Insider Business Club: Fleet management -drive for greener cars

Should government be taking a leading role in driving fuel cost
economies?

Stewart Whyte, director at Fleet Audits

There are many ways to waste fuel. The first is to cover unnecessary mileage,
and not enough companies are asking whether every journey is really necessary.
Another issue is that in an uncontrolled situation where nobody is monitoring
the fuel costs, there is a tendency for people not necessarily to drive with an
eye on fuel economy.

Simply tightening up there is a simple, basic housekeeping, good business
sense requirement for the chief executive. And it will save a huge amount in
terms of costs for companies and make the biggest difference to the environment
on a national basis.

Government has an absolutely fundamental role to play here. It needs to be a
little bit more co-ordinated. We have a very large number of initiatives and
some of these initiatives don’t quite join up. Most of them are dedicated to
looking at introducing newer and cleaner technologies. That is absolutely right
and there is a great deal of pump-priming that needs to take place first. But
the fundamental issue comes back to the fact that the vehicles in use can be
improved as of tomorrow.

Should companies be looking at how green a car is as well as the discount
they can get?

Alastair Kendrick, partner at Wilder Coe

What has happened since 2002 is that government has set a standard for what
it wants manufacturers to do by way of energy economy and the manufacturers have
responded well to that. They are producing cars with lower emissions, so the
whole-life cost of those vehicles is beneficial.

A government think-tank recently published a report that welcomed the
taxation of company cars to encourage greener transport. What they are asking
for is to widen the use of public transport and to encourage more people out of
their cars.

The government has got the CO2 emission taxation right and now it must take
the lead on how manufacturers and dealers can be incentivised to sell cleaner
vehicles.

Companies must look at how green a car is, rather than just looking at what
discount they can get. If you are getting a 40% discount on the vehicle, but
overall it is churning out lots of CO2 emission gases, then effectively that
isn’t good for the environment, so employers need to stand back and think, is it
right that we look at this discount arrangement now?

Are companies making a mistake in averaging employee fuel
consumption?

Sean Bingham, director of new business, Bank of
Scotland Vehicle Financing

Barring the odd exception, for every employee car ownership operation that we
have in place, the driver behind the decision is the cost to the employee of
running their own vehicle. Therefore, if they want a gas guzzler, they can have
it, but they will have pay for it. But if they are not doing sufficient mileage
then the organisation is not saving the money.

We are suddenly realising that all the work done here was done on broad
averages and if somebody is doing 2,000 business miles a year and somebody is
doing 22,000 business miles, that’s an average of 12,000 business miles,
therefore we will save x. Well, it doesn’t work like that and while you will
save the money on the employee doing 20,000 business miles, you won’t on the one
doing 2,000.

Also, what has led to the consultation that the government is currently
conducting on employee car ownership schemes is the much vaunted 400,000 fewer
company cars on the road. The chancellor seems to think that they have all gone
into ECO schemes, which they certainly have not.

Are fleet managers making the most of the car passenger allowance?

John Pryor, group car fleet and travel manager at the Arcadia Group
and director of ACFO

I think every fleet is looking green. It goes further than just taking a
quick look over your overall mobility – how you travel and whether you go by
air, rail or train, or use the allowances that governments have made available.

For instance, not enough mention is made of the passenger allowance that can
be claimed, where you put four people in a car to get to a meeting rather than
going in separate cars, which is much more cost-effective. Lots of fleets are
now doing that and looking at their CO2 emissions.

It affects everyone – whether it is corporates getting better miles per
gallon, or employees having to pay less tax on their cars.

Under previous tax legislation everybody had to do more than 2,500 business
miles to reduce their tax allowance, and those tax rates were coming in at 25%.
Now, people are looking for an 18% car because they know what they are going to
be driving in two or three years’ time and can plan their taxation leverage. All
this is bringing down fleet costs because people are getting smaller, more
tax-efficient cars.

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