Close up of front of white car

A Guide to Car Running Costs

Apart from capital costs, fleet managers need to consider the operational costs of running commercial fleets. These costs are a result of the day-to-day car activity, it’s important to have an understanding of what they are and how you can better manage them by cutting unnecessary expenses.

This guide will cover:

  • Fuel costs
  • Fleet maintenance costs
  • Insurance costs
  • Tax
  • Licence and Permits

Fleet fuel

Fuel cost is a big part of running a fleet. The cost can vary depending on a range of factors such as mileage, fuel type, having the right type and size of the fleet for the task, and tyre conditions.

There are various ways to reduce fuel costs:

  • Starting off with calculating how much each mile is costing you. Once you understand the mileage cost, looking at deals that offer cheaper fuel can massively reduce costs. Fuel Cards are a great option as we work with every major fuel brand to offer competitive discounts across petrol stations nationwide.
  • Consider using electric vehicles. They are not only environmentally friendly as they reduce emissions, but also great for reducing costs as there will be no need to pay for diesel or petrol.
  • Review whether you’re using the right type and sized vehicle for the job you’re carrying out. For example, if your fleet is carrying only a small quantity of products, then a small car would be enough. However, if you’re carrying heavy goods then a van or truck would be a better option.
  • Underinflated tyres can increase fuel consumption by 15%. Ensure your tyres have the right pressure, this will also help decrease fuel consumption.

Fleet maintenance costs

The second largest expenditure that fleet managers incur is maintenance, service and repair. The rate at which you carry out repairs and service of your fleets will affect your cost of ownership or monthly leasing payments if you are renting your vehicles.

Often, this can be a hard area to manage as maintenance work can be unexpected. However, there are is software such as MyService.Expert that can be used to monitor all servicing and repair work with price guarantees, service level agreements and KPIs for suppliers. This will give you full visibility and control over your fleet operation management and reduce fleet downtime by ensuring all vehicles are in their best condition.

There is also a simple way to reduce and manage your maintenance cost, by opting for packages offered by fleet management or leasing companies. These packages include servicing, repair and general wear and tear, allowing you to manage your overall business operations in an efficient way.

Fleet insurance

Over time, your insurance costs could increase due to accident or damage, especially if you haven’t set a minimum drivers standard. It’s highly important to do a risk assessment to analyse your claim history to check what types of accidents are occurring, how often and any common causes.

This will allow you to train your drivers on their weak points and enforce a minimum standard of driving, whether that involves online safety training or in-car training. The less accidents the lower your insurance costs.

When hiring drivers, carry out thorough checks and ensure they don’t have any points on their driving licence. The more points on their licence, the higher the insurance premiums. So, hiring drivers that have a clean driving licence and are safe road users is extremely preferable for both the safety of road users and for reducing costs.

You can use fleet management software such as Tele-Gence to store and analyse all the data for easier analysis and understanding. This is a tracking system that automatically stores data, reduces costs and offers improved safety to drivers by setting geographic alerts based on defined parameters, setting up crash detection alerts to inform a chosen contact, and monitoring dangerous speeding.

Always review your insurance before renewing as you may be able to get better deals with new insurers. Gathering information to show them that you are taking all the necessary steps to increase safety measures and reduce accident rates may also help you negotiate your insurance rate.

Adding new vehicles can also affect your premium rate, so before committing to a vehicle, check whether it would be viable and not increase your current insurance premiums.

Row of parked cars

Fleet tax

Apart from road tax and vehicle tax, fleet companies need to pay Benefit in Kind, National Insurance and costs related to how much CO2 emissions the car produces. These taxes are:

  • Class 1A National Insurance: this is worked out as the car’s P11D price, combined with the relevant CO2 emissions band.
  • Vehicle Excise Duty: all UK vehicles must pay this tax. This is linked to how much emissions a car produces.
  • Benefit in Kind: this only applies to fleet operators that also personally use the company vehicles. However, fleet operators that do not use the vehicles for personal use, will not have to pay any BiK tax.

The good news is that fleet operators are able to reclaim 100% of the VAT if their vehicles are solely used for business purposes. Lease costs are also 100% deductible unless CO2 rating is over the LRR household, in which case only 85% is deductible.

An easier way to reduce taxation cost is through EV vehicles, due to them not producing CO2 emissions, you won’t have to pay National Insurance or Benefit in Kind.

Fleet licence and permits

Fleet operators that carry goods on a van or truck with a gross weight of over 3,500 kilograms or unladen weight of more than 1,525 kilograms, need a Goods Vehicle Operator’s Licence.

