With the rising cost of doing business in South Africa, small and medium enterprises (SMEs) that run fleets need to understand the elements that make up the cost of ownership. To truly maximise efficiencies of a vehicle, all factors including: management of downtime, supplier support and vehicle quality play a key role in managing cost of ownership and is key to business sustainability, says Wade Griffin, director of commercial vehicles at Hyundai Automotive South Africa.
Here are Griffin’s four rules for reducing the costs of fleet ownership:
1. Minimise downtime
Service and maintenance plan options are important for an SME that has strict operational budgets. What happens when a vehicle in your fleet breaks down? Do you have a maintenance and service agreement? While full manufacturer’s warranties tend to be more ‘valuable’ as they cover part failures and are comprehensive, local warranties can contain a host of exclusions and limitations in terms of what is covered. At face value a local warranty may look more appealing, as the upfront cost is less, however often results in higher maintenance costs.
2. Select the right financing structure
When selecting the right financing option for your vehicle(s) understand not only the cost of the purchase but the cost of maintenance of the vehicle. This means that something like a Full Maintenance Leasing (FML) contract can be more beneficial to the business – as vehicles are not registered in the company’s name and there is no disposable risk. Additionally, the company receives a fixed maintenance rate for the period of the lease plan and can budget for a fixed amount monthly.
3. Reduce premature vehicle replacement
SMEs should ideally select a fleet supplier that can assist in training their drivers with the following: performing preventative maintenance checks; safe driving principles and mechanisms; driver techniques as well as driver health; and fatigue prevention. Through this, you minimise early vehicle replacements and maintenance costs.
4. Maximise efficiencies
The elevated cost of fuel is an ongoing challenge. Investment into efficient vehicles, will not only save on fuel spend but also lower CO2 emissions.
