Business Guide — Finance
How to reduce your fleet operating costs
Looking to reduce your fleet costs? Discover how you may be able to save money while increasing your fleet’s efficiency.
5 min readRunning a fleet may be one of the biggest expenditures for large and small businesses alike. But identifying improvements can be difficult, especially if reducing your fleet size or the distance it covers isn’t an option. Here, we look at the two main day-to-day costs of running a fleet – management and operations – to find opportunities for savings.
When combined, management and operations costs contribute around 85% of the total costs of a fleet vehicle(1). So there’s plenty of room to find efficiencies and cost saving opportunities.
Management costs refer to the foundational costs of running a business, which means they exist whether the fleet is utilised or not. Operating costs are the maintenance and day-to-day costs. They vary, depending on the actual usage of the fleet.
Typical lifecycle of a fleet vehicle(2)
Figure 1: The typical life cycle costs of a fleet vehicle(2).
Optimising your fleet
There are three main things to consider when optimising your fleet management costs: finance plans, insurance costs and tax.
Choose the right finance plan
The decision to buy, lease or rent your fleet will depend on many factors, including your fleet requirements, your fleet size, your budget and your available capital.
Buying outright will give you total control over acquisition, maintenance and disposal. It can be a good option for fleets that have low turnovers. Renting and leasing have the benefit of providing access to new vehicles while preserving capital. But they don’t always unlock certain tax depreciation benefits or lead to ownership at the end of the term.
Related reading: Business vehicle finance explained
Whether you’re building a new fleet or you’re looking to add another vehicle to your business, Toyota Finance has a range of fleet plans and special pricing programs available. Our dealers can work with you to set up the right financial strategy from the outset.
Get better insurance premiums
It’s wise to consider a comprehensive insurance policy that covers your whole fleet, rather than insuring each vehicle individually. This offers better scope for reduced premiums, and there’ll be less ongoing admin time to manage.
To access better insurance premiums, make sure to keep a thorough safety record of your fleet – think distance travelled, maintenance, repairs, accidents, and fines. Tools such as dash cams are helpful here to comprehensively and effortlessly track accidents and responsibility.(3)
Manage your taxes
Lowering your fleet’s tax liabilities may lead to large savings, but many small businesses and new fleet operators are unclear about what vehicle-related expenses are tax deductible. The ATO (Australian Taxation Office) provides guidelines for what you can and can’t claim, along with easy-to-use tools to calculate deductions.
Related reading: A guide for keeping track of tax expenses for business vehicles
Your local fleet dealer is also available for free consultations and can talk you through the tax options that best suit you.
Improve your fleet operations
Your fleet’s day-to-day activities are a great opportunity to not only reduce operational costs, but to increase fleet efficiencies in the process.
Let’s explore some tactics.
Stay on top of preventative maintenance
Creating and managing a fleet maintenance program is a must. Because staying one step ahead of potential repairs can help you better control the costs while avoiding vehicle downtime and extra admin.
Invest in telematics for powerful insights
Telematics is a method of monitoring fleets via GPS technology. When telemetric data is analysed for particular events and patterns, it can provide in-depth insights about an entire fleet.
Enter Toyota Halo: Toyota’s new telematics service. It will provide fleet managers access to a range of insights, from vehicle allocation and idle time, to driver speeding and road safety habits, to fuel use and maintenance schedules.
With a mobile-friendly app where drivers can log their time, to a fully-integrated management system where fleet managers can assess operations, Toyota Halo will make it easier than ever to streamline and optimise the day-to-day running of your fleet.
Reduce fuel consumption
Your fuel reduction strategy should start with making sure your vehicles are the right size for the job: are large utility vehicles necessary, or will a hard-working HiLux or LandCruiser 70 be better for the job?
Regularly servicing your vehicles also comes into play here. Steps should also be taken to make sure drivers are adopting fuel-efficient behaviours.
Improve road safety
Improving the safety of your fleet won’t just protect your employees from harm, it’ll minimise downtime and increase productivity.
Toyota’s safety technologies – including the Pre-Collision Safety system, Lane Departure Alert and Road Sign Assist – are great tools to help improve the safety climate of your fleet. Usually these technologies are only available on newer vehicles. So it’s worth researching the latest technologies when planning your fleet finance strategy and replacement cycle
Increase employee retention
Research shows that satisfied employees are up to 20% more productive than unhappy employees, with many able to increase sales by an impressive 37%(5).
Providing employees with a safe and modern vehicle is a great way to increase satisfaction and attract new and competent talent – which can only be good for your business’s bottom line.
Related reading: Driver well-being policies for small businesses
Disclaimers
(1), (2) https://www.researchgate.net/publication/346680827_Determination_of_the_Economic
(3) https://www.aami.com.au/aami-informed/on-the-road/insuring-a-car/how-dash-cams-affect
This information provided is of a general nature and for information only. Nothing in this article constitutes or should be considered to constitute legal, taxation or financial advice. Before making a decision about any of the products and services featured on this article, you should consult with your own independent legal, taxation and financial advisors, who can advise you about your personal circumstances.
