FLEET200: OVERVIEW
A problem-strewn 12 months, but prospects look more rosy Top 10 fleets show sharp increase on vans and a considerable dip on cars. Stephen Briers reports rexit, CO2 emissions, company car tax uncertainty, the new Worldwide harmonised Light vehicle Test Procedure (WLTP), clean air zones – the list of challenges facing companies operating car, van and truck fleets over the past 12 months has been extensive. Yet, while the implications for many car operators have undoubtedly been severe, with enforced extended replacement cycles and a rise in cash uptake caused by the lack of clarity around future benefit-in-kind (BIK) tax, for many fleets it’s been a case of focusing on the core business and continuing to prioritise cost efficiency, safety and the environment. Like-for-like, the top 10 biggest operators are running a little over 2,000 more vehicles than a year ago, although there is a stark contrast between vans and cars. Driven by continued demand for home deliveries and growth in national infrastructure, particularly roads, the number of vans has risen by more than 5,500; meanwhile, the top 10 are running around 3,500 fewer cars. Notable growth has come in the Royal Mail van fleet, part of the business strategy to accelerate its revenue from parcels as the make-up of its operation evolves. Internal pressures have already seen the business pull away from its ‘empty legs’ initiative, whereby it offered other operators space on its trucks; it simply no longer has the spare capacity. Likewise, Royal Mail is now phasing out its fleet management service, a process that is expected to conclude by the end of this year. Its national network of 100 workshops is now required to concentrate on the organisation’s expanding ‘red’ fleet, ensuring they take precedence for service, maintenance and repair (SMR).
In a sector where margins are tight, vehicle utilisation and minimising off-road times make a vital contribution to the bottom line. A Royal Mail spokesperson said: “Royal Mail has decided to focus its fleet services divisions on its own vehicles. This means we will no longer offer third party fleet services. Our decision has no impact on Royal Mail or our colleagues.” The decision adds up when considering the rise in its van fleet: Royal Mail has added 1,200 light commercials and almost 400 trucks in the past year and further growth is anticipated as part of its investment strategy in the parcel sector which includes building three parcel hubs. The move is part of a £1.8 billion investment in network enhancements and new ways of working. The hubs, scheduled to be fully operational by 2023, will introduce a second delivery for parcels. SSE – formerly Scottish and Southern Energy –
FLEET DEMAND – PERK VS ESSENTIAL USE
Source: Sewells Fleet Intelligence
B
Sector
EMPLOYEES COULD NOW RETURN TO THE (CAR NOT CASH) FOLD THANKS TO THE ULTRA-LOW BIK RATES AVAILABLE ON ELECTRIC AND MANY PLUG-IN HYBRIDS
Current % of perk drivers
Current % of essential use drivers
All car fleets
29%
71%
6-25 cars
29%
71%
26-50 cars
29%
71%
51-100 cars
30%
70%
101-250 cars
33%
67%
250+ cars
30%
70%
Primary/Manufacturing/Construction
30%
70%
Transport/Wholesale/Retail/Distribution/ Information/Communication
27%
73%
Business Services
39%
61%
Other services
27%
73%
Public sector
18%
82%
has jumped from seventh to fourth biggest fleet after the utility company added just over 1,500 vans taking it to 6,500, while Amey Fleet Services almost doubled its van fleet, from 1,565 to 3,000. Amey has also boosted its company car fleet, bringing more than 2,000 employees back into the scheme compared with a year ago (up from 750 to 3,000). Not everyone has increased the size of their fleet. Centrica reduced its vans from 12,500 to 9,900 following a utilisation project with its funding partner. Steve Winter, Centrica head of fleet, set a target of holding 3% of the fleet as surplus to reduce downtime due to vans off the road (hire vans tend not to meet its specifications). Previously, it was too high, while vehicles were held centrally which was inefficient when the fleet is spread nationally. This work, including action to put vehicles in strategic locations, has now been completed, largely explaining the reduction in van fleet size. “Most of this has been through having a much better handle on utilisation as well as some attrition in the business in line with structure and operational plans within the group,” says Winter. “Clearly we are taking every opportunity to reduce the fleet size in surplus and, in particular, the Euro 5 vehicles.” Kier has also cut its van fleet year-on-year, by just less than 2,000 vehicles. In total, the Fleet200 – consisting of 135 organisations – are operating 126,796 cars, 187,995 vans and 25,172 trucks. While total volume comparisons with 2018, where 167 completed the survey, are not possible, digging into the figures reveals that vans account for 61% of 2019’s 305,791 car and van total, up four percentage points from 2018’s 57%. Assessing the top 100, where the majority of the companies are the same, shows some interesting trends. In 2018, the top 100 companies had 313,399 vehicles, of which 131,280 were cars and 182,119 vans. While the number of vans operated by the 100 biggest businesses in 2019 is largely unchanged – 182,627 – the number of cars has fallen dramatically, to 122,200. In total, the top 100 are running 304,827 vehicles. This 9,080 year-on-year drop in cars underlines the impact of more than a year of uncertainty over BIK taxation and CO2 emissions. Companies and leasing companies have been reporting that employees are drifting out of car schemes and opting for cash, particularly higher rate tax earners. The Fleet200 seems to support this view, which was highlighted in last year’s report following a Fleet News poll which showed 77% of companies were seeing an increase in the number of drivers
