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How fleet owners can easily offset impact of higher VAT rate by harnessing strategic alliances, big data and analytics

How fleet owners can easily offset impact of higher VAT rate by harnessing strategic alliances, big data and analytics

Efficient and innovative fleet management can save businesses the costs of the recent VAT and fuel levy increases.

Executive Head for Standard Bank Fleet Management, Derick de Vries, says the increase in VAT to 15% from 14% is seen as a high cost to bear – but this can be comfortably offset via a comprehensive managed plan which harnesses predictive data.

“Fleet owners are facing a multitude of additional costs and also hidden costs they are not even aware of. The solution lies in harnessing the existing data they possess to dramatically save costs and enhance business efficiencies,” he says.

For instance, Standard Bank Vehicle and Asset Finance (VAF) research into a fleet company with 50 vehicles, shows that they have saved R14 006 in April as a result of Standard Bank analyzing their existing fuel spend patterns and converting them to one of their suitable fuel alliances where the customer is now saving R0.53 a litre on Diesel.

“By managing the way it consumes diesel through one of Standard Bank’s Alliance partners, the R0.53 saving per litre trumps the R0.52 increase in the fuel and RAF levies during April. The overall saving of R14,006 far outweighs the R62 more someone with 50 vehicles in this example would pay in fees after the VAT increase,” says De Vries.

More impressive savings are possible when a more comprehensive managed plan in switched on. For instance, Standard Bank researched the impact of its managed maintenance offering for a large fleet of over 3,000 vehicles before and after VAT increases and compared this with someone who did not have this solution in place.

“We noted savings of R1.084 million over a three-month period (Jan – Mar) for this client as a result of properly managing their maintenance says De Vries.

Businesses are operating in an increasingly complex environment and need to improve their understanding of the trends shaping the industry to stay a step ahead – or get left behind.

“The currency plays an important role, as 70-80% of vehicle parts get imported. Managing this part of the business is therefore essential. But an over-arching will look at the currency as just one component – it drills down to minutiae like the costs of brake pads and fuel per litre,” says De Vries.

Standard Bank VAF research shows that the saving as a result of utilizing managed maintenance is significantly more than what the customer pays in fees, before and after the VAT increase. It is also significantly more than the increased amount of VAT the customer would have paid for the actual service or repair due to the increase from 14% to 15%.

Pricing and timing are crucial to the longevity of a fleet business – and switching to a reliable product that assist in predicting key trends will help companies go the distance – no matter the market conditions.

But De Vries says most businesses are not yet realizing the full potential in the “goldmine” of data they are sitting on.

“Data analytics provides insights into an entire fleet and then granular detail on product prices which can be way too high and need to be managed,” says De Vries.

The move to adopting fleet cards is another way to reduce fraud – a major bugbear for fleet owners. Standard Bank has pioneered advances in the authorization of fleet card transactions and currently services over 50% of the fleet card market.

“We have found that most fraud comes from driver abuse, but properly managing this with fleet cards totally changes the picture. We have, for instance, declined over R440m in transactions during 2017 as potentially fraudulent on our cards, which is a direct saving for companies that were getting ripped off,” says De Vries.

According to De Vries, the vehicle sector is at a critical juncture, raising the bar for companies to understand and manage the trends taking shape.

“Some green shoots for economic growth are sprouting – but it is not enough to drive growth forward in the fleet industry. Fleet companies will have to find other ways to expand. One of the best levers right now is to rescue as many costs as possible. Harnessing the tools and innovations based on big data is the best way to go,” he says.

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