Are You Worried About Grey Fleet? Should You Be?
Managing your company’s grey fleet can add grey to your hair and cost to your organisation. Compared to company fleet operations, grey fleet offers unique challenges. Fleet managers dealing with grey fleet must consider complex issues such as duty of care, health and safety, corporate social responsibility and financial efficiency.
Understanding the dynamics of grey fleets and creating a programme with clear guidelines can help you take control of the risks and costs of your operation.
What is a Grey Fleet?
Grey fleet refers to any privately-owned vehicle used by your team to complete business activities. Beyond an employee's own vehicle, however, a grey fleet includes vehicles purchased or leased with employer-provided cash allowances and vehicles rented privately by employees.
With grey fleets, you reimburse your employees for business mileage, typically using a cent or euro per kilometre calculation that accounts for fuel and maintenance costs. This plan contrasts with a company vehicle programme where you provide employees with a car, and they pay benefit in kind (BIK) fees. Since company cars aren’t usually available to everyone, ineligible employees may be required to drive their own vehicles on occasion for business-related travel. The size of your grey fleet may fluctuate depending on your business travel needs.
Potential Pitfalls of Grey Fleets
Fleet managers have in-depth knowledge of the health and safety responsibilities for their team as well the potential liabilities they face in the event of a road accident involving on their vehicles. Grey fleets require the same legal duty of care. The Safety Health and Welfare at Work Act defines a vehicle driven for company purposes as a place of work. Based on this definition, it is the company’s responsibility to ensure reasonable health and safety of both work-supplied and grey fleet vehicles.
While this may seem to be a straightforward policy, monitoring grey fleet vehicles and drivers makes it more difficult to implement. Fleet managers must assess the following characteristics of their grey fleet:
- Vehicle Roadworthiness. A recent report showed that approximately 60 percent of grey fleet drivers don’t do regular checks of oil levels, brake lights or tyre pressure and that one-third have never lifted the bonnet of their grey fleet vehicle. Without driver accountability, fleet managers must take on the burden of necessary CVRT and NCT tests or other maintenance checks.
- Driver Qualifications. Fleet managers are responsible for checking grey fleet drivers’ licence validity and confirming insurance coverage meets company policy. Verifying grey fleet drivers are ‘fit to drive’ can be a challenging process, since these qualifications are usually self-diagnosed and self-reported.
- Environmental Impact. The age of grey fleet vehicles means many fail to meet the new Euro 6 emission standards. According to data from the BVLRA, the average grey fleet vehicle puts out 152g/km CO2, about 35% more than a newer car. The additional pollution from grey fleets slows government efforts to reduce CO2 emissions and may be harmful to a company’s socially responsible image
Reducing the Risks
Grey fleets are unlikely to be eliminated in the immediate future. However there are steps companies can take to minimise the risk associated with grey fleet vehicles. One step would be developing a policy that outlines processes and expectations to improve metrics and reduce the time it takes to manage your grey fleet. Elements of a grey fleet policy could include:
- Putting grey fleet vehicles into your fleet database. On a monthly or quarterly basis, grey fleet drivers could be required to report relevant data to help with monitoring such as vehicle condition, licence status/penalty points, insurance status and monthly mileage. Having an online record of your grey fleet also allows you to send reminders about licence renewals, maintenance checks, CVRT & NCT tests, and policy changes.
- Training drivers, especially those who are higher risk. Scheduling training for your road warriors (those with high mileage), young drivers, or those with a history of accidents helps you meet your duty of care responsibilities. Education could cover topics like what is safe and legal driving, how to recognise and address signs of driver fatigue, how to insure your vehicle for business use and how to do basic vehicle maintenance.
- Posting clear guidelines about vehicle use for business. Direction about how your grey fleet programme works can include areas such as how to report mileage accurately, when a personal vehicle can be used for business (e.g., trips less than 70 km), which type(s) of vehicles can be used (i.e., age, fuel type), consequences for not following guidelines (e.g., reduced reimbursement) and how to use travel planning to find alternatives to personal vehicle use (e.g., conference calls instead of travel or using other forms of transport)
Choosing Grey Fleet Alternatives
After reviewing your grey fleet data, you’ll be armed with information to identify alternatives that are better for your budget and the environment. In addition to public transportation, options include rentals, car clubs, or leasing. Analysis of several public companies helped define the criteria to use when deciding on a grey fleet alternative:
- If the distance for a one-day journey is between 120 and 190 kilometres, a daily rental will be more cost-effective than grey fleet.
- If a substantial number of employees consistently take one-day journeys from the same location, a car club such as GoCar can reduce rental rates.
- If annual mileage is in excess of 9,000 km, it will be more cost effective for an employee to shift from grey fleet to a lease car
Benefits of Leasing with Avis Fleet Solutions
For companies with grey fleet drivers that fall into the high mileage category, Avis Fleet Solutions can offer them several benefits that will save them time and money. Some benefits include:
- Competitive rates for a wide range of vehicles through increased buying power
- Fixed costs for the duration of the vehicle lease
- Tax savings for low emission, hybrid plug-in, or electric vehicles
- No residual value risk on the vehicle at the end of the lease agreement
If you want greater control of your company’s grey fleet, the Avis Fleet Solutions team are ready to help. You'll spend less time and money managing your grey fleet, and your employees will be safer while driving new, reliable vehicles.
Contact us today to start planning your company’s transition out of grey fleet and into a flexible, risk-free leasing programme.