Is running a grey fleet a viable option for business? Wagga Wagga Council thinks so.
About three years ago the council introduced a policy to offer employees entitled to council-owned vehicles the option of a car allowance to purchase their own vehicle. The allowance is $12,600 a year and was taken up by more than a quarter of the 48 council staff it was offered to.
The attraction for drivers that accepted the offer was that it allowed them to choose a vehicle outside those models selected for the council fleet. The benefit to the council is that it reduced financing costs.
“Council wanted to reduce costs in relation to vehicles; to reduce the costs of capital,” said Mark Hewson, procurement manager at the southern NSW border town, adding, “And we made the savings.”
The new policy meant that the council was now running a grey fleet and it set out a comprehensive policy to ensure that associated vehicles and drivers met a number of conditions.
“There are a couple of restrictions. It must be registered in the employee’s name and it can’t be older than five years,” said Hewson.
As it is used for council work, the vehicle is a no-smoking zone in line with workplace health and safety legislation. Drivers need to submit their registration and insurance details, maintain the vehicle to certain standards, and of course, notify it of any license suspension.
Typically, though, a grey fleet isn’t viewed through the lens of cost savings.
“We haven’t got that level of sophistication of thinking yet in the Australian market,” said Mat Prestney, a director of grey fleet consultancy TR Fleet. “However, it could save an organisation money. The biggest reason is that allowing people to use their own cars means the employer doesn’t have the cost of the fleet on their books.”
Costs associated with running a fleet, such as processing kilometre claims and capturing vehicle details and other duty-of-care obligations, need to be considered.
Once an employer has a good handle on their grey fleet, tracking how it’s being used for work can lead to significant savings.
For example, looking at examples from the U.K., where the understanding of how to best manage such a fleet is well advanced, there are savings to be made in setting rules for grey fleet use, such as prioritising use of public transport over employee-owned vehicles where appropriate, or use of video conferencing or Skype instead of face-to-face meetings.
The benefits of managing a grey fleet well are more than cost savings, though. In the U.K., as in Australia, the leading cause of workplace-related death and injury is related to vehicle accidents. So cutting the distances travelled in a grey fleet, surely leads to improved health and safety of an organisation’s workforce.
