Small investment, Big return

“Could any fleet manager ignore the opportunity to make a small investment that could return 16 times that amount, improve legal compliance and reduce the chance of accidents?”
Tony Greenidge

The occasion of this question was the annual conference of the Institute of Car Fleet Management and the speaker who posed the question was Tony Greenidge of IAM RoadSmart. Both organisations are registered charities. 

Let’s look at the numbers Tony presented, which show how a change in driver behaviour can dramatically cut costs.

He assumed a fleet of 80 cars and 20 vans, averaging 15,000 business miles per annum, having a 15% chance of an at-fault collision every year and a four-year replacement cycle. A fairly typical medium-size fleet.

He presented well-sourced stats that showed that 37% of leased cars and 40% of leased vans are returned with unfair wear and tear, for which the leasing companies charge an average £308 and £414 respectively. That’s a cost of £3,107 for our example fleet, a fair chunk of which might be down to driver behaviour.

The average motor insurance claim is £2,839 (Source: ABI, 2017), and this figure is rising as cars become more complex. If 15% of our assumed fleet is involved in an at-fault collision every year, the cost to the fleet will be £42,585. How much of that could be reduced by changes in driver behaviour? Presumably rather a lot, as these are at-fault claims.

Tony assumed that his fleet of 100 vehicles driving 15,000 miles per annum had an average 44mpg under WLTP, but that the fleet actually averaged 40mpg. He showed that a cost saving of £18,908 was achievable if the driver could be encouraged to drive in a fuel-efficient way.

Then we came to the interesting part, which I hadn’t been aware of. The EST provides a subsidy to approved training organisations for every driver they put through an ecodriving course.  This can reduce the per-head cost of a standard 90-minute course to £30-£40, depending on the provider.

For the assumed fleet of 100 vehicles, the potential savings from ecodriving is £64,600, or £646 per driver. Let’s say the 90-minute ecodriving course costs £40 per head, or £4,000 for all of the drivers. That’s a potential return of more than 16 times the investment.

Fleet World reporter Colin Tourick ended the article by asking: "Costs reduced, emissions reduced, accidents avoided, lives saved, all for £40 per head and 90 minutes outside the business. Why isn’t everyone doing this?"

Source: Fleet World 31 July 2018

DriverFocus comment:

Indeed, however there are some additional points to ponder, such as:
1. What uninsured losses would this sample fleet also face?  Typically, this is a multiple of 2X (or significantly larger multiple) of the "bent-metal" cost
2. If EST funding is not an option, the commercial rates for in-vehicle driver training is significantly higher (again a multiple of 3X or more), which reduces payback. Still, the business case for being proactive is strong.
3. Aside from training everyone, a targeted training programme - based on telemetry, fuel card data and/or risk assessment data - could reduce the training cost and improve return on investment.