Overlay
Sustainability

A quick guide to: improving fleet efficiency systems

With fuel prices increasing and pressure growing to improve efficiencies in all departments, many businesses are looking at ways to reduce the costs and environmental impacts of their existing car and van fleets.

Ways to improve fleet efficiency
  • select lower emission vehicles 
  • install fleet management software 
  • limit ‘grey fleet’ use
  • cap emissions or set CO2 targets 
  • incentivise lower emission cars 
  • ‘right-size’ your fleet 

Replacing your entire fleet with electric or hybrid vehicles can be very costly, and it may take some years to recoup the investment so your transition plans should be carefully considered. Here are some considerations when thinking about how to make a traditionally powered fleet more efficient, while reducing emissions. 

Compare fuel types

The cost difference between running petrol and diesel vehicles is narrowing due to more efficient petrol and hybrid-petrol engines. According to Department for Transport statistics released in December 2021, a new petrol car in 2020 was able to travel 52.6 miles per gallon on average, compared with 56.1 miles per gallon on average for a new diesel car. 

While diesel engines continue to have slightly better fuel consumption and lower CO2 emissions, they emit more harmful soot and nitrogen oxide, according to the Energy Saving Trust’s website. This may affect their profitability in future as major cities and towns implement clean air zones (CAZs), which charge polluting vehicles more to enter certain areas. Older diesel vehicles tend to be the most heavily affected by the new rules, so if a business is running an older fleet there could be cost implications for continuing to do so. As air quality plans are developed and released, companies should review the compliancy of their current vehicles and allow for CAZ charges to running costs and decisions to replace vehicles. More information on this topic can be found on the Energy Saving Trust’s website.

‘Right-size’ your fleet

Smaller cars and vans cost less to buy and are usually cheaper to run. An oversized van will spend much of its life running well below its load capacity, resulting in unnecessarily high fuel costs and emissions. Vehicles should be suited to their tasks in terms of physical size, engine capacity and payloads, advises the Energy Saving Trust. In research carried out in 2019 for the Department for Transport (DfT), it added that “typically, each step up in van size within a range increases fuel consumption by 20% to 30%”. However, loading a van to its maximum capacity only increases fuel consumption by 9% to 10%, according to the EST.  

“Carbon emissions and fuel use increase significantly with van size and it is more efficient to have a fully loaded smaller van than a half-empty large one,” according to DfT guidance on running zero-emission local authority fleets, issued in April 2022.

Other savings, such as lower vehicle taxes and insurance, may be achieved by right-sizing a fleet. And it’s also worth considering renting vehicles when needed or running pool vehicles.

Setting CO2 targets allows the responsibility for fleet improvements to be shared across teams or entire departments

Install fleet management software

Fleet management software like telematics systems help businesses obtain optimum efficiencies by providing real-time information about a fleet’s performance. Information can be imported automatically or fed in by employees via mobile apps. Using the data, a central office can manage the entire fleet and adjust schedules accordingly. Information can also be imported from external sources like financial institutions and the DVLA, and internal ones such as HR and finance departments. 

Fleet management software can also be used for route planning, driver management and vehicle cost analysis. “Fleet managers will often see significant cost reductions when they start to manage mileage due to reduced incidence of error, fraud and waste,” according to a 2018 report for the DfT by the Energy Saving Trust. The software is readily available and varies in price depending on its level of complexity. 

Set CO2 targets or caps 

Setting CO2 targets allows the responsibility for fleet improvements to be shared across teams or entire departments. The Energy Saving Trust website states: “Targets can be set in percentage reductions in total CO2 emissions or average CO2g/km for the fleet and linked to vehicle choice lists.” 

Another way of reducing emissions quickly and improving efficiency is to set a CO2 emission cap for company vehicles. Switching to a vehicle with lower emissions will benefit employees through lower benefit-in-kind payments, and a bonus might also nudge staff to opt for a lower emission vehicle when choosing their company car. Any CO2 cap should be reviewed annually to ensure that it remains effective, the organisation advises.

Manage ‘grey fleet’ travel

Grey fleet vehicles are privately owned or leased by employees but used for business travel. It has been found that the mileage of these is unnecessarily high, and since grey fleet vehicles tend to be older and less efficient than company or pool cars, businesses should limit their use as much as possible. When developing a policy, it pays to track who is making grey fleet journeys, and why, as well as establishing the vehicles being used and whether they are fit for purpose. The company mileage rate should be reviewed to ensure it is not an incentive to drive more, and a clear chain of command must be established to regulate the authorisation of grey fleet business trips.

Sustainability
Climate

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

scroll to top