Taxi fleets also need to have licences depending on the number of vehicles they operate. There are two types of Taxi Operator Licence (TOL):

  • Small operator TOL: only two vehicles can be operated at any one time.
  • Large operator TOL: there are no restrictions on the number of taxis that can be operated at any one time.

How can Fuel Card Services help?

At Fuel Card Services, we specialise in fleet maintenance and have developed a full suite of tools that you can use to become more cost-effective in your operations. Every good fleet management operation requires a desire to both protect drivers and profits, the right people in place, and the right technology to make an efficient operation possible.

To see how we can support you with the right technology, including advanced telematics, view our range of fleet services today, and get in touch with one of our friendly experts for a tailored quote.

Salesman handing keys to driver in vehicle

Make the most of rental vehicles

Businesses might choose to lease their vehicles rather than purchasing them as it can have many financial benefits. How can businesses ensure they are doing their best to save money under this arrangement?

What are the benefits of renting vehicles?

For some businesses, the financial benefits of a rental vehicle can seem attractive. Businesses will obviously have to pay less upfront, making leasing a promising prospect for small businesses who may not have the money to splash out on an entire fleet.

With a full service lease, the expenses of having these vehicles become very predictable. Hefty maintenance and insurance fees won’t catch fleet managers out, as these costs are included in the plan.

The final monetary benefit of leasing is that businesses don’t need to be concerned about depreciation.

Understanding the contract

Despite the many financial benefits of vehicle leasing, it is vital that fleet managers understand how to make the most out of this arrangement.

When you agree to rent a vehicle from a provider, you are entering into a contract. It is paramount that you understand the ins and outs of the contract so you don’t come across any unexpected costs.

Will you be charged for delivery and collection? How many miles are you permitted to drive? What would the implications be if the vehicle was damaged or stolen?

Not knowing the answers to these questions could be seriously detrimental in the future. Additionally, make sure your drivers know the terms of the contract too, so everyone involved can be held accountable.

You also need to understand what condition the vehicle should be in when it is returned to the supplier. You can assume it must be cleaned properly before it goes back, but different suppliers may have differing rules regarding things such as fuel and fluid levels.

Set an end date

On that note, it’s hugely beneficial to agree a date on which the vehicle will be returned to the provider. Leaving it open ended can mean that your drivers will keep the vehicle far longer than necessary, and your business will be charged for this. Since business owners might not even see the vehicle, this extra layer of security is important.

If your driver keeps the vehicle longer than the contract allows, your business will be charged for this, but you can be certain it was the driver at fault. If you leave the contract open ended, you can’t extract compensation from the driver on the grounds that they kept the vehicle for longer than necessary, as no such time was determined in the first place.

Plan ahead

Booking last minute tends to be more expensive. Getting a rental vehicle organised in advance further exaggerates the financial benefits of leasing.

Additionally, you might find that you can’t find the right vehicle if you leave it too late! The global shortage of parts such as valuable semi-conductors means that vehicle production across the globe has slowed. As a result, you might find that suppliers of rental vehicles don’t have a surplus of cars or vans.

This is especially important if you know your drivers will be going through a low emissions zone such as the one in London. You’ll need to get your hands on an electric vehicle if you don’t want to be hit with extra charges. Since electric vehicles are set to be an increasingly popular choice over the next decade, you can expect competition when it comes to renting one. Get it booked in before your competitors do!

Salesperson handing over keys

Could a rental fleet replace your grey fleet?

Many businesses choose to run a grey fleet as a way of saving money. Much like leasing, they negate the need to purchase new vehicles, so can it work out cheaper in the long run.

However, grey fleets do cause some legal complications. Your drivers need to have the correct insurance, and they can claim money for having to use their own vehicles.

If you run a fleet of rental vehicles, however, you don’t need to worry about any of this! All legal considerations will be covered in the contract with the vehicle supplier. You’d be getting financial benefits of not having to purchase business vehicles, whilst maintaining a level of security and confidence.

How can Fuel Card Services help?

So you’re running a fleet of leased vehicles, and you’re saving money as a result – but could you go further?
Consider supplying your drivers with a branded fuel card. You could save up to 10p per litre on fuel costs, and also reducing your admin time with HMRC approved invoices.

Much like renting fleet vehicles, a fuel card can keep your long term costs low, meaning you have more to spend on the development and expansion of your business.

Get in touch today, and see what Fuel Card Services could do for you!

