Transport Sector Suffers from Cost Pressures

A study conducted on behalf of Lex Autolease shows that nearly half of firms in the sector (42%) expect to be under further pressure to control costs in the year ahead.

Fuel - one of the biggest cost burdens a year ago during the oil price hikes - is not such a major concern for the transport sector with just a fifth (21%) predicting further pain at the pump. This is despite a 4p increase in fuel costs over the last month and further increases to come in the New Year.

And, although CO2 is dominating the current motor industry agenda, firms in transportation and automotive sector are now less preoccupied with environmental concerns. Just 15% say green issues will impact on their business over the next
12 months.

"Fuel and environmental issues seem to be playing second fiddle to overall cost control at this moment in time. This is partly because vehicle manufacturers have already made significant advancements in these areas, but also due to transportation and automotive firms becoming more prudent with their overall fleet spend. But what many companies have perhaps not realised is that fuel, environment and cost saving measures are intrinsically linked.

"The modern car or van is clean, fuel efficient and emits less CO2, which also reduces the tax burden, so a significant amount of cost reduction can be derived from introducing more control over which new cars come onto fleet. Policy changes are much easier to implement in the current climate, so the time is ripe to act.

"A clean vehicle is usually a fuel and tax efficient vehicle, which is why we've been working hard with our customer base to ensure the link between cost and CO2 is brought home to employers and their business drivers. Both are now reaping the rewards of playing the taxation system to their own advantage", says Claudia Rose, Corporate Sales Director at Lex Autolease.

Manufacturer advancements with conventional diesel and petrol engines have accelerated to the point where just over one in ten (13%) firms expect to introduce more green or alternative fuels in the year ahead.

Claudia Rose continues: "Many firms are using CO2 as the main instrument to control fleet costs, but there isn't the appetite or need right now to radically switch fleets to electric or hybrid technology. Electric cars are getting all the headlines, but the more compelling choice in cost, performance and reliability terms is for the new breed of diesel and petrol models.

"To put it into context, almost 80% of our customers choose diesel engines which are both fuel and tax efficient, but with comparable performance to petrol. In contrast, we have less than 100 electric vehicles on a fleet of over 300,000, which is partly because of cost, but also because the infrastructure and technology is in its infancy."

Against the background of transport and automotive firms looking to squeeze extra savings from their fleet policies, the biggest challenge facing firms on a company-wide basis is 'getting enough work' and 'the economy'. Just under half
(46%) of those polled said this was the biggest threat to their industry.

Claudia Rose concludes: "These findings mirror the wider economic picture.
There's a need to bring down costs over the year ahead, but right at this very moment in time, the overriding concern is drumming up more business and the wider impact of the economy.

"The transport sector is reluctant to reduce costs to the extent where productivity and new business is jeopardised. Cutbacks can only go so far and it needs to be in the right areas, but greater efficiencies can be derived with relatively little pain by making small changes to the big expenses.

"For example, introducing a CO2 cap is a fairer and more effective measure than reducing vehicle choices based on list price or monthly rental. It actually puts money back into the pockets of employers and employees, so a smart move in this direction is one way of keeping your best staff mobilised, motivated and managing your way out of the recession."

Lex Autolease supports businesses, large and small, with a standalone team of experienced fleet management specialists. To benefit from the Fleet Consultancy team's holistic and impartial advice, call 0844 824 0270 or email fleetconsultancy@lexautolease.co.uk