Last year according to Companies House, there was record 660,000 new start-up businesses formed, up from 608,000 in 2015. A total of two million new Small Medium-sized Business (SMB) UK firms have been established since 2000 and UK business failures are also falling – roughly 15,000 each year close their doors. SMB numbers and growth is such that Centre for Economic & Business Research (CEBR) estimates that by 2020, 27% of total business contribution to the UK’s GDP will come from the UK’s small and micro business employing less than 50 people each.
What’s interesting about these numbers is the increasing percentage of SMB employees who do not have company cars but use their own vehicle to do their work. Many will get a cash allowance from their employer to buy their own car for work. Others simply use their existing private car.
A grey fleet vehicle is defined as one owned and driven by an employee for business purposes. The employee is reimbursed on a ‘pence per mile’ basis for using their vehicle on business journeys. Grey fleet mileage numbers, although difficult to state with great accuracy because of the lack of effective measurement of grey fleet car usage for business purposes, are also rising fast.
The British Vehicle Rental and Leasing Association (BVRLA) estimates that 11bn miles per year are clocked by grey fleet vehicles in the private sector alone – all at a cost £5bn each year. By some estimates, nearly 20% of all vehicles being driven for work are now in grey fleets. Lex Autolease 2015 numbers estimated 14m private cars were being used for doing business in the UK. The BVRLA is nervous about the rise of the grey fleet for several reasons:
- Costs of running grey fleets are high and are not accurately collected. Failure to cost them adequately tends to mean that employers don’t look at ways to reduce the mileage of its workforce with as much vigour as it might if it had full visibility of the numbers and were paying all the bills.
- Grey fleet vehicles’ environmental impacts tend to be higher for lots of reasons, most significant of which is the grey fleet vehicles are older than normal company cars (8.2 years as against 7.9 years for corporate fleet cars); they tend to have higher emissions and fewer safety features giving them lower Euro NCAP ratings.
- They expose the company to higher legal risks, again for lots of reasons including higher likelihood of using a vehicle that is inappropriate for the use it is being employed for; the fact that less vehicle maintenance checks are being done meaning that grey fleet drivers are more likely to be driving a car whose MOT or insurance has expired. Fewer driver checks add up to additional risk also as there are more drivers on undeclared points or even banned than in well-managed fleets.
There are structured solutions for employers to reduce grey fleet risks which the BVRLA quotes in their Report ‘Getting to Grips with Grey Fleet’. Some solutions include Mileage Management Systems, Lease Vehicles, Daily Rental and Car Clubs. However, what the report doesn’t really address is the fact that many employers running smaller business and grey fleets are doing so because they don’t have the financial or organisational wherewithal to put these sorts of systems in place and then run them month in, month out.
For these sorts of businesses, running anywhere from a few vans to several hundred lorries, there are new, modern cloud-based solutions emerging which can enable ‘light touch’, yet highly effective management of grey fleets and their drivers on the move as well as in the office. With this modern, mobile- ready software approach it should be possible to stimulate and provide auditable reporting of vehicle and driver checks for grey fleets.
Telematics can be integrated easily to pick up actual miles being done while ‘on the clock’ for the company, potentially eliminating one of the biggest costs for grey fleet operators: workers over-stating the miles they’ve completed to do their job. This sort of visibility can also help reduce insurance costs for vehicle owners.
The fleet management platform approach can also provide a central dashboard to work out which driver is in which type of vehicle, providing Management Information to assist a small business in working out whether it’s worth investing in a small pool of different sized company-owned vehicles for sharing amongst all drivers – thereby meeting pre-identified business needs. Those vehicles could perhaps even be booked out via this same platform.
Previously this sort of intelligence was only available to large fleet owners and managers paying thousands of pounds per year on software licenses for highly-functional but also highly complex fleet management software suites. This is changing now that modern, open API-driven software offerings, hosted in the cloud, are reaching the SME market.
ODO, a new software provider sitting within an established one – Drive Software Solutions – is part of this revolution in fleet management software. It means that small businesses can now understand and mitigate against any rising risks and costs that otherwise naturally come with the ‘greying’ of their fleets.