Electric charger plugged into white car

Can you use a fuel card to charge electric vehicles?

The UK’s transition towards zero emissions means that businesses are going to be turning to electric vehicles to fuel their operations. Why, then, should a fleet manager stick to using a fuel card if electric vehicles are the future of transport?

Of course, EV infrastructure is a completely different landscape to what many fleet managers will be used to. You might even ask “how am I supposed to pay to charge my vehicles?”

It’s a valid question. Fleet managers have been paying for fuel in a number of ways for years. Fuel cards are a popular option, or having employees pay for fuel and claim back expenses later is also common.

However, with the inevitable adoption of EVs on the horizon, fleet managers might worry that these payment methods will no longer be viable.

Why are old payment methods less compatible with EVs?

Your fleet may have operated under a system where your drivers paid for fuel with their own money, then claimed that money back via expense forms.

When it comes to charging an EV, however, this may not be as effective.

In 2021, electric vehicle batteries still have a long way to go. Huge advancements have been made in charging technology, but many EVs will struggle to get 200 miles out of a full charge. This means that drivers are likely to charge their vehicles more often than they were fuelling their combustion engine vehicles.

When it comes to filling out expense reports and claiming back mileage, this is not ideal. Admin time could be doubled with all these extra reports to fill out.

It gets even more complicated when you factor in the different charging apps. Until recently, finding an electric vehicle charging point that accepted contactless card payments wasn’t as easy as you’d expect. Instead, different charging points used different apps to process payments.

Whilst contactless is now more common on the EV charging network, your drivers may still encounter a charging point that requires one of these apps. This is just another complication in the purchasing and expense claiming process.

Should you still use a fuel card once you adopt electric vehicles?

In short, yes. The way that we fuel our vehicles may be changing, but paying for it is just as easy.

One of the main benefits of using a fuel card is that they can give your drivers access to a large range of chargers. You won’t need to worry about having the correct app installed.

Each of your drivers can be given their own individual fuel card, meaning their payments can be tracked and linked to their vehicle.

A single, consolidated HMRC approved invoice will be provided to you. This means that there is no need to keep track of receipts, and your admin time will be massively reduced.

Many fuel card offerings also give drivers the option to pay for regular fuel as well. This means you don’t have to take the huge leap of transitioning to an electric fleet overnight. You can start by introducing a few electric vehicles to your fleet and slowly phase out your ICE vehicles. After all, you won’t be able to buy any new combustion engine vehicles after the 2030 ban, so it’s worth preparing yourself for this change now.

As of April 2021, only 6% of businesses were using a fuel card to charge their electric vehicle. That’s 94% of businesses missing out on the huge benefits they offer. Say you’ve already made the transition to EVs, why not get even further ahead of the competition?

How can Fuel Card Services help?

Our most recent addition to our line-up of branded fuel cards is the Shell Electric Vehicle Fuel Card.

With this card, you’ll get access to over 7,500 charging points in the UK. 900 of these points are also rapid charging.

The Shell EV Card can also be used at Shell Recharge sites. Shell Recharge is Shell’s network of rapid EV chargers. They use 100% renewable energy and can provide most vehicles with 0-80% charge in just half an hour.

Of course, this card can also be used to pay for petrol and diesel, if you are operating a mixed fleet.

The change to electric vehicles doesn’t have to be an expensive venture for your business. Get in touch with our expert team today and see how we could help save you time and money.

hybrid or electric cars for commercial fleets

Electric or hybrid cars for commercial fleets?

The cost of new vehicles is always a huge factor for fleet managers to consider. It can require capital investments worth thousands of pounds, which can have a serious impact on a business’ cash flow in the short term.

This decision isn’t one that can be ignored or put off, either. The government announced that the sale of new petrol and diesel cars will be banned from 2030 – so savvy commercial fleets are now looking to explore the world of electric and semi-electric vehicles. To help make this decision, we’re sharing our insights that should help cover all bases when choosing which types of vehicles to buy or lease.

One popular question we see fleet managers ask themselves is whether to choose between electric or hybrid cars, so this article will help to identify the types of hybrid and electric car, shine a light on the pros and cons of these different models, and provide some insight around how best to make that crucial decision.

Types of hybrid and electric car

While the first hybrid car (the Prius in 1997) looked completely different to anything else on the roads, this isn’t the case anymore. In fact, unlike their fully electric counterparts, you may not even realise you’re looking at a hybrid when you see one.

