Fleet leasing contracts are structured in many different ways, and maintenance costs are one element that need to be carefully scrutinised. Many organisations enjoy the fact that maintenance costs are agreed as a fixed cost, which is a common feature of fleet leasing contracts. Inclusive fleet maintenance does have its benefits for some organisations, but there are potential cost savings to be made by considering alternatives, such as pay-as-you-go fleet maintenance.
Inclusive fleet maintenance appeals to many businesses who just want to see a fixed cost to enable them to budget easier, so this fixed cost applies each month whether vehicles need any work or not, plus there is usually a contingency figure included within this fixed cost to cover any unforeseen or emergency repairs.
Pay-as-you-go fleet maintenance is increasingly appealing to fleet management specialists because it offers a whole range of benefits, which all contribute to considerable cost savings, and even if this leads to more analysis and direct fleet management of vehicles, this additional scrutiny brings new transparency and more benefits across the board.
How pay-as-you-go fleet maintenance can save you money
Fundamentally, your fleet vehicles will be new vehicles, so service and maintenance should not be a major cost and consideration. If it is, this perhaps highlights problems with the criteria used to select suitable vehicles. Cars are much more reliable today than they were 20 or 30 years ago, so it is possible that a vehicle with low mileage, for example, will not require many service and maintenance visits in its lifetime, never mind the two or three years it is contracted to your organisation. So why should you be paying a fixed cost for services you are unlikely to need? Switching from inclusive fleet maintenance to pay-as-you-go fleet maintenance can save between 10-20% in service and maintenance costs, and that is a figure you can’t afford to ignore.
And here are three other benefits to consider alongside that:
Better cash management
Pay-as-you-go fleet maintenance allows you better cash flow management, because cash is not tied up in a monthly fixed cost and can be invested elsewhere in the business. You also have a better visibility of your cash, because you will see where costs are going and enable yourself to better analyse why, rather than expecting a blanket cost each month and not being alerted to where it is being spent. This all allows you to make more informed decisions based on real data.
Of course you should use all the data available to select vehicles based on their suitability, but pay-as-you-go fleet maintenance becomes a factor in this. So low mileage and more reliable vehicles will come into your thinking because of the likely savings in fleet maintenance.
Each service and maintenance cost you see, and each vehicle report that comes with it, can be analysed and approved with increased scrutiny. This means you can apply costs to certain vehicles and drivers and monitor trends which may lead to training opportunities or at least enable you to better manage your fleet drivers. If drivers can see the impact of their habits and behaviours it has a more tangible effect. With inclusive fleet maintenance it is difficult to allocate costs in the same way, and hence you don’t have the same visibility and transparency.
At first glance it may appear that there is more management required in pay-as-you-go fleet maintenance, but visits are scheduled in the same way and you can still plan ahead and be proactive in managing fleet maintenance. Also, in terms of downtime and bulk scheduling maintenance visits for your fleet, in practical terms, pay-as-you-go fleet maintenance works exactly the same, so the potential cost savings are the major benefit and a big factor in why many organisations are now switching to pay-as-you-go fleet maintenance.
To discuss pay as you go fleet maintenance with our expert team, please click here to contact us.