As we move into the latter part of the first quarter of 2026, businesses operating fleets can expect expenses to increase from the procurement stage through to termination, due to various local and international factors.
This is according to Johan van Niekerk, a fleet solutions consultant at FleetDomain. He highlights Fleet Domain’s Fleet Management Information System (FMIS) capabilities to address the challenges and risks of fleet management on a single integrated platform.
“We advise businesses operating fleets to invest time and effort in developing long-term strategies through the implementation of policies that aim to reduce costs on a sustainable platform,” says Van Niekerk.
FleetDomain recommends focusing on the following areas:
Procurement: This must be comprehensive and include consideration of appropriate brands and models for the job in hand, areas of operation, distances to be covered and actual job function. Vehicle specifications such as engine size, gearbox, tyres, and fuel will influence costs. Setting rules in place to manage time and kilometre usage through to replacement date will prevent over ageing of vehicles and being kept past their sell-by date. Old vehicles lead to down time, increased costs and risk, and lower resale prices.
Finance: All funding methods should be studied and tested, ranging from cash, hire purchase, financial lease, operating rental, and full maintenance leases. In-house financial experts need to be tasked with testing all of these options and mapping out the potential impact in a Discounted Cash Flow (DCF) model that reflects the best long-term return on investment (ROI).
Maintenance: Vehicles need to be maintained by manufacturer dealer outlets, ensuring that service/maintenance plans and warranty stipulations are supported. Third-party vendors offering maintenance and service plans can be considered, but the cost implications and their effect on total cost of ownership (TCO) and cents per kilometre (CPK) must be carefully evaluated.
A further option is a third-party service provider who will handle maintenance management, taking on the risk on your behalf as required by time and kilometres of use. The inherent risks of this product include restructures, excess kilometre usage, and early termination penalties.
The use of Managed Maintenance Cards (MMC) as offered by banks is a fair option. Monthly expenses are managed and captured, rendering reports for a nominal admin fee. However, this method does not necessarily yield the lowest-cost option.
Tyres: Passenger, light commercial vehicles (LCVs), and commercial vehicles (CVs) all have different requirements and applications. Each should be understood and catered for.
One example is that low-profile tyres are more expensive than higher ones and are more susceptible to road conditions. The load capacity and regular load weight onto LCVs and CVs, as well as the area of operation, can have a detrimental cost effect if not selected correctly. Tyre size, rating, and pressure are vital to lower tyre costs.
Fuel: Selecting a petrol, diesel or electric/hybrid vehicle is a matter of choice and should be selected based on the best CPK value and TCO. Service intervals and maintenance costs must be evaluated over the lifetime of a vehicle. Considering a hybrid or electric vehicle should be thoroughly investigated and analysed, taking all factors into account. Fuel can be managed by filling up with cash or using fuel cards issued by banks.
GPS/Tracking: GPS/Tracking units fitted to all vehicles are part of the company's safety and risk policies. A GPS/Tracking unit is not a fleet management tool. It is a driver behaviour and vehicle location tool that provides information to help improve driver behaviour, which in turn can result in cost savings. GPS/Tracking devices and supplementary products, such as dash cams, need to be carefully selected based on how well they meet a company’s reporting requirements.
Fines: With the AARTO demerit system of fines back on the map, companies must prepare to manage driver and vehicle fines. It is extremely important to manage fleet drivers’ demerit status. Companies will have to put risk-mitigating policies in place to handle potential licence losses and more. Human Resource (HR) departments should be involved in planning for this.
Insurance: There are various insurance options available in the market. Companies should evaluate all options and select the policy that best fits their operational requirements. Policies regarding accidents and their after-effects involving vehicles, drivers, passengers, third parties, and family members must be put in place.
Jai Kalyan, MD, FleetDomain, highlights the importance of communicating company policies to staff in a manner that ensures both their understanding and their stated acceptance. “Personnel buy-in is essential, which in turn will drive good corporate governance, safety, and risk mitigation for all. Our FMIS provides a holistic solution that covers all areas of fleet management and delivers peace of mind in the knowledge that your fleet is being managed optimally,” he concludes.
© Technews Publishing (Pty) Ltd. | All Rights Reserved.
printer friendly version