The future of company car fleets

06 December, 2019

The electric vehicle driving revolution has been quietly building with the hum of electric engines on our roads. These hushed tones herald a major change for fleets. And Electric Vehicles (EVs) aren’t the only change on the horizon, as we explore in this article on the future of fleet.

 

Company fleet trends

Research based on interviews with 1,000 fleet and mobility decision makers reveals that the majority of firms plan to retain or increase numbers of essential and perk car users:

  • 66% of businesses intend to keep essential car user numbers the same
  • 18% forecast an increase
  • 57% of firms forecast the same number of perk car users
  • 18% plan to increase perk car numbers

As a fleet manager, this likely means you won’t be putting your feet up any time soon. Especially with changes in the makeup of fleets: Deloitte reports that UK leasing companies are seeing double and even triple digit growth in orders of EVs. Their calculations show that by moving to electric vehicles:

  • an employee could save 95% or more over a four-year lease by choosing an EV instead of a diesel of comparative value as their next company car
  • a company operating a large fleet (900 or more vehicles) could benefit from savings in excess of £1.9 million each year by changing their fleet profile to electric

These are outstanding business benefits that will transform the fleet manager role from controlling cost to driving cost savings. But doing so relies on a smooth transition - something we look at towards the end of this article. And there are other changes that could impact fleet management that need to be considered too.

 

Demographic driving differences

Department for Transport data reveals a drop of almost 40% in driving registrations among 17 to 20 year olds with younger people delaying their test until their twenties. Read the headlines around this story and you’d think cars were coming to the end of the road as the UK’s preferred method of transport.

However, the overall number of drivers on UK roads has increased to 32.9 million, an all-time high. And, given younger people’s financial challenges, this delay in driving is probably less about moving away from cars and more to do with money.

What does this mean for businesses that employ young people in roles that require a driving licence? It could mean adding driving lessons to company employee benefit packages. And providing young people with a cost-effective way to get behind the wheel of a brand new car once they’ve passed.



Changes in tax

The biggest change driving the way fleets operate are the new Benefit-In-Kind rates with significant savings on electric cars and those emitting less than 50g/km CO2. However, as fuel switches from petrol and diesel to electric, the government’s returns from fuel duty will diminish. Which could mean road fund rates increase to make up the shortfall.

However, alternative methods, like congestion zone and clean air zone charges, are already beginning to creep in. Again, these fees can be avoided with the right fleet makeup. All of this points to the adoption of ULEVs as the next major transition for fleets. So what are the practical next steps to follow?

 

Choosing the right EVs

Introducing electric vehicles to your car fleet requires careful consideration. Will you restrict employee choice to pure electric cars only? Or will you give drivers the option to get behind the wheel of a hybrid? And what about petrol or diesel?

At Tusker, we’ve helped many of our customers introduce EVs to their fleets via our contract hire and salary sacrifice products. Before deciding on company policy, we advise our clients to ensure they’re completely clear how their fleet vehicles are used.

Research by What Car? identified that just 17.3% of people are better off in a petrol or diesel model with the vast majority of people able to drive a hybrid or electric model without changes to their routines.

Understanding which cars would work best for your drivers will help you determine the right kinds of cars for your fleet. You can do this by asking your employees to share:

  • the typical length of their daily commute and other journeys
  • how often they use their vehicles to travel longer distances
  • how long those distances are
  • where drivers leave their cars and for how long

By assessing this data on a car-by-car basis and gaining a good understanding of ULEV capabilities, you’ll be able to identify opportunities to introduce EVs that work for your employees and your organisation.

Talk to Tusker, the fleet solution experts, to find out more.

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Tuskerdirect Limited is an appointed representative of Howden UK Group Limited (FRN 309639) for insurance mediation activities and Product Partnerships Limited (FRN 626349) for consumer credit activities, which companies are authorised and regulated by the Financial Conduct Authority.


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