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Fleet policies by the numbers

March 28, 2019
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Eqstra Fleet Management (EFM) recently conducted a Benchmark Survey of the company-car fleet industry with 162 participants among the basic material, mining and farming; building engineering and construction; manufacturing, processing and distribution; and retail and wholesale sectors. Companies with employee numbers ranging from 100 to more than 5 000 were represented.

Most companies (69 percent) operate fleets of fewer than 100 vehicles. A significant majority (65 percent) indicated that their fleets were funded through leasing, while 28 percent paid cash and 17 percent bought their vehicles on hire-purchase.

Of the companies surveyed, 39 percent purchase less than 25 percent of their fleet using the company’s operating or capital budget, while 18 percent use the company operating or capital budget to purchase their whole fleet.

Fifty-nine percent of respondents fulfil their fleet-maintenance requirements through full-maintenance lease contracts, while nine percent use cash.

The majority of companies (94 percent) that provide company cars to employees also provide fuel cards as a value-added product (VAP). Similarly, most companies (83 percent) provide a travel allowance to employees.

In both instances, tracking is the least provided VAP. This is in line with tracking being an optional VAP, and privacy regulations are expected to curtail the usage of vehicle tracking in the future.

Some of the other results include the following:

  • When services/repairs are due, employees are provided with company pool vehicles as replacement vehicles by 47 percent of companies, while 44 percent do not have alternative transport arrangements for their employees;
  • Company cars are replaced within a five-year period at 81 percent of companies;
  • Most companies limit the lease periods on company cars;
  • The majority (77 percent) return company cars to fleet management companies at the end of the vehicle’s contract term;
  • Employees who leave a company upon resignation, retrenchment or retirement are allowed to purchase their company car at a discount at 33 percent of companies. Any taxes liable are covered by the individual. Most companies allow employees to purchase vehicles at less than market value and determine the employee purchase price based on the balance of the lease;
  • Private travel is frequently limited when supplying employees with a company car. The limitations are mostly distance or fuel-spend based;
  • Most companies redirect fines to drivers of company cars. A small number pay for fines collected on business travel;
  • The use of an alternative fuel to support a green initiative would be considered by 47 percent of fleet managers. Of these, 23 percent would consider natural gas while 16 percent would consider SYnGas (synthetic gas – a fuel gas mixture consisting primarily of hydrogen, carbon monoxide and some carbon dioxide).

Most companies allow sales and technical staff to use company cars, while specialists and management personnel are given monthly travel allowances.

A travel policy is in place and in use by 94 percent of companies. This policy is said to clearly define the rules for employees regarding company car and/or travel allowances. The vast majority have their travel policies determined by the local company office, as they believe it is important to factor in local conditions. The majority review their travel/vehicle policy annually.

Fleet management is identified as being responsible for adherence to their travel/vehicle policies by 53 percent of respondents. “Well managed fleets should have a combination of fleet manager, HR and line management’s involvement in monitoring compliance,” comments EFM.

It was found that 83 percent of companies give their employees a travel allowance as opposed to, or in addition to, a company car.

Regarding a travel allowance, 41 percent of respondents calculate the tax at 80 percent. This means 80 percent of travel is expected to be private and only 20 percent can be classified as business usage.

Tax on a company vehicle is calculated at 80 percent by 47 percent of respondents and at 100 percent by 24 percent of respondents.

Of the companies that utilise travel allowances, 71 percent say that the submission of logbooks is compulsory. Of the companies that use company cars, 76 percent say that the submission of logbooks is compulsory.

Company cars are more likely to utilise e-Tags than travel-allowance users. The majority of companies reimburse employees for toll fees.

Of the companies using company cars, 65 percent pay for the insurance excess, while 50 percent of those on travel allowance ask the employees to pay the insurance excess.

Worryingly, there is no road safety awareness in place in 46 percent of companies.

FOCUS on Transport and Logistics is one of the oldest and most respected transport and logistics publications in southern Africa.

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