Are you finding it difficult to manage the overall cost of running a fleet? Do the costs always exceed the budget you set? Are you frustrated with the unforeseen expenses and finding no way to prevent them? Then don’t worry here are we to help you to reduce fleet costs. Here are the best 5 methods to reduce the fleet operating prices that will help you in many ways.
The average TCO for a light-duty vehicle can lie somewhere between $5,000 to $8,000/vehicle/year. Measuring the overall expenses and taking preventive measures to reduce them is not everybody’s cup of tea, since you’re here reading this, it shows your concern towards your business. So without wasting time, let’s get started.
Follow these 5 methods to reduce fleet costs
So here are some cost measurements and preventive measures against the over expenditures to reduce the fleet operating prices.
1. Minimize the fuel cost:
Fuel is the second-highest expense after maintenance. Though there are fewer possibilities to reduce the fuel cost as it is not in your hands unless you are shifting to electric vehicles, you can still take some necessary steps to reduce it:
- Check the individual fuel economy of every vehicle to make sure that each vehicle is running at its capacity. If you find any vehicle exceeding that capacity then it might be due to careless driver behavior or an issue in maintenance which can be resolved if the right actions are taken on time.
- Keep the track of every penny spent on the gas stations. Fuel cards can help you in doing this by storing the data regarding fuel like cost per mile, or fuel economy for an individual vehicle for future analysis for prevention against theft and waste.
- Control the other operations like reducing vehicle idle time and taking longer routes during rides, using AC unnecessarily, etc. this will protect your fuel’s efficiency and save you dollars.
2. Keep the track of the total cost of ownership:
Calculating the total cost of ownership and setting limits to all costs can help us understand when the vehicle has outlasted its financial benefits. Using this, you understand where to hold the operation on each vehicle and make further financial decisions on it regarding its depreciation.
To reduce the overall fleet cost, focus on decreasing the vehicle acquisition costs. As a cost-reduction method, you can consider negotiating charges on the basis of “triple-net” cost. According to this, you should negotiate with the buying dealer at dealer invoice without including advertising refunds, flooring, and OEM factory components.
See from where are you ordering your vehicles either from the factory or from the dealer inventory. The former can save you $1000 per light-duty vehicle.
TCO will help you in reselling the vehicle before its lifecycle ends otherwise it can result in huge maintenance costs and high fuel prices due to a reduction in the vehicle’s fuel economy and utilization.
3. Reduce vehicle cost by optimizing maintenance:
Maintenance costs account for the highest cost in the overall fleet operating prices. These costs include vehicle repair or major replacements, high service charges, the cost of handling the roadside mishaps, and missed warranty charges.
But this can be prevented by optimizing maintenance guidelines to take care of the vehicle’s health and reduce the chances of repair and roadside breakdowns. With these maintenance guidelines, you can create a schedule for consistent service based on mileage or age. This will help you to analyze vehicles and predict the issues before facing them.
A good fleet manager will notify you of the service timing as per the schedule. For the light-duty vehicles, preventive maintenance practices can be conducted for every 6000 to 7000 miles completed by the vehicle. High use of synthetic oils can increase the servicing intervals.
eDVIRs(electronic driver vehicle inspection reports) must be filled by the drivers that ensure they are following the rules properly so that the vehicle remains in good condition to reduce the fleet operating prices.
4. Emphasizing safety of vehicles and drivers by preventing mishaps:
What if your driver is caught in a road accident? What are the unforeseen actions you are expecting:
- Interruption by lawsuit
- Rising insurance premium.
- Huge repair price or major replacement.
And you can do nothing else to prevent them but just prevent mishaps and vehicle loss by following safety measures.
You can encourage safety by running a safety management program in your business that offers you these benefits:
- Boosting driver’s productivity.
- Decrease in insurance cost.
- Lower risk and cost of injuries and mishaps.
- Incentivizing drivers to follow the program and thus boost their morale.
Boosting drivers’ morale means encouraging them to avoid careless action eg: harsh braking that can impact the vehicle’s efficiency. Unnecessary mishaps lead to lost profit.
To calculate this lost profit, you can consider the complete expenses during an accident and divide it by the company’s current profit margin. This will give you the extra amount that you must earn to compensate for the lost profit.
5. Choose between the in-house maintenance or outsourced maintenance
What do you consider fleet management software: a money-saving tool or an added expense? Any choice you make between the two, make sure the approach chosen by them is cost-effective. There are some benefits and demerits of both over another.
Outsourced maintenance benefits:
- Well-trained and experienced professionals.
- Pre-decided fleet maintenance cost so you don’t have to pay unnecessarily.
- Warranty on work they handle.
- Decreased investment in workshop building & tools.
In-house maintenance benefits:
- Complete command on quality.
- Familiarity with vehicles.
- Complete command on vehicle scheduling.
- Decision-making power for maintenance costs.
- Complete track of vehicle maintenance.
- Control parts checklist.
- Fast vehicle turnaround time.
- Organizing defect management processes.
In-house maintenance demerits:
- Parts checklist and investment.
- Continuous training charges.
- Workshop running prices.
- Handling skilled employees and managers.
Outsourcing maintenance demerits:
- Enhanced downtime.
- Restricted command over quality.
- Service and parts mark up.
So now you have done the comparison in both, it’s time to choose one among them. Go ahead.
Are you ready to implement these 5 methods in your business to reduce the fleet operating prices?
So these were the basic methods to reduce the cost. Now how to implement them in your business is entirely dependent on you. Any method is not the best one until or unless you use them in your business and it requires action. Only if you are ready to take it, you are gonna enjoy the fruits of it. But if you’re unable to do it yourself, Secure Fleet Manager is here for you.
We offer all benefits including sending service reminders to support you in the fleet manager journey. You can take the free demo of SFM and see the magical results yourself. So comment below or contact us directly at email@example.com. You can also fill the contact form in the bio.