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Are Increasing Costs Causing You to Postpone a Fleet Upgrade?

Are rising costs squeezing your fleet budget? Upgrade strategically! Explore EVs, financing, and cost-saving tips to improve safety, and boost efficiency.

Although it was recently reported that the UK is officially out of recession, many of us are still feeling the impact of rising costs that have been building since September 2021 and hit a 40-year high in October 2022, according to the Office of National Statistics.  
While the inflation rate has decreased since then, there’s still notable increases in the cost of food and motor fuel. With the continuation of rising costs, it’s not difficult to understand why businesses might be hesitant to upgrade their fleets. 
Delaying a fleet upgrade though, could cost you more in the long run. If a vehicle needs additional maintenance, you’ll have to pay those bills, as well as think about the loss of productivity while that car is off the road.   

In this guide, you’ll learn more about strategies and solutions to navigate rising costs and how to make informed decisions about upgrading your fleet. 

If you’re a UK-based business looking to upgrade your fleet solution, take a look at our Business Fleets page to see how we can help.  

The Impact of Rising Costs on Fleet Management

There are a number of associated motoring costs that are contributing to the overall rising costs of running a car fleet. Let’s take a look in more detail. 

Increasing fuel costs have a huge impact, especially if you have a large company car fleet. Average prices for petrol and diesel hit record highs during the summer of 2022, with the highest ever average prices reported at 191.5p per litre of petrol and 199.09p per litre of diesel. Although prices have come down since then, averages from 2023 and 2024, year-to-date come in second place to the 2022 highs when reviewing prices back to 2000 – according to the RAC Fuel Watch.  

The used car market  has shown signs of recovery over the last 12 months, with the Society of Motor Manufacturers and Traders (SMMT) reporting a 5.1% growth in used car sales across 2023. The market also rose by 6.5% in the first quarter of 2024 compared to the first quarter of 2023, however, the quarter’s transactions remain -2.6% below pre-Covid levels – Q1 2019.  

We’ve also had the new car stock shortage over the Covid period, which naturally had a knock-on effect with the used car market. Sourcing the right vehicles for a cost-effective price and running cost in a fluctuating market can also influence your decision on whether to upgrade your fleet. 

Something else to consider is the age of your current vehicle fleet, and if it might start to generate higher maintenance expenses as it continues to age. As vehicles age, they’re more prone to wear and tear, and could require more frequent repairs and replacement parts.  

Taking this into consideration, there’s a potential impact on safety and productivity too. Older fleet vehicles could be deemed unsafe as they start to experience wear and tear and if any maintenance is required, that vehicle is then off the road, which will reduce your business productivity.  

Strategies for Navigating Cost Challenges

There are different solutions and strategies for navigating increasing costs when considering your fleet upgrade. When it comes to making the right decision for your business, it’s important to evaluate your budget and long-term cost goals. Review the upfront costs, total cost of ownership, fuel efficiency, maintenance costs, and residual values. 

Fuel Options 

Considering multiple fuel options could also help with potential cost savings. While the debate over petrol vs electric – and which is the most cost efficient – is apparent, if Electric Vehicles and hybrids are utilised for their efficiencies, there’s still potential to make savings on fuel costs. 

The actual cost of electricity varies hugely from car to car, depends on location and energy supplier and differs from public charging to home charging. Efficiency will depend on driving style, road and weather conditions, as well as the size of the battery. Utilising pre-conditioning could improve efficiency, as drivers can set off with a full battery and their desired temperature inside the car, and the battery at optimum temperature too.  

Leasing vs Buying 

Your business could review whether buying or leasing is the best option for your fleet. Business Car Leasing through CBS can provide a number of benefits including:  

  • Freeing up your capital by using our vehicle funding. 
  • No vehicle risk for your business, just hand the cars back to us when the contracts end. 
  • Terms, mileage, maintenance and insurance packages to suit you, minimising extra costs.  
  • Claim back VAT: 50% of the VAT on the finance rental if the cars are used for business and  personal use.  
  • No deposit required and fixed monthly payments. 

