Businesses Urged to Consider Whole Life Costs


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New research from Venson Automotive Solutions, the independent leasing and fleet management specialist, reports that containing costs is the biggest worry for fleet operators for the coming year.  In a survey of its customers, 89% said cost containment was a key concern for 2014 and 80% reported that the most important way suppliers can help businesses is to work harder to reduce costs.  Those businesses who calculate the expense of running a fleet on the basis of a vehicle’s whole life cost, will achieve the most effective reductions in financial outlay believes Venson, however,  evidence suggests as few as one-in-five organisations use that strategy.
Alan McCleave, Business Development Director for Venson comments:  “When we analyse companies’ car choices, within existing grades, the whole life cost deviation between the lowest and highest is frequently significant and that is money businesses are currently giving away, despite containing costs being their top priority.   Despite significant savings to be made by selecting vehicles based on whole life cost data, a recent ACFO seminar highlighted only 20% of organisations use whole life costs when compiling choice lists; a figure I believe is slightly generous.”
Of those surveyed by Venson, 71% said they were under greater pressure in 2013/14 to reduce supply costs, with 29% also under pressure to reduce internal costs. In addition, 40% said they were more closely monitoring the financial viability of suppliers. Perhaps tellingly, the key areas fleet operators felt they would be spending less on over the next 12 months was Fuel Cards (35%), as many look to implement an integrated solution. Continues Alan McCleave:  “The cost of fuel is going to become the biggest headache for fleet managers and one that could grow out of control if businesses don’t have strategies in place to deal with it.”
Vehicle servicing maintenance and repair (27%) and purchasing cars (25%) were the other areas fleet managers felt they could reduce spend over the coming year.  In contrast to the cost-cutting areas, 21% of fleet managers felt that insurance was an area where they would spend more, with the natural rise in premiums. 21% also said they would spend more on daily rental and fleet management. Interestingly, 95% felt they would spend the same amount on Risk Management and 87% will be spending the same amount on telematics.
“Rises in insurance premiums are often unavoidable, although there are ways to potentially reduce these. As well as daily rental and fleet management where working closer with a provider can help to reduce costs,” concludes Alan McCleave.  “At Venson we continually highlight to customers and prospects the impact of whole life cost figures on existing vehicle choices, because implementing best practice is at the heart of what we do.”
“It’s clear, from our survey, that effective fleet solutions that focus on reducing costs are what matter most to fleet operators.  We don’t believe in a one size fits all approach; we  deliver impartial fleet advice and  purpose-built solutions that truly help  businesses achieve their operational objectives and contain costs in today’s challenging economic climate.”