Need to Reduce Expenses?

4 Major Cost Areas of Vehicles

Most businesses are not doing an effective job managing all four major cost areas associated with operating vehicles. As a result, they are incurring greater expenses than necessary.

Here is a review of some of the common errors that may result in your business over spending on vehicle related expenses.

Acquisition

Avoid the misconception that business vehicles can be acquired in the same manner as a personal vehicle. Your first steps should be in developing a fleet plan and implementing a cycling program. Approaching your vehicle needs on a transactional basis will likely result in spending more than necessary.

Discounts and incentives available to businesses differ from consumer rebates. By taking the time to research and explore all makes and models, most businesses can take advantage of additional savings.

Maintenance

Do you have controls in place for maintenance expenses? Are you maintaining detailed records? If not you are probably spending more than you should. Company vehicles don’t have a conscience like a personal vehicle. Approvals for repairs are commonly rubber-stamped. Without adequate records, vehicles are often left in service past the optimal cycling point thereby generating above average repair expenses.

Depreciation

Are you putting vehicles into service without a cycling plan? How long are you keeping your vehicles in service? Identifying the optimal cycling point for each vehicle is critical to reducing your depreciation expense. Taking a vehicle out of service too soon will obviously increase your depreciation expense. Leaving it in too long can have the same effect by decreasing the economic value. Selecting vehicles with strong residual value performance that best fit your business needs is also a key factor in reducing overall depreciation expenses.

Fuel

Without level III controls in place, you cannot be certain that all fuel purchases are going into company vehicles. Your purchases could also include non-fuel related items. Fuel card programs that capture vehicle mileage at the pump provide huge benefits in managing your fleet.