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The 10 most common mistakes in fleet management.

Here at Fleetcutter, we've compiled the definative list of what we consider to be the 10 most common mistakes in fleet management.

Over the years as a fleet manager, I know I've been guilty of at least 3 or more.

How many will you own up to?

Mistake #1: Having more cars than you need.
This is a simple mistake. If you have 75 cars, but you only need 65.....then sell 10, put the money in the bank, earn the interest and save the depreciation. Try using your resources more intensively through aggressive utilisation practices and keeping the cars on the road more often. The tricky bit is....what is your optimal fleet size? You'll need good quality demand (from drivers)  and utilisation (trips made by cars) data.

Mistake #2: Offering vehicles as a soft perk to employees
Nowdays, the tax benefits to employees (and organisations) of vehicle ownership are very marginal. Often, a salary packaged vehicle is given as a status symbol, as an inducement to long term employment (i.e.employees sign up for a long term lease) or simply because its how the organisation has historically attracted staff. Try thinking outside the box and offering other travel related benefits - and if you must go down the route of tax effectiveness, look at the deductibility of long term public transport tickets. .

Mistake #3: Centralising fleet costs rather than allocating them to each department.
If you're running an organisation where fleet costs are centralised, there's a distinct lack of incentives on the part of individual departments to make fleet savings as they never get the benefit. Its a tragedy of the commons . Why not charge each department for each vehicle? Or for each trip? Have you thought about making your fleet management function a profit centre?

Mistake #4: Buying the wrong type of car at the wrong time of year
Manufacturers bring out many different variants for each model. Some have better resale than others, and its up to you to find out. For instance, a late model Toyota Yaris Hatchback will trade at a substantial premium to the less popular Sedans, which were more expensive than the hatch in the first place. The difference in this case could be more than $2000 per car.

Mistake #5: Buying a car late in the model cycle.
Resale value for end of life vehicles (i.e vehicles that are the end of the model life) tend to be much lower than for vehicles at the beginning of their model life. If you're buying a car and the model is long in the tooth (model lives vary from 5 to 10 year cycles, depending on the manufacturer), chances are you'll get a poor resale when you come to sell the car. Expect a lower price of anywhere from 5-15%for a late model resale.

Mistake #6: Letting drivers get speeding or parking fines that can't be allocated to direct to them personally.
Unpaid speeding and parking fines for organisations 'escalate' much faster than they do for individuals. For instance, if you don't quickly nominate a driver for a speeding vehicle in Queensland, the fine can escalate to upwards of $3500 for every single incident. 

Mistake #7: Paying drivers excess for at fault accidents.
Drivers who know they'll pay if they have an accident tend to drive a bit more carefully than ones who assume the organisation will wear the cost. Make it clear to your drivers that any at fault accidents - they pay the excess. You bend it, you mend it. Your accident rate will go down, and so should your insurance premiums.

Mistake #8: Entering into poor financing arrangements.
Novated leases, finance leases, corporate hire purchase, chattel mortgages, operating leases...Yes, it's complex. Some finance arrangements have severe penalty clauses for early payout, which can increase the effective financing rate by up to 50%.  Get professional advice, multiple quotes and learn how to check your payment schedules.

Mistake #9: Manual administration of tasks more easily performed by a computer
Sick of manually typing in fuel receipts? Hate allocating tolls to vehicles one by one? Hate making paper based bookings of vehicles? We recently spoke to one organisation who had 3 full time staff managing the bookings for 90 vehicles. Get a system that can automate these simple tasks, and you'll be surprised how much time you free up..

Mistake #10: Failure to maintain detailed insurance claim history.
If you've been managing your fleet for a while, you should have a detailed insurance claim history you can use to compare how much premium you paid with how much your accidents cost your insurer. At the very least, a detailed history will enable you to get better pricing on your insurance.


For solutions to these common mistakes, visit Fleetcutter.com and request a consultation.


*About the Authors. Nic Lowe and Bruce Jeffreys have over 15 years of fleet management experience between them. In 2003, they set up GoGet CarShare, utilising advanced FleetCutter technology designed specifically to maximise the utilisation of vehicles in a pooled fleet. They've won numerous awards for the service, including the Chartered Institute of Transport Logistics "Achievement of the Year" when they beat multimillion dollar logistics company, Toll Holdings.

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Last Updated ( Saturday, 29 August 2009 )
 

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