Car fleet management in a company - what is fleet management?

What is a fleet of vehicles?

A vehicle fleet refers to a group of vehicles that a company uses or owns. Part of the fleet can be trucks, buses, but also personal vehicles (which are used, for example, by sales representatives or company management).

In-house fleets are primarily built by companies whose operations require high mobility. These are courier companies, carriers, pharmaceutical companies and many other organizations.

The cars in the fleet do not have to formally belong to the company – they are often leased or rented. The most important thing, however, is unfettered access to the vehicles, which allows the company to optimally manage costs, carefully select routes, have full control over how the vehicles are used, and more effectively ensure the safety of drivers and cars.

The availability of vehicles is particularly important if the company uses special vehicles (lawnmowers, snow plows, tugs, cranes, jacks, etc.).

For some businesses, brand recognition can be important. Marking vehicles with the company’s logo or contact information, such as address and phone number, is a simple way of marketing that works every time the car is out of the business – even if it’s parked.

How to build a new car fleet?

Fleet management should begin before the fleet is even established. In the process of building a fleet, it is necessary to draw up a plan to correctly estimate the needs of the company. As part of it, several key questions should be answered.

How many cars will be needed to carry out tasks effectively?
Will the cars be leased or rented?
What type of vehicles does the company need (cars, trucks, buses, special vehicles)?
Which manufacturers’ vehicles will be the company’s first choice?
What if there are availability issues?
What budget do we have for acquiring vehicles?

Once you know the answers to all these questions, you should start making purchases. In the meantime, it’s a good idea to draw up internal rules and regulations, including rules for the use of vehicles (during and outside working hours), mileage, but also for servicing and dealing with breakdowns, collisions or accidents. The internal regulations should also include rules on road safety. A document drawn up in this way should be presented for review and approval by all employees who will use the company’s fleet.

Fleet financing

Basically, we can acquire cars for a company’s fleet in three ways:

Purchase vehicles with cash. This is the most costly solution, but it allows the company to manage its fixed assets unfettered, including making depreciation deductions without hindrance.
Operating lease or finance lease. Leasing allows a company to gain access to vehicles in exchange for monthly payments. Depending on the option chosen, cars obtained in this way can (in operating leasing) or must (in finance leasing) be bought back at the end of the contract. In both cases, you will also need to pay an initial payment, which is usually 20-50% of the vehicle’s value.
Long-term rental. This is the most flexible option among those mentioned. Renting a vehicle to a company allows you to use it under certain terms and conditions, paying installments in return – similar to leasing. However, long-term rental allows you to use the car even without an initial payment (in exchange for higher installments).

Want to learn more about the important aspects of owning a company vehicle? Read our e-book “Car in the company”!

How to manage a company’s car fleet?

Car fleet management consists of many processes. Some of them are absolutely crucial – without them the fleet has no right to function properly. Some are optional, although the more comprehensive the management, the better results can be expected.

Fleet monitoring

An important part of managing a company’s vehicles is monitoring them. However, this does not mean the literal installation of cameras in vehicles (although the installation of video recorders is generally a good idea that can save a lot of trouble in unforeseen situations on the road). Fleet monitoring consists of the activities listed below.

Analyzing routes – based on GPS data, it is useful to conduct a continuous analysis of the routes your company’s drivers take. This allows you to optimize travel time, fuel consumption and respond to changes – such as those caused by road repairs.
Tracking the location of vehicles – every modern vehicle used in business has satellite navigation, so it can (and should) be tracked. First and foremost, for safety.
Monitoring drivers’ working time – thanks to the mandatory installation of tachographs in trucks, you have access to a lot of detailed data. You know when the driver starts and finishes work, when he takes breaks and whether they are long enough. All this is necessary in the context of European regulations collected in the so-called Mobility Package.

You can read more about tachograph-related regulations in our study – Transport Mobility Package.

Safety checks – the data collected also allows you to check whether the drivers you hire are being careful on the road and not leading to dangerous situations. Access to speedometer data, information about sudden braking or acceleration, as well as about collisions – all this allows you to thoroughly check, drivers for safety.
Assessment of the technical condition of vehicles – modern vehicles equipped with a set of sensors are able to send real-time information about their own technical condition to the base. This allows you to find out whether there is excessive fuel consumption, check the engine temperature, as well as the oil level and a number of other important indicators.

Vehicle cost management – TCO (Total Cost of Ownership).

Now that you have access to the relevant data, it’s time to move on to putting it into practice. Total Cost of Ownership, is a segment of management focused on the costs associated with owning vehicles – and therefore operating them. Activities in this aspect are focused on four pillars:

Repair and service costs.
Insurance costs.
Fuel costs.
Depreciation of company cars.

Repair and service costs

Good management of a company’s vehicle fleet cannot do without securing funds for regular maintenance. The more thoroughly you take care of the good technical condition of company vehicles, the less unforeseen expenses will surprise you. So what steps are worth taking?

Create and enforce a service plan – a well-managed fleet should have a service plan that includes dates for scheduled maintenance and servicing. Proper timing of these activities will allow:
- optimize vehicle availability (so that you don’t have to – for example – service several or more vehicles at the same time),
- optimize costs,
- protect the company from higher expenses caused by breakdowns due to overuse of vehicles.
Conduct research on services – if your company does not have an internal service, take the time to choose the best technical partner for your company. Building a close relationship with a service will not only allow you to negotiate good service prices, but also gain a trusted business partner.
Use modern technology – as we mentioned in the previous chapter, new vehicles are equipped with advanced sensors. Ensure their proper use. Implement a system in your company that will send alerts and warnings about the condition of the vehicle and worrying symptoms – not only to the base, but also to the drivers. All this so that your employees can react as quickly as possible in case of trouble.

