A number of fleet management solutions can save businesses the additional costs of the recent value-added tax (VAT) and fuel price increases, says Standard Bank Fleet Management executive head Derick de Vries.
He says this year’s increase in VAT to 15% from 14% can be “comfortably offset” by means of a comprehensive solution that harnesses predictive data.
“Fleet owners are facing a multitude of additional costs and also hidden costs they are not even aware of. The solution lies in harnessing the existing data they possess to dramatically save costs and enhance business efficiencies.”
For instance, Standard Bank Vehicle and Asset Finance (VAF) research into a company with a fleet of 50 vehicles, shows that the company saved R14 006 in April as a result of Standard Bank analysing their existing fuel spend patterns and converting them to one of their suitable fuel alliances where the customer is now saving 53c a litre on diesel.
A fuel alliance, in simple terms, is an agreement for companies to fill up certain sites as part of a reward programme.
“By managing the way it consumes diesel through one of Standard Bank’s alliance partners, the 53c saving per litre trumps April’s 52c increase in fuel and Road Accident Fund levies.
“The overall saving of R14 006 far outweighs the R62 someone with 50 vehicles in this example would pay extra in fees after the VAT increase,” notes De Vries.
Greater savings are possible when fleets make use of an even more comprehensive plan, he adds.
Standard Bank researched the impact of its managed maintenance offering on a large fleet of more than 3 000 vehicles before and after VAT increases, and compared this with a company which did not have this solution in place.
“We noted savings of R1.084-million over a three-month period (January to March) for this client as a result of properly managing their maintenance, explains De Vries.
Currency plays an important role in maintenance plans, he explains, as 70% to 80% of vehicle parts are imported.
However, currency is just one component.
“Our programme drills down to the smallest part, like the costs of brake pads and fuel per litre,” says De Vries. “We look at how often to replace the brake pad, for example, and which brand we should use.”
But what about the fees Standard Bank charges their fleet customers? Doesn’t this add another layer of cost?
Not so, says De Vries.
“Standard Bank VAF research shows that the saving as a result of using managed maintenance is significantly more than what the customer pays in fees, before and after the VAT increase.”
De Vries says most businesses do not yet realise the full potential of the data they have at their disposal.
“Some green shoots for economic growth are sprouting, but it is not enough to drive growth forward in the fleet industry.
“Fleet companies will have to find other ways to expand. One of the best levers right now is to rescue as many costs as possible. Harnessing the tools and innovations based on big data is the best way to go.”
Standard Bank services more than 50% of the fleet card market.
“We have found that most fraud comes from driver abuse, but properly managing this with fleet cards changes the picture,” says De Vries.
“We have, for instance, declined over R440-million in transactions during 2017 as potentially fraudulent on our cards.”
The Truck Market
Standard Bank expects the new passenger car market to grow by around 2% in 2018.
De Vries expects only a small increase in the 2018 new truck market.
“Vehicle price inflation is the lowest it has been in four years. It is a good time for fleet replacement.
“Public sector and State-owned enterprise fleet spending remains an open question, however. All in all, new truck sales are linked to economic growth and we don’t expect much of that this year.”
De Vries joined Standard Bank in January this year. He is the former CEO of TransUnion Auto Information Solutions Diversified Markets, Africa Region. Prior to joining TransUnion he worked at WesBank for 20 years.