GE Capital has identified annual savings of more than £24 million for its UK fleet customers since the beginning of 2009* by locating efficiencies in company car policies.
Company car operations are often one of the biggest people expenses for employers apart from wages and pensions – but that many opportunities still exist to contain costs considerably, according to GE Capital.
The fleet savings identified have been made by GE’s specialist Key Solutions consultancy team, who work with customers to review opportunities for effective cost management in their fleet operations.
Gary Killeen, Fleet Commercial Leader at GE Capital, said: “The recession has prompted many businesses to undertake comprehensive fleet policy reviews in an effort to minimise cost and improve efficiency. Companies want to retain the effectiveness of their company cars but need to keep costs as low as possible.”
The savings identified fell into two main categories:
(1) Straightforward gains such as:
a. Extending or rewriting existing lease contracts
b. Reducing the number of car suppliers to concentrate spending power
c.Limiting the car choices offered to employees to models which meet the new Capital Allowances taxation rules. This measure, which came into effect in April, favours cars with a CO2 output of less than 161g/km and brings a range of costs benefits through reduced taxation and lower fuel costs.
(2) More sophisticated measures engineered by the Key Solutions team in response to specific fleet circumstances and could include:
a. Corporation Tax and VAT efficiency schemes
b. Segmented product structures dependent upon driver population and car use.
Contract extensions have been by far the biggest single area where companies have chosen to make changes during 2009, being described by Killeen as an easy and obvious decision to take.
He said: “By deciding to extend all their current three year company car lease contracts into four years, companies gain a range of benefits – their monthly lease rate falls, they preserve existing cash reserves and they are protected from the current instability within the market that has driven up lease prices.
“There are, of course, human resources implications but most employees are taking a pragmatic view of cost control so having the same car for an extra 12 months seems like a relatively small sacrifice to make.”
Killeen added that the attentions of the Key Solutions team were now focussed on helping businesses to meet the ongoing recessionary needs of their fleet customers.
He added: “We have gone through the initial phase of cost optimisation. Now that the economic backdrop against which businesses operate appears to be stabilising a little, we are working with our customers to recommend cost management strategies for the long term.”
About Key Solutions
Key Solutions is GE Capital’s team of more than 15 experts within Fleet Management that analyses how cost savings can be achieved by focusing on the whole life cost of the vehicles (TCO). The Key Solutions team combine international and local resources to gain complete market expertise of both the Pan-European and the local perspective.
* The time period covers January 2009 to May 2009.
About GE Capital
GE Capital, headquartered in Norwalk, CT, is a global provider of financial products and services to businesses, retailers and consumers. It finished 2008 with net income of $8.6 billion and total assets in excess of $572 billion.