6 Important Considerations When Selecting Your Company’s Business Vehicles - Forum.web.com
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6 Important Considerations When Selecting Your Company’s Business Vehicles

Commercial auto fleet

Many companies will reach the point where they need to consider selecting company vehicles for business use. Whether this be for their sales team who are regularly on the road, for deliveries, or for transportation of passengers for hire or reward.

Here are the 6 most important considerations when selecting your company’s business vehicles.

1. Should you Buy, lease, rent?
One of the first things to consider when choosing your company’s business vehicles is whether to buy, lease or rent. Although your business may have always purchased company vehicles, it is wise to regularly review the alternatives to ensure you are adopting the most efficient scheme or even mix of options for your business. You may ultimately be driven by cash flow or tax breaks, but it is wise to consider overall long-term costs and benefits.

While many would consider rental vehicles to be a costly and time-consuming option, this is becoming increasingly more popular particularly when considered as one element of your vehicle policy and combined with say leasing vehicles for more routine every day journeys.

Rental is a good way of supporting your owned or leased fleet vehicles and can be cost effective if managed correctly. Rental cars can effectively fill the gap when car-share vehicles are not available and are more cost effective when utilized for return journeys of over 80-100 miles. With a 24-month agreement in place you can negotiate the best daily rate and requests can be managed quickly and effectively online with deliveries and collections now being extremely flexible and available almost anywhere they are needed. Not only does rental allow for significant cost savings when utilised correctly, it also ensures you are providing the most up-to-date vehicles with increased safety and fuel efficiency features for your employees.

Alternatively, leasing is also an efficient option for those companies with employees undertaking regular business travel as it provides a more transparent view of total life cost of the vehicle when compared to buying outright. Leasing frees up cash and administration time and ensures regular maintenance and renewal which is often included in the contract, as well as tax advantages for either full or partial business use.

It is worth understanding that if you do go down the leased route, you can gain efficiencies by extending your replacement cycle of leased vehicles from the commonly adopted 3 years to 4 years and make considerable savings to the business on monthly lease rates. In comparison, yes, an owned vehicle is an asset to the business which can be used to advertise your brand with appropriate signage – but a leased vehicle is kept regularly up-to-date and you will not need to consider the rapid depreciation or selling on headaches.

2. Maintenance and repair costs
Before getting your vehicles in place you will need to consider the additional cost of regular maintenance and repair. Regular maintenance is essential to help guard against any larger problems that may occur otherwise in addition to avoiding the downtime that would be related to this.

Maintenance and repair also relates heavily to the vehicle choice as different makes and models will carry different levels of costs relating to parts, availability of parts and ease of maintaining. It is therefore important to gain some understanding of the cost and ease of maintaining particular makes and models you may have in mind. It may even be worthwhile considering getting a centrally-managed body shop on board that is experienced in maintaining your chosen vehicle type in advance of choosing your business vehicles.

3. Choice of vehicle make and model
When choosing the vehicle type you need to consider a few elements which can dramatically affect the lifetime cost of the vehicle. Firstly, environmental responsibility comes into play with the drive to reduce emissions and carbon footprints. This will normally therefore mean taking into consideration newer models, fuel type and vehicle size. Not only will introducing more sustainable measures in your vehicle choices translate to an improved company image and doing your bit to help the environment, but you are also likely to realize the added benefits of tax and VAT advantages as well as increased fuel efficiencies. Advanced fleet selection these days is aiding companies to go green and means they can reinforce company policies and priorities by moving towards hybrids, diesels or smaller cars for their vehicle choices. Not only do introducing low carbon emitting vehicles introduce savings on tax, VAT, and fuel costs but they can also help with related insurance costs due to reduced risk.

If your company vehicles are provided to employees as part of their overall remuneration package it can be best to only offer a limited choice of pre-selected vehicles specifically with reduced CO2 emissions, lower maintenance costs and those that are most fuel efficient.

4. Don’t forget your ‘grey fleet’
Grey fleet is a term related to employee-owned vehicles used for business purposes. Before deciding on choosing company vehicles it is good to have an overall awareness of your grey fleet, how much employee-owned vehicles are being used and what types of journeys they are commonly used for. Ideally most companies want to look to reduce their grey fleet usage as it is extremely hard to manage and ensure that your employees are safe, the vehicle is well maintained and fuel efficient, as well as producing limited emissions, and above all that the vehicle is correctly taxed and insured.

Understanding your companies grey fleet usage can help with your decisions and strategy moving forward and understanding which options will be the best fit for your situation.

5. Insurance
Insurance costs are determined partly by the make, model, age and engine size so it is important that you consider what the insurance costs are before making any hasty decisions on choosing vehicle types. It is also important to understand how the nature of your business will affect insurance costs. Your fleet size and frequency of use on your vehicles can affect your insurance premiums. Perhaps your employees comprise of a number sales reps that need to carry examples of products or small amounts of stock to appointments, if so then these are all things that need to be considered and can affect both your choice of vehicle and insurance costs.

6. Fuel cards
Finally, while in the process of choosing vehicles for your business, it is also worth considering the benefits of introducing a company fuel card across the board in order to benefit from reduced fuel costs and to help increased awareness and management of fuel usage. Fuel cards can also help massively in reducing administration and improving cash flow forecasting otherwise attributed to less effective reimbursement processes.

As Director of Bluedrop Services, Doug advises on specialist, non-standard insurance with in-depth knowledge and expertise in business and liability insurance, in addition to fleet insurance.


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