For those who wonder how much better it could be to provide company vehicles rather than reimburse drivers who use their own vehicles, it’s easy to count the ways: improved cash flow, reduced overall operating costs, improved safety, enhanced driver morale and more professional company image. Each of these factors is significant independently; together they present a compelling case.
A recent analysis for a company that has 80 drivers, who average 15,000 to 20,000 miles per year, indicated that about $100,000 a year could be saved by switching from reimbursing drivers to providing company-owned vehicles. Although the calculation was based on a combination of hard costs – lease terms, monthly payments, maintenance and insurance – and fuel savings generated by having a fleet of uniformly fuel-efficient vehicles, soft costs also were a factor. For example, while some drivers were operating older cars that were not very reliable, resulting in more downtime, others were driving vehicles that were not very fuel -efficient. In addition, for those in competitive industries, employee-owned vehicles did nothing to enhance the professional image of the company they represented, which impacts awareness among potential customers and prospective employees.
The advantages of company-owned vehicles begin with acquiring vehicles that are the right size, include all appropriate safety features and have uniform fuel efficiency. Establishing a separate line of credit for vehicle purchases though a full-service fleet management company can eliminate the need to tap existing lines of credit to fund a rapidly depreciating asset. In addition, fleet management professionals can help ensure that vehicles are replaced at appropriate intervals to achieve optimum performance and resale value.
Operating costs can also be minimized with a company-owned fleet. A managed maintenance program can monitor and ensure regular service checks, examine invoices, and arrange the most economical, timely and high-quality repairs for fleet vehicles. This program also can yield maximum warranty benefits, rebates, price breaks and other opportunities to minimize expenses. For example, a fuel card program can automatically monitor fuel purchases and mileage for each vehicle, while giving drivers maximum access to the most convenient fueling stations.
In today’s competitive marketplace, great looking vehicles are good advertising. In addition to promoting the company’s professional image in traffic and at job locations, having great looking cars can enhance employee satisfaction, which impacts retention as well as attracting the most qualified applicants when there are openings.
There are several options to reimburse an employee for using his or her own car on the job – actual cost, standard mileage rate, fixed or variable allowance. However, a comprehensive cost analysis could show that none of these methods is as cost effective or efficient as providing company-owned vehicles.
Bryan St. Eve is a Director for Enterprise Fleet Management in Louisville and can be reached at 502-458-3100 ext. 279. He is supported by an experienced team of veteran mechanics and accredited Automotive Service Excellence (ASE) technicians to serve the fleet maintenance needs of businesses with mid-size fleets. In addition to maintenance management programs, Enterprise’s services include vehicle acquisition, fuel management and insurance programs, as well as vehicle registration, reporting and remarketing. Visit the company’s web site at www.efleets.com or call toll free 1-877-23-FLEET.
For more information contact
Robyn Frankel, Frankel Public Relations
Toll free: 877-863-3373, email@example.com
OR Ned Maniscalco, Enterprise Fleet Management