Insurance costs

Insurance is a cost that cannot be avoided (and absolutely should not be tried!). However, it is possible – like many other expenses – to optimize these expenses. How?

First: compare insurance quotes. This advice seems trivial, but in a deluge of offers it’s not hard to get discouraged and choose the one that “pops up” high in search results or is ranked first on a comparison site. While insurance comparison sites can sometimes be helpful, it is not worth trusting them without verification. Also, keep in mind the negotiation possibilities! The more vehicles in your company, the better your negotiating position with insurers.
Drive safely – you and your drivers. Harmless driving is an important prerequisite for getting better insurance proposals. The driving monitoring systems we’ve already mentioned will help you, but that’s not all you can do in this regard. Consider introducing a rewards system to promote safe driving in your company. With gamification, your employees will be motivated and your company will benefit – and doubly so. Lower insurance rates are just an addition to the inestimable benefit of safe driving.

Fuel costs

This is one of the basic expenses of operating vehicles. Dynamically changing fuel prices can cause trouble for a company, but if you prepare well, even more expensive oil will not shake your company’ s liquidity.

Constantly monitor fuel consumption data – This will help you find out which vehicles (or drivers?) are using the most fuel. By comparing this data with an analysis of the routes traveled, you can introduce optimization measures to use less fuel. By keeping your hand on the pulse (i.e., the gasoline or diesel levels of individual vehicles), you will also more easily detect possible cases of “disappearing” fuel.
Encourage fuel economy and give the tools to do so – as with blameless driving, you can also convince your drivers of eco-driving through incentive programs, gamification and reward systems. Training in eco-driving can also be helpful.
Invest in electromobility – if your company’s fleet relies entirely or heavily on internal combustion vehicles, this step will require a great deal of dedication and planning years ahead, but may prove beneficial in the long run. Investing in hybrid or all-electric vehicles is a move that more and more companies are opting for – a condition, however, is often access to government or EU subsidies, without which this venture would often simply be too expensive.

Depreciation of company cars

Depreciation of vehicles reflects the loss of their value over time. With depreciation, you optimize costs, but that’s not all you can do.

Good choice – as we have already mentioned, effective fleet management begins even before vehicles are purchased. It is worth choosing cars in such a way as to invest funds in models that enjoy a low failure rate and a low rate of depreciation.
Planned fleet replacement – if you are at the stage of building a fleet, this point will not be relevant to you for a long time to come. However, if you are using a fleet that is several years old (or building a fleet of used vehicles), it is a good idea to plan for replacement in advance. As with servicing – it’s a good idea to divide your fleet into groups or teams that will be replaced over time. All this so that you don’t suddenly find that all or most of your fleet is eligible for replacement.

Driver management

Although solutions for autonomous vehicles are constantly being developed, for the time being it is a song of the future. Still, the most essential resource of a company – whether transport or any other – is people. Without a driver, a car is just a cost generator – only with a human on board can it also generate revenue.

We can divide this sphere of fleet management into three segments: safety, logistics and labor efficiency.

Security

A key component of fleet management. It consists of legally required activities, but also optional ones – all to reduce the likelihood of dangerous situations on the road.

I will only mention – to avoid repetition – the necessary analysis of data collected from available monitoring systems. The more sensors and cameras, the broader the picture that will make it possible to create safety procedures, reward drivers who drive safely and draw attention to those who do not follow safety rules.

The key point, however, is that no matter how much data you acquire from your systems, it is worthless without in-depth analysis and summary reports. It is also necessary to conduct cyclical analysis to compare key indicators and evaluate the effectiveness of changes and procedures implemented.

Also pay attention to the ever-expanding training offerings. If you conduct an analysis and diagnose safety problems in your company, it’s worth going a step further and betting on increasing the competence of the drivers working for you.

Logistics

Optimize routes on an ongoing basis. Again, it will be necessary to analyze the acquired data to see which routes are more efficient. In the age of ubiquitous GPS systems, optimizing trips is no longer as challenging as it once was. However, for the sake of balance, we have much busier roads, which mean that even the best optimized route can take longer to complete than we would like.

It can also be helpful in fleet management to designate geo-fences. These are virtual areas that you can give any meaning to. Geo-zones can be used to control cargo (you’ll receive a notification when a company vehicle leaves a designated zone without permission, which can be tantamount to cargo theft), monitor traffic volume in the area or further research to optimize routes.

Work efficiency

In order to optimally manage a fleet, it is also necessary to take care of the efficiency of drivers (and vehicles). To this end:

Plan the assignment of tasks to drivers – this is much better than assigning tasks “on the fly” – to employees who happen to be available. Proper planning will allow you to assign tasks taking into account the age, experience and skills of your drivers. This, in turn, will make your employees more motivated – by knowing that there is a meaningful plan instead of moment-driven action.

Fleet management systems

Fleet management today is fully computerized. There are solutions available on the market that make it possible to “pin down” all information and warning systems, allow analysis of selected elements based on collected data and optimize processes in real time.

Managing a fleet without the right system to do so is severely hampered, not to say: impossible. Trying to get all aspects of management under control without a single environment in which to oversee changes, run tests and analyze data can be an expensive and time-consuming failure. The cost of automated systems can be high, but the potential savings (especially in time) outweigh the expense.

Car fleet management – summary

Managing a company’s vehicle fleet is a complex and multi-faceted process (actually a set of processes). To do it well, you will need not only access to data, but also its analysis and integration of information from different segments. However, implementing a fleet management system in a company is an investment that brings a real return and has a positive impact on many aspects of the company’s operations – from increased safety to process optimization to higher revenues.

Car fleet management in a company – what is fleet management?