Naturally, there are some disadvantages too, including: 

  • You won’t own the vehicles or have the option to buy them at the end of the contract. 
  • Early terminations could cost you money.  
  • To avoid excess mileage charges, accuracy in mileage estimation is key.  

When comparing car leasing to buying a car, there’s another set of considerations. Firstly, you’ll need to have the capital to buy vehicles outright or facilitate a loan to buy them, however, once you do own the vehicle you can do as you please with it in terms of customisation (as long as legally compliant for a company car), sell it when you see fit, and you won’t be restricted by mileage.  

On the other hand, vehicles can depreciate quickly in their early years, so you’re not guaranteed to get your money back and you’ll need to pay VAT on the purchase price. You’ll be tying in some of your business capital to run your fleet, which could limit your borrowing power. Insurance, maintenance and road tax will all be your responsibility, and as cars get older, they may require more maintenance.  

Fleet Financing 

Financing your fleet with us couldn’t be easier. We offer vehicle funding across our portfolio of solutions and with no deposit required – to find out if our financing options could work for your fleet upgrade, get in touch today.  

Optimising Your Fleet 

Keeping your fleet in-check could help you to make maintenance savings. Tasks such as oil changes, brake inspections and tyre rotation all contribute to keeping your vehicle running efficiently. All cars will also have a maintenance schedule, which is usually found in the handbook, that lists out how frequently these tasks should be completed based around mileage or the age of the vehicle.  

Regular servicing is equally important, again this is dictated by the age of the vehicle or the mileage travelled, for example, high mileage drivers might need a service earlier than average or low mileage drivers. Maintaining the engines of your fleet cars will set you in good stead for avoiding or reducing unexpected costs, and healthy engines also have the potential to help you make savings at the fuel pumps too, as they run more fuel efficiently. 

Servicing can help to extend vehicle lifespan too, by catching any minor problems before they turn into major ones, identifying wear and tear or other hazards that could lead to costly repairs. So, don’t ignore your maintenance schedule, stay on-track to ensure a healthy and safe fleet.  

Driver behaviour can also impact fleet optimisation. Choosing the best route for any business journeys can save time and fuel, so ask your employees to plan their routes in advance to ensure the best results. Equally, having a drivers guide for how your employees physically drive the fleet cars can useful, offering tips such as using cruise control to maintain a steady speed, monitoring acceleration and deceleration, and reducing engine idling – all of which can contribute to improving fleet efficiency.  

Weighing the Benefits of Fleet Upgrades

It’s important that your company car drivers are safe when on business journeys, so upgrading your fleet to newer vehicles that feature the latest technology can help reduce the chance of unplanned maintenance and repairs, especially since older vehicles are more prone to breakdowns and costly repairs.  

Brand-new cars also make your employees feel valued, rewarded and motivated, especially if it’s a make or model they wouldn’t own personally without the help of the car benefit.  

A new and upgraded fleet can be beneficial for your company brand too, it demonstrates professionalism and environmental awareness to your customers, and when trying to attract new customers, your brand image and values are important.  

Choosing the Right Upgrade Path

There are many things to consider when thinking about upgrading a fleet of company cars. The cost to the business is usually a high priority, as well as the safety of your drivers, there’s fuel management and in-life maintenance to think about, and you’ll need to keep reviewing the latest technology and your approach to it.   

When it comes to making the right decision for your fleet upgrade, there are a few things you should consider:  

  • Fuel efficiency and different fuel types for your fleet. 
  • Maintenance costs and warranty terms.  
  • New technology and features when reviewing new models. 

 It’s important to evaluate your current fleet performance and identify areas for improvement, and you could also consider working with a fleet solution partner that could create a tailored fleet upgrade for your business. 

How Car Benefit Solutions Can Help You

If you’re nervous or unsure about when is the right time to upgrade your fleet, set aside some time to consider all your options and formulate a plan to help you navigate cost challenges and achieve a successful fleet upgrade. 

We can provide help and support every step of the way, soget in touch with us today.