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  • Why you should look to reduce your grey fleet

    A grey fleet consists of employee-owned vehicles used for business purposes and then reimbursed on a pence per mile basis. It is thought that there are currently around three times the number of grey fleet cars across the UK as compared to company cars. With grey fleet currently taking over so much of the commercial market it is therefore important to analyse this type of fleet and the impact it has on your business. Unfortunately with this in mind there are many reasons why grey fleet are detrimental to your business and considerations on why you should look to communicate policies on reducing their usage across your business.

    Environmental reasons to reduce your grey fleet

    With the fact that the average grey fleet car versus a newer spec company car generally creates substantially more carbon emissions this is a worrying prospect and something that should be tackled to ensure environmental sustainability as well as social responsibility. If you consider that an employee-owned car is owned for 6-7 years on average and a company car is only owned for 1.5 years you can quickly see how a five year gap with improvements in CO2 emissions can make a difference in terms of the environmental impact.

    The introduction of ESOS

    ESOS Energy Savings Opportunity SchemeStarting in 2015, the Energy Savings Opportunity Scheme requires large enterprises to start undertaking energy audits every 4 years with the first being due in December. This increased spot light on reducing carbon emissions is thought to result in driving a 2% reduction in corporate mileage for company cars and a 1% reduction for vans.

    With ESOS coming into place there will be increased reasons to reduce your fleet emissions and an audit of grey fleet usage is highly likely to identify the benefits of rental and leasing as a viable alternative by use of newer, cleaner vehicles.

    The financial argument

    Reimbursement with Approved Mileage Allowance Payments (AMAP) rates on grey fleet vehicles costs the business significantly, currently at 45 pence per mile for the first 10,000 miles and 25 ppm thereafter. This is obviously much higher than the actual rate of fuel. Particularly for those businesses who have a significant number of grey fleet drivers this can mean a significant cost to your business. The reason for this though is that AMAP has been calculated to cover purchase and running costs such as fuel, maintenance, insurance and depreciation.

    Often ‘pay and reclaim’ systems are also more ‘finger in the air’ calculations on fuel usage with opportunities for false claims or cheating the system, as well as employees deliberately seeking to make more business journeys in order to benefit from the perceived profit. Use of grey fleet therefore is seen as a benefit for employees and the perceived profit that your employees think they gain will work against your efforts to drive down emissions, save money and increase safety.

    Are your grey fleet even insured?

    Reducing your grey fleet usageIn many cases employees and even their managers aren’t fully aware of what type of insurance is required and businesses tend to focus on their fleet insurance for company owned or leased cars, forgetting that their grey fleet also requires insurance. With the insurance of an employee-owned vehicle too often being left to the employee to arrange it is so important to check and educate your grey fleet drivers on what insurance they do need to cover them for business use.

    It is thought that up to 20% of grey fleet drivers across the UK are not correctly insured either due to lack of knowledge on what is required, or by simply thinking it is only one journey and will be ok. Ultimately the employer is still responsible for a ‘duty of care’ to their employees and ensuring that the right cover is in place for them. Businesses can tackle this problem by extending their fleet insurance to include grey fleet drivers, but will need to check with the specialist insurance broker for any restrictions on this. Alternatively they should implement regular checks on both drivers licence and insurance cover.

    Driver safety

    Driving is one of the most dangerous things that people do at work with as many as one of three accidents on the road involving a vehicle driven for work. Reducing the number of work journeys taken in a grey fleet vehicle can mean that the driver is more likely to use either a more up-to-date company car or hire car with increased safety features, such as ABS, airbags and NCAP safety ratings.

    Solutions to reducing your grey fleet usage

    Your business can look to introduce a grey fleet reduction programme, gaining buy-in from key stakeholders with the company. By challenging the mode of transport used for different journeys you can help to reduce the use of grey fleet within your business and all unnecessary journeys should be eliminated. This can be implemented by way of the type of vehicle an employee must use for different mileage journeys. For example, journeys of as much as 80-100 miles are likely to be more cost-efficient and safer by using public transport or a hire vehicle, which will also create fewer carbon emissions due to hire companies offering up-to-date vehicles. These vehicles are also well maintained and suppliers will have covered the motor fleet insurance.

    A company car may be the most cost-efficient option when travelling over 12,000 per year. This option increases control over the fleet as well as reducing fuel emissions and liability. Lease cars could also be offered on a salary sacrifice scheme.

    Low emission pool cars are another good option for those who take less frequent journeys and should be shared across the business, however you need to be aware of still also double checking the drivers licence and ensuring insurance cover.

    With all of this in mind, grey fleet vehicles should ideally only really be used for short journeys and when an alternative rental or pool car is not available. You can also consider bringing in restrictions on vehicles that can be used such as restricting how old a vehicle can be; that it is fully maintained with MOT, tax, insured for business use and perhaps even setting a limit on the carbon emissions.

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