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Market Trends

High Fuel Costs are Prompting Fleets to Tighten Employee Eligibility for Company Vehicles

March 12, 2007, by Mike Antich

If you ask fleet managers what is their greatest challenge, the overwhelming majority will tell you it is managing fuel costs and identifying ways to decrease this expense. This is especially the case with fleet managers who manage fleets with heavy concentrations of diesel equipment. The cost of diesel fuel has risen at a greater rate than unleaded gasoline. In fact, the fuel economy for medium-duty trucks is actually lower today since the introduction of the 2007 diesel emission standards on Jan. 1. These fleets are not only getting lower miles per gallon, but also experiencing increased fuel costs due to the higher cost of ultra-low sulfur diesel, along with additional PM costs for special motor oils required for the hotter-running 2007 engines and replacement of diesel particulate filters.

In 2006, overall operating costs for commercial fleets, on average, increased 20 to 30 percent. Across all vehicle classifications, this increase was directly attributable to increased fuel costs.

Stretching Fleet MPG
Fleet managers are trying to reduce fuel costs any way they can. More fleets are implementing fuel management programs to restrict unnecessary fuel expenditures. Some fleets have been able to deflect the impact of fuel increases by shifting to more fuel-efficient vehicles. These fleets are re-evaluating the use of SUVs or moving to smaller SUVs. Fleets across the board are also looking to “right-size” cargo vehicles to minimize fuel expenditures, but are restricted by fleet application requirements. Fleets that are environmentally conscious or have green initiatives are acquiring hybrid vehicles, although this volume continues to be negligible in terms of the overall industry.

Fleets are also looking to increase overall fleet mpg by spec’ing four-cylinder engines instead of six cylinders. Other fleets are exploring telematics, such as using GPS to monitor employee driving patterns and maximize route efficiency.

Another fuel-saving initiative is implementing anti-idling awareness programs with drivers. Some fleets are ordering trucks with idle cutoffs after five to 15 minutes. They are also employing geo-fencing products to restrict unauthorized personal use.

High fuel costs are prompting other fleets to establish minimum mpg requirements for vehicle inclusion on a selector list. They have determined a minimum miles-per-gallon requirement for all levels. A vehicle must meet this set mpg number to be placed on the selector.

Increasing fuel efficiency also involves driver compliance and education. Fleet managers are seeking to educate their drivers to be cost-sensitive to the high price of fuel and to avoid refueling at stations with higher than market-level prices. Another way to control fuel costs at the driver level is to set tighter and more-frequent exception reporting to ensure best buying practices, such as identifying the unnecessary purchase of premium fuel and eliminating fraud.

While fleets cannot control the cost at the pump, they can utilize measures to reduce consumption, the majority of which rely on drivers. This includes ensuring drivers maintain proper tire pressure, eliminate excessive idling, avoid jackrabbit starts, etc. Many fleet managers have become more vigilant in enforcing scheduled preventive maintenance services to ensure their vehicles remain operationally fuel-efficient.

Reassessing Employee Eligibility
There is a limit as to how much additional fuel economy can be squeezed from fleet vehicles. Most vehicles on today’s selec-tors are already the most fuel-efficient models available to fulfill the required fleet application. Well-run fleets already have in place effective fuel management programs that optimize the cents-per-mile fuel efficiency of their vehicles. Although the high cost of fuel is a necessary cost of doing business, there is pressure at some companies to review ways to reduce the overall number of company-provided vehicles.

One area receiving increased behind-closed-door scrutiny is driver eligibility. The high of cost of fuel is prompting companies to reassess and tighten employee eligibility to receive a company vehicle as a way to reduce overall fleet costs. Historically, one criterion for a company vehicle assignment is if an employee drives more than 12,000-15,000 business miles per year. Already, several major fleets are studying the feasibility of increasing the annual mileage for this eligibility threshold. Those employees unable to meet the new criterion will be shifted to driver reimbursement.

As volatile fuel prices continue to dig deeper into “corporate pocketbooks,” we will begin to see more fleets tighten employee eligibility criteria as a cost-control measure to reduce overall fleet count by eliminating marginal drivers.

Let me know what you think.

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Author Bio

Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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