Hybrid vehicles bridge the gap between traditional vehicles that are powered by petrol or diesel and those that are completely powered by electric energy by combining a typical engine with a battery-powered electric motor.

As operators look to incorporate electric vehicle models into their fleets, it’s important to understand the range of options available in market. These include:

1. Parallel hybrids

This is the most common type, with an example being the Toyota Prius. It can be powered solely by the engine; solely by the motor; or using both together. Electricity is produced and stored when the brakes are applied.

2. Range extender

Like the BMW i3, the engine in these cars never drives the vehicle and is instead used to produce energy to recharge the batteries.

3. Plug-in hybrids

These cars can be charged while they are being driven, or by being plugged in at a designated charging point. The Mitsubishi Outlander is a good example.

You might also hear the terms ‘strong’ or ‘mild’, which simply refers to the amount of battery power available – strong hybrids can drive further than mild ones.

4. Fully electric cars

Full-electric cars require charging at compatible charging points every time they run flat, but have surprisingly low running costs once these have been established. An example is the SEAT Mii electric.

rear of white hybrid car

The key factors to consider

When choosing between electric and hybrid vehicles, consider the following.

Initial purchase cost

The initial purchase cost of any new vehicle is likely to be the most significant cost a business will incur during the vehicle’s lifespan. As of 2021, the average cost of a full-electric car is around £44,000, which of all car types is likely to be the most expensive option in the market.

Hybrid cars are typically around £4,000 more expensive than their cheaper petrol equivalents, and still undercut fully electric vehicles by up to around £10,000 when comparing models like-for-like – making them the middle-market option in terms of listing price.

It’s also important to consider the cost of charging points your fleet is likely to be facing. Different EVs require different types of charging stations, and a single charging point could cost up to £1500 – so nailing down charger compatibility is an important part of the buying process.

Running costs

Once you’ve purchased your electric or hybrid vehicle and established your charging requirements, it’s time to think about running costs.

The cost of fuel is considerably more expensive than the cost of electricity when considered like-for-like. One mile of unleaded for a typical UK hatchback could cost a driver around 18p, whereas an equivalent cost for a similar size of fully electric vehicle is likely to be around 0.025p.

For an SME running a fleet of taxis, this significant cost saving could really rack up with the kind of mileage drivers are likely to be covering, which could exceed 30,000 miles per year. Hybrid vehicles are able to enjoy some of the cost-saving benefits associated with using electricity over fuel, coming in at around 30% cheaper per mile than fuel powered vehicles, but this can vary depending on the type of hybrid your fleet utilises.

One additional point to consider in terms of daily running costs is charging point availability. If your electric vehicles aren’t getting access to an adequate network of charging stations while on long haul journeys, then it could increase the total duration of each trip and drive your overheads upward.

Just because you have an electric vehicle doesn’t mean you can’t continue to make great savings with a fuel card though. With the Shell Electric Vehicle Fuel Card, you can save 2p per kWh, and access over 7,500 nationwide charge points. You can even use it to pay for regular fuel, making the transition from fuel to electric even easier!

Environmental impact

There’s no doubt that electric vehicles are the most environmentally friendly option for commercial fleets in the UK, but hybrid vehicles do also go a long way to reducing driver’s fuel emissions.

From an ethical standpoint, having a fully electric fleet could position your business as eco-conscious to customers and prospective employees alike. If this shift is in fact inevitable, with the gradual phasing out of fuel-based vehicles rolling out, then it may be worth considering making the shift to a fully electric fleet sooner rather than later.

It’s also worth considering whether being more environmentally friendly could actually be cheaper for your fleet. There’s a good chance the UK government will introduce a carbon tax within the next twenty years, and that could see the cost per mile of running a hybrid vehicle increase. So, creating projections for the future that can factor into your business’ cash flow forecast may also help you decide between which electric vehicle models to acquire.

Range anxiety

The opinions of your drivers could also be a factor worth taking into consideration. Range anxiety, for example, could prove to be an issue for some. With fully electric vehicle technology still feeling alien to some, hybrid alternatives could potentially give drivers reassurance, and confidence in their routes.

What’s clear is that the adoption of hybrid and electric vehicles is on the radar of virtually every major fleet operator in the UK. According to Arval figures, 25 percent of UK fleets have already begun adopting hybrid cars, so now is a better time than ever to start asking these questions and learning more about the market.

How can Fuel Card Services help?

