The Car and Truck Fleet and Leasing Management Magazine

What Manager Accepts a 20% Defect Rate ?

Fleet Managers Do

September 2006, by Mike Antich - Also by this author

The accident rate for fleets averages around 20 percent, with some industries, such as pharmaceuticals, even higher. In other words, 20 percent or more of your vehicles will be involved in an accident annually. In terms of your fleet safety program, any vehicle-related accident should be viewed as a defect.

What type of company would view a 20-percent or more defect rate as acceptable? This is an important question, especially when this defect is a controllable fleet expense. Of the 20 percent of vehicles involved in an accident, about 40 percent are involved in preventable accidents resulting from driver negligence. "If 40 percent of all accidents are preventable, this presents a huge opportunity to reduce what a fleet spends on accidents-related cost," said Maurice Chenier, program manager, safety solutions for GE Commercial Finance Fleet Services. "Overall, accidents represent 14.2 percent of a fleet's total expense. If a fleet can find a way to eliminate preventable accidents through driver training and other means, it would drop the expense rate to just over 8 percent."

In today's fleet management world, few areas remain where such dramatic savings can be achieved. "Since a key part of a fleet manager's job is to reduce accident repair costs, many find it counter-intuitive that expenses can be reduced by incurring expense" said Chenier. "The real cost savings occurs when you train your drivers to drive safely. If a driver training program results in fewer accidents, the payoff is tremendous." Chenier calculates that the cost ratio between training a driver and avoiding an accident is a 70 to 1 return on investment, based on the cost of the accident versus the cost of training a driver.

Fixing Bent Metal is Expensive

There are two cost components to fleet accidents. The first is the actual repair of the vehicle. The second is liability cost, which can run the gamut from tens of thousands of dollars to potentially millions in a high-profile incident.

Even the simplest fender bender costs $500 or more. The industry average cost to repair a fleet vehicle involved in an accident is SI ,848.36. When other cost components of an accident are included, such as loss of use, liability, workers' comp, and other indirect expenses, the total cost exceeds $ 10,000 per incident.

The National Highway Traffic Safety Administration (NHTSA) estimates the costs to be even higher. According to NHTSA data, the total average cost per incident is $ 16,400. Fleet industry studies indicate a lower figure, but nonetheless still substantial. "CEI has done a number of studies based on customer-provided data. Based on this, we calculate the average total cost of a fleet-related accident is approximately $ 10,000," said Vincent Brigidi, director of strategic account services for The CEI Group. The $ 10,000 figure does not include the number of hours a driver is out of the field and the resultant productivity loss. In the pharmaceutical industry, this productivity rate is calculated at $300 per hour for a sales representative. "If a driver were to be taken out of the field for 6 to 8 hours because of an accident, this alone would represent a productivity loss of $2,400," said Brigidi.

Focus on the Driver and Not the Asset

"The goal of a driver risk management program is to prevent vehicles from colliding in the first place," said Chenier. In this vein, fleet managers may need to view accidents from a different perspective than just repairing bent metal. The true cost savings are in accident prevention and not in accident repair cost reduction.

"You can utilize a solid accident management program and squeeze every dollar you can out of a repair, but, in the end, you may not be saving anything," said Brigidi. For example, if a licet has 100 repairs in a year and it is able to reduce (or avoid) repair costs by $ 100 per repair, this would represent a $ 10,000 savings across the fleet. "But if you reduce the number of annual accidents from 100 to 90, you have $ 100,000 in savings when you factor in the savings from direct and indirect costs," said Brigidi.

The cost savings are even more phenomenal if you prevent a fatality. The average financial cost for a fatality resulting from a fleet accident is $ 100,000 to $200,000 based on industry data. Just one incident can devastate a fleet budget. "If you were able to cut $ 10,000 per year off your accident management costs over a 10-year period, a single lawsuit can erase all 10 years of cost-cutting efforts" said Brigidi.

Statistics such as these have caught the attention of fleet managers and their counterparts in risk, HR, and legal. Fleet services companies report that the focus of RFPs has shifted overwhelmingly from only accident management to inquiries that include a full suite of risk management products. Unfortunately, what motivates some fleets to focus on driver risk management is a recent fatality or very expensive liability settlement. Regardless, a 20-percent accident rate is no longer acceptable for our industry. To reduce it, we must focus on the cause (the driver) and not the symptom (the accident).

Let me know what you think.

Twitter Facebook Google+


Please note that comments may be moderated. 
Leave this field empty:

Fleet Incentives

Determine the actual cost of owning and running a vehicle in your fleet. Compare vehicles by class and model.


Fleet Management And Leasing

Merchants Experts will answer your questions and challenges

View All
Sponsored by

Thomas W. Beasley was a past president of the National Auto Auction Association

Read more


Market Trends

Mike Antich
Avoid Repeating Past Inefficiencies: Build the Truck to Match Today’s Application

By Mike Antich
I asked one fleet manager how he spec’ed replacement trucks for his fleet application. He related that many years earlier an OEM rep spec’ed out his trucks and he has been using the same formula ever since. While this may work in some cases, specifications should be defined by today’s fleet application to ensure the replacement truck is designed to accommodate current operational requirements rather than trying to make your operation conform to trucks spec’ed for yesteryear’s requirements.

Conduct an Efficiency Audit to Eliminate Waste in Your Fleet Budget

By Mike Antich

View All

Driving Notes

Amy Winter-Hercher
2017 Subaru Impreza

By Amy Winter-Hercher
The redesigned 2017 Impreza has been built on Subaru’s new platform that improves stability and reduces road noise and vibration. The fuel-efficient, all-wheel-drive Impreza makes for a good commuter vehicle — available in either a sedan or hatchback.

2017 Mazda CX-5

By Eric Gandarilla

View All

Nobody Asked Me, But...

Sherb Brown
Yes Virginia, There is Depreciation

By Sherb Brown
Depreciation is a necessary evil in our industry. Knowing your risks and knowing your OEM partners won’t make depreciation go away but it can make it more manageable.

Are You a Fleet Manager or Are You Just Managing a Fleet

By Sherb Brown

View All

Data Points

Dylan Brown
Does Telematics Branding Translate to Adoption?

By Dylan Brown
We asked over 750 fleet professionals questions about the prevalence of each provider in the market and their brand recognition.

How Fleet Size Dictates Telematics Needs

By Dylan Brown

View All

In Memoriam: Coach's Insights

Ed Bobit
Thinking of the Newbies of the Future

By Ed Bobit
A lot has changed in the past 10-15 years, so we can only imagine this momentum will continue into the next decade-plus. How will this change impact the fleet manager of tomorrow?

Managing a Car vs. Work Truck Fleet

By Ed Bobit

View All


Up Next

More From The World's Largest Fleet Publisher