The motoring world is fundamentally changing, with 65% of motorists admitting that they will be forced to opt for a more fuel efficient vehicle the next time they are on the search for a new car. This is due to the rising running costs which have been sparked by declining raw oil supplies and turmoil within the financial markets.
Many businesses rely on vans and trucks for their operations, and it is therefore unsurprising that they are beginning to struggle. One example of which is the Kent based Derek Linch Haulage Company which went out of business earlier this year with the company owner citing the rising running costs involved with his vehicles fleet as being a major contributor.
This is unsurprising when it is considered that Mr Linch was paying £20,000 per month on fuel costs alone before insurance premiums are considered. Insurance is another area of concern for businesses, with MoneySupermarket.com reporting that the cost of an average motor insurance premium rose by 40% last year.
We therefore take a look at the things that business owners should consider when deciding what vehicles their fleet should consist of. After all, your choice of vehicle is the most influential factor in determining your businesses total annual fuel and insurance expenditure.
Insurance examined
Let’s start by looking at vehicles in light of insurance. Every car, van and truck which is available in the UK will have been assigned to a particular insurance group numbered between one and fifty by the Insurance Group Rating Panel (IGRP) which is made up of members of Lloyds Market Association (LMA) and the Association of British Insurers (ABI).
This decision is made by looking at the statistical likelihood of owners of that type of vehicle making a claim, the security features the vehicle comes equipped with (i.e. alarms and immobilisers) and the overall performance of the vehicle. Don’t forget that adding additional security systems post purchase can bring further insurance cost savings.
Vehicles which are classified into insurance group one tend to be the cheapest to insure as there are asserted to be the ones where the owner is the least likely to make a claim. Business owners should therefore ensure that their fleet consists of vehicles which are in the lowest insurance groups possible in order to ensure that insurance costs are as low as possible.
Fuel costs considered
With overall performance being a factor in the determination of insurance group allocation, it is unsurprising to find that vehicles in the lower insurance groups tend to have smaller engines. This is also good news for fuel costs, with smaller engines tending to be more economical. However, this is not always the case, so make sure that you check your vehicles combined miles per gallon (mpg) figure before making a purchase decision.
Another key point to remember is that diesel fuelled vehicles will often have a higher mpg figure than their petrol equivalents. This is due to diesel fuels being consumed more slowly, but it is compensated for by the fact that diesel tends to cost 4p more per litre than petrol.
You can work out whether the petrol or diesel version of vehicles in your consideration set are cheaper in terms of fuel costs over the course of a year by using websites such as www.fuel-economy.co.uk, which allow you to put in the cost per litre of fuel, the annual mileage of your vehicle and its average mpg. This gives a rough guide to help aid your decision on what will be the cheaper option.