At Fuel Card Services, we specialise in helping businesses save money on their fuel costs. Electric technology may not be a fully viable option for all, and businesses can be making real cost savings today. With a fuel card from our range of branded cards, you could be making a real impact to your bottom line for every mile driven by your team. For businesses who have made the transition to EVs, we recommend the Shell EV Fuel Card to keep your charging costs down.

Additionally, it’s important that you’re able to properly track your driver’s routes, and plan routes efficiently. Our Tele-Gence technology can be used to empower your drivers with this information. Live traffic updates can notify them of long traffic queues, enabling them to steer clear, and you’ll be given updates on their driving habits to understand whether they’re burning unnecessary fuel.

Tele-Gence also syncs seamlessly with your fuel card account, making them the perfect pairing for keeping your fuel costs and consumption as low as possible. Get in touch today and see how we could help you.

Birds eye view of toll road booth

Why do drivers use tolls roads in the UK?

Drivers on UK roads are likely to have encountered a toll road at some point. In fact, there are 23 toll roads in the UK, and 18 of those are river crossing. This means that they are often unavoidable.

But why do we have toll roads in the first place, and why do drivers sometimes opt to use them despite the charges?

What is a toll road?

A toll road is a stretch of road that requires drivers to pay a fee for driving on it. The charge per use can vary from 40p to £6 depending on which toll road you are using, what vehicle you are driving and the time of day.

You will encounter toll roads across the UK, but Scotland abolished their toll roads in 2008, so Scottish drivers need not worry about having to pay to drive on their own roads.

To pay a toll, vehicles have to come to a stop at toll booths, or “plazas”. At the booth, drivers are able to pay the charge. They can use debit or credit card – often with contactless payment available. Mobile options such as Apple Pay are being accepted at more UK tolls nowadays, but not all.

Many toll roads are no longer accepting cash as payment, so drivers must ensure they have an accepted payment method ready before starting their journey.

In fact, holders of Shell fuel cards can now use their card to pay the M6 toll, which is one of the busiest, most used toll roads in the UK.

Benefits of toll roads

Given that most UK roads are free to use, you might be asking yourself why anyone would be inclined to use a road that requires a payment.

However, toll roads do have certain benefits that, for some, makes paying a fee worthwhile.

In theory, using toll roads will save time. This is great for businesses needing to deliver goods across the country in a hurry. It also means vehicles spend less time burning fuel. It could work out that paying for the toll is cheaper overall than continuously driving on another route and burning a few pounds worth of fuel.

When the M6 toll was in it’s infancy, it was estimated that drivers would save 45 minutes driving near Birmingham if they used the road. However, the amount of time saved is closer to 25 minutes when compared with the non-toll road. The original M6 is well known for build ups of traffic and long delays, however, so you can see why a business might want their vehicles using the toll.

Birds eye view of traffic at toll booth

The money from the tolls is used to maintain the rods themselves. This tends to mean that toll roads are very well maintained and smooth to drive on. Compared to a back road that may be covered in potholes that could damage your vehicle and its cargo, this makes a toll road seem like a desirable option.

Can UK toll roads be avoided?

For drivers who are adamant that they don’t want to pay the toll, there are often alternatives. The obvious example of this is the M6 toll, which can be avoided by continuing on the M6 when travelling through Birmingham.

However, the Mersey tunnel tolls near Liverpool are considered to be fairly unavoidable. Other tolls such as the Tyne tunnel are avoidable, but require fairly time consuming details.

As there is no set rule as to whether a toll road can be avoided, it is vital the you plan your routes beforehand. This is especially true if you are sending one of your drivers on a new, unfamiliar route.

Your satnav will probably direct you to a toll road as it is usually the fastest option. If you want to avoid them, make sure you adjust the settings on your satnav. Otherwise, you might find yourself approaching a toll road with no viable alternative.

Don’t let toll roads drain your finances

Sometimes, you can’t avoid going through a toll. For businesses, it might be the difference between getting a delivery to it’s destination on time.

However, this doesn’t mean you need to just sit and watch the money draining from your account. There are things fleet managers can do to negate the toll costs!

We mentioned a fuel card earlier, but they do a lot more than help drivers pay for toll roads! With the right fuel card, you can save up to 10p per litre on fuel. Consolidated HMRC approved invoices also mean you can save a great deal of time on admin too!

You can also improved MPG by 20% with a tracking system such as TeleGence! Consistent reporting and real-time tracking mean you can help to improve the way your drivers control your vehicles. Say goodbye to aggressive steering and braking!

Get in touch with Fuel Card Services today and see how we can help to save those precious pennies for your business!