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It’s time to get pragmatic over fuel choices, CLM tells fleet managers

It’s time to get pragmatic over fuel choices, CLM tells fleet managers

Conflicting messages about the future of diesel and contradictory advice on how and when to introduce alternative fuel vehicles was not helping companies make sensible decisions about their fleets, according to John Lawrence, managing director at CLM Fleet Management.

“We’re seeing many organisations that are struggling to get to grips with the everyday practicalities of running their fleet in the midst of the debate over fuels. When you’re trying to make sensible decisions about managing costs, keeping the business mobile and helping drivers to reduce their tax burden, it’s not helpful to have so much noise,” he said.

CLM, which manages more than 15,000 vehicles in the UK, says it has been working closely with its clients in an attempt to filter out some of “this noise” and ensure a clear focus on the fundamentals. That, said the company, included an emphasis on whole life costs and ensuring that the right vehicles were selected for the right roles and journey patterns.

Mr Lawrence said: “Whole life costs remain the key measure for any fleet and optimising this means taking a flexible approach to vehicle and fuel selection. Leasing companies are currently taking very different residual value positions depending on manufacturer, model and particularly fuel type.

“From a vehicle acquisition perspective, this means that if fleet managers are not shopping around for the best deal on each individual vehicle they’re likely to be paying too much. Offerings like our own Smartpanel funding solution mean they’ll at least have the flexibility to pick the leasing company with the best price for the vehicle in question.

“But running costs also vary across the fuel types, so it’s a matter of getting the calculations right based on mileage and how long fleets intend to run a vehicle. It’s for this reason that we would never advise a client to, for example, switch away from diesels completely because for many situations these remain the most cost-effective choice.’

Mr Lawrence believes such a pragmatic approach also worked from a mobility perspective, explaining: “If the nature of a business demands a large number of short, urban journeys, then plug-in hybrids or even pure electric vehicles can be the perfect choice.

“But if covering longer distances, and don’t have the opportunity for charging, then electric vehicles simply aren’t an option and plug-in hybrids become conventional vehicles carrying several hundred kilos of battery packs and electric motors.

“By working closely with a fleet management partner, fleet managers should be able to assess journey patterns and crunch the numbers to determine the optimal vehicle mix for the business. We’re not pretending this is rocket science but it’s surprising how many organisations are being poorly advised.”

The current company car benefit-in-kind tax environment was also leading to conflicts of interests over fuel-type selection that needed to be carefully managed, said CLM.

Focusing on a driver selecting a plug-in hybrid in an attempt to minimise their benefit-in-kind tax liabilities, Mr Lawrence said: “There is the higher P11D value to consider. Then you have to look at whether the driver is realistically able to optimise use of the vehicle by maximising the mileage covered in electric only mode. This would mean ideally being able to charge the car both at home and at the workplace.

“If this isn’t possible then fuel consumption is likely to be far higher than an equivalent diesel. Where this is the case, fleet managers need to seriously consider whether such drivers should be allowed to choose this type of vehicle.”

Mr Lawrence concluded:  “There are a lot of changes in our industry at the moment, but this doesn’t have to lead to panic or rash decision-making. By sticking to the basics of good fleet management it means we can take advantage of the opportunities provided by new technologies and avoid the potential pitfalls.

“If people are concerned, there’s a lot of good information and advice out there amongst the commotion and they shouldn’t be afraid to ask for help in seeking it out.”