Are you looking to reduce costs in the management of vehicle fleets?

In the car rental and sale businesses great efforts are made to effectively manage their company car fleet.

Taking this reality into account, below are the keys to reducing costs in the management of vehicle fleets in order to save resources, optimize processes and obtain positive results.

What is vehicle fleet management?

To understand what vehicle fleet management is, we must clearly know what we call vehicle fleet.

Broadly speaking, it is the set of vehicles that a company owns regardless of its function within it (transport, industrial functions or those assigned to vendors).

Car rental companies, or car buying and selling companies, are one of the companies that most often require good management of vehicle fleets, since they tend to be kept in constant use and therefore represent a constant economic investment throughout the weather.

The more a renting or buying company grows, the more vehicles it usually integrates for its operation.

In this sense, the management of vehicle fleets becomes a vital element, since this is the administration, control and monitoring of this set of vehicles made available for their functions.

How is vehicle fleet management carried out?

Vehicle fleet management includes a wide variety of elements to take into account. To make this process clearer, over time these elements were divided into two large groups: direct and indirect costs.

Direct costs:

These are divided into fixed direct costs and variable direct costs. The fixed can be, for example, the salary of workers, vehicle taxes, the purchase of new vehicles; These are those costs that will not have a constant variation margin.

On the other hand, the variable direct costs are related to the possible activity that the transports can carry out. In this sense, this group will include fuel consumption, vehicle maintenance, payment of tolls, tire repair, those related to transport personnel, etc.

Indirect costs:

Indirect costs do not have an activity that involves vehicles as such, but they are related to them, especially with the management of vehicle fleets.

For example, the salary of the administrative staff in charge of coordinating the fleet, their office supplies, the vehicle management system they use, among other factors.

Each company will have specific characteristics that determine the indirect cost of its fleet of vehicles.

Calculation of the cost of a fleet

As we have mentioned before, each company will have a particular context in the indirect costs of its fleet of vehicles.

However, as far as direct ones are concerned, it is possible to calculate the cost of a fleet.

This point, in fact, is of the utmost importance for the administration of a company, since it allows to foresee what will be the economic investment that will have to be made within a certain period of time within the management of fleets of vehicles that it owns, in addition to the fact that this process is effective.

In calculating the cost of a fleet, there will be expenses that are made over time based on the kilometers traveled during a set period.

In this sense we have, for example, the investment in fuel, maintenance, relationships or tire changes for a year.

In turn, fixed and variable costs cannot be ignored when calculating the cost of a fleet.

Although they depend on the particular activity carried out by each vehicle, they will be of great importance as they will determine how much wear will be on each vehicle and the possible ways to optimize these processes to improve activity.

Each company will have the task of verifying what these elements are and studying them.

Data analytics for connected vehicle management

In order to automatically and effectively manage the vehicle fleets of a company, it is necessary to carry out a data analytics process in the management of connected vehicles.

This process is carried out through computerized systems or software that evaluate the information we provide about the fleet in question.

Data analytics for the management of connected vehicles makes it possible to monitor aspects such as the state or conditions of the vehicle, spare parts and the management of repairs with mechanical workshops, among other factors.

Of course, these elements allow us to know the status of each vehicle in particular and of the fleet in general in order to keep us constantly aware of them. Supporting management decisions on reliable information is not just an option recommended, but also a necessary one.

It is thanks to the connected that we can get to the point of foreseeing situations, making decisions and avoiding investments of resources that are not necessary (especially in the back office and when negotiating with manufacturers and marketers). In this way, we find the keys to reduce these costs.

6 Keys to reducing costs in vehicle fleet management

1) Collection of data from your vehicle fleet

As we mentioned before, data analytics for connected vehicle management is the starting point that allows you to correctly manage a fleet and make the correct decisions regarding it.

As the saying goes, “information is power”, and in this context it will be very helpful the more we have on our vehicles.

2) Evaluate the size of your vehicle fleet

It is always necessary to keep abreast of the possible ways to reduce the fleet of cars or vehicles in order to reduce the costs of fleet management.

This is not an easy task, as it must always be borne in mind that the activity of the company is not adversely affected.

However, reducing the number of cars will also reduce their investment, logically.

3) Measure the consumption of your car fleet

One of the main fixed direct costs is the fuel consumption of cars.

Reducing this point is, clearly, one of the best options we have to reduce the cost, not the investment that is made in the vehicles.

For example, excessive spending on tires directly affects the cost of fuel (link to this post increase-your-fuel-expense-safety-maintenance-pollution-car.html

That is, none of these 6 keys are isolated, if not all of them have any correlation.

4) Reduce the kilometers of your fleet

When the company carries out activities related to dispatches and shipments, one way to reduce its maintenance cost is by reducing its routes. This is achieved, for example, by looking for new routes that are faster or more direct and that allow reaching the destination without traveling such a long journey.

5) Manage the maintenance of your vehicle fleet

Of course, a control in the maintenance of the vehicles will bring great benefits for the state of these.

Take as an example taking care of the condition of the oil in the engine, a process that will precisely allow the engine to continue to function properly. If the engine were to be damaged due to lack of maintenance, it would require a higher cost than expected in general management due to unforeseen costs due to not being aware of maintenance.

6) Identification of bad habits in the use of your vehicles

Vehicles are driven by people and therefore they could be committing bad practices or procedures.

Driving badly, speeding or even the recurring action of careless accidents deteriorate the condition of the vehicle and are some of the actions that increase the level of damage and investment in repairs.

In short, the key to being able to reduce costs in the management of vehicle fleets is in the correct use of the information on the transport available.

Having data analytics for the management of connected vehicles will be the first step (and one of the most important) when it comes to reducing costs in the vehicles we have.

Do you want to reduce costs in your vehicle fleet management? The Authemis program will allow you to reduce back office costs and thus be able to focus your efforts on achieving better business deals with manufacturers and suppliers.

Book a demo with Tasarauto and discover how.