How outsourcing your fleet during economic challenges could save your business’ cash flow and mitigate risk.
According to the latest figures from the Southern African Vehicle Rental and Leasing Association (SAVRALA), the South African fleet industry is still showing single-digit growth of between one and four per cent – despite the current economic downturn. At the base of this forward momentum, is an outsourced fleet management industry that is not only saving costs for fleets across the country, but mitigating risk amid a challenging operating environment.
“The Rand’s depreciation against major currencies has had a negative impact on the import of vehicles and parts into South Africa,” explains Mkhuseli Setuse, Executive of Bidvest Bank’s Fleet Finance and Management Division. “Whilst these challenges persist, we believe the future remains positive. Cost efficiencies for any business should be a priority and partnering with a Fleet Management business that has the necessary expertise to assist in achieving these cost efficiencies makes a huge difference.”
Currently corporates, investors and business owners are holding onto their cash, rather than reinvesting in assets. The approach is the same when it comes to their fleets – which results in extending the periods in which they drive their vehicles.
But, as Setuse explains, while this may seem like a cost saving initiative in the short-term, in the long-term, prolonged use of any business asset, especially vehicles, has a knock-on effect on maintenance and service related costs. This often results in increased major component failures as fleets depreciate. Specialised Fleet Management businesses, like Bidvest Bank’s Fleet Division, manage fleets to ensure that their business customers’ objectives are met in the most optimal and efficient manner.
“Our experience allows us to make recommendations to customers on procurement, tyre spend, maintenance, service-related costs and, through driver behaviour, fuel-spend,” he says. “We are also able to mitigate risk by advising customers on how to modify user and driver behaviour.”
A good example of this, he adds, is achieving a reduction in costly and premature tyre replacements simply by managing the tyre pressure in heavy commercial fleets. Tyre Pressure Management Programmes for some Bidvest Bank customers have demonstrated a 30 per cent increase in tyre life cycles, and a 60 per cent reduction in spend. In addition, outsourcing their fleet management programme has saved one Bidvest Bank customer close to R20 million over a five-year period. This was done by ensuring the selection of their fleet was fit-for-use, managing abuse-related costs and implementing driver training as well as optimising the fleet’s replacement cycles.
“Most businesses that require large fleets are not specialists in running fleets. Outsourcing to fleet management specialists translates to a reduction in all fleet-related costs, including management staff. As customers demand more transparency when it comes to fleet- and driver-related costs; outsourcing a business’ fleet management function can drive various cost-saving and risk-mitigation initiatives,” Setuse concludes.