill between 250 and 350 euros.”
Some independent networks also offer pre-diagnostics, such as Eurofleet.
A few simple but often forgotten elements have a major impact on costs: a cracked windshield, missing duplicate keys, tires in poor condition.
Finally, for those who forget to manage this step, it is essential that the refund report corresponds to the final bill. Pascal Pilleyre highlights: “We note that one out of two times, there are inconsistencies. We support our customers to verify this.”
Better Manage Your Insurance Contract
Contrary to popular belief, it is possible to save money on your fleet insurance contract:
- Exiting the Glass Breakage Warranty, because it is an easily foreseeable damage. With a rate of 0.18, a fleet of 100 vehicles will have approximately 18 glass breakages annually. The company can self-insure on this part, which saves around 19% in premium taxes and 15% in management fees.
- Increase franchises (from 700-800 € to 1,000-1,200 €) to reduce the portion covered by the insurer and lower the premium. It also encourages the company to be more vigilant, thus reducing claims and premiums.
- Renegotiate your contract Approximately every 3 years to benefit from the best offers on the market.
- Use partner repair networks From the insurer, who negotiate labor rates two to three times lower than those of the general public.
- Promote PIEC coins (original equipment manufacturer parts) in repairs, which makes it possible to divide the price of the parts by 2 or 3.
Finally, some brokers, such as Gras Savoye WTW, assist clients in the actual assessment of the costs of physical claims, in order to ensure fair compensation, not only based on the interests of the insurer.
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