Having an efficient, reliable, and cost-saving strategy to solve your mobility needs is crucial. At SIXT, we have ample experience working with the most varied corporate clients. In this article, we share with you our extensive know-how on fleet management. It is important to consider some key aspects that will help you develop an effective strategy, such as understanding the types of costs that companies face in traditional corporate fleet management and using SIXT’s approach that saves time and money thanks to its innovative conception of mobility and state-of-the-art technology.
Fleet management, how to develop the right strategy
What is fleet management? What activities need to be coordinated and taken into account by a fleet management system? Fleet management for a company includes the development, organization, and implementation of all the processes required to manage a corporate fleet. This involves all the steps between the acquisition of vehicles, their maintenance, and their disposal. A successful strategy will minimize costs, ensure compliance metrics, increase productivity and efficiency, and, of course, will ensure the satisfaction of employees and team members. A point that companies often underestimate is that mobility needs change. The right fleet management strategy will develop ways to cope with uncertainty and build resilience.
The first step to develop an efficient strategy and choose the right vehicle management system is to know your mobility needs and internal capabilities. Some key aspects that companies need to take into consideration:
- Scope of operations (local, regional, international)
- Type of transportation (passengers, merchandise, heavy load)
- Driving-frequency (daily, weekly, irregular terms)
- Bureaucratic capacity (do you have a person that can manage the fleet as a full-time job?)
- Available capital and lending options (together with its opportunity costs)
Understanding fleet management costs
Costs are one of the most important topics concerning corporate fleet management. For anyone new to the topic, the main expenses that come into mind are the acquisition costs. These are indeed some of the highest costs that a company has to calculate, but they are by no means the only ones. Costs in fleet management can be broadly divided into two types: capital costs and operational costs.7
Capital costs include:
- Acquisition cost: that is the cost of obtaining the vehicle, whether through purchase, leasing, or rental.
- Vehicle financing: ongoing payments and interests related to the possession of the car, truck, or any other vehicle.
- Depreciation: the decrease of value that a vehicle has from the moment of its acquisition. This value is often underestimated by companies and should be taken into account in the planning of a successful fleet management system.
“Depreciation, or the degree to which a given vehicle’s value will drop over time, is a motorist’s highest ongoing expense. Depreciation now accounts for an average of 36% of annual ownership costs […] The average vehicle drops 49.6% of its original value after five years.”
– Jim Gorzelany, Forbes i
“Operating costs for fleets are often within the top five spending areas for an organization.”
– Deloitte ii
Operational costs come from the continuous use of any vehicle. As mentioned by the Deloitte study, these can add up to constitute a big part of a company’s expenses. Finding smart ways to reduce operational costs is a big task of a company’s fleet management system. Some of the most important operational costs are:
- Insurance: different types of insurance like insurance against theft and protecting from costs from accidents.
- Maintenance and repair: vehicles need continuous maintenance and repair.
- Fuel costs and tolls
SIXT’s innovative approach to fleet management services
As seen until now, under the traditional method, fleet management can be a full-time job, especially as the company grows in size. SIXT has developed a corporate vehicle rental service tailored to serve the most diverse and spontaneous needs that an ever-changing business landscape implies.
- Different rental modalities for ever-changing situations
Our business model is based on offering different modalities of car rental instead of the rigid schemes traditional in other car-rental services. With one account, our clients have simultaneous access to these different types of rental. Easily select among short and long-term rental plans, vehicle subscriptions with a monthly cancelation policy, or opt for our comfortable driving service.
- A wide range of vehicles that get the job done
Instead of committing to one vehicle for your fleet, enjoy the flexibility of having an entire fleet at your disposal. Or long-term and car subscription modalities allow you to change vehicles without any bureaucratic hassle. Promptly react to changes in your needs and bring agility to your business.
- Decrease costs at every step
Our business model is based on the idea of “using instead of owning.” With SIXT, you only pay for the service that you need and nothing more. Our rental options allow you to free capital and avoid maintenance, repairment, and depreciation costs, as well as avoid losing money in fixed insurance and membership fees. Moreover, our efficient system makes management and reporting easier, saving you time and money.
- Ensure reliability in uncertain times and situations
Even if your vehicle needs to be repaired or something happens on the way, our fleet management system ensures that you can get a replacement vehicle right away. No more losing your mobility when the vehicle is in the repair shop.
- We are wherever your business takes you
Drop your car in San Francisco and pick a new one in New York. Our vast network of branch offices allows us to be there for you wherever your business takes you. We are present in over 120 countries, in all major airports and train stations.
- Eco-friendly approach to mobility
By only using the vehicle when you need it instead of owning it, we ensure that the natural resources are used more efficiently. Our planet needs us to do business in an eco-friendly way. You will only find vehicles that meet the strictest environmental standards in our fleet, as well as hybrid and electro models. This, in turn, will help your company save money in operational costs. Everyone wins.
State-of-the-art technology in the management of your company fleet
With SIXT, our innovative car-rental concept is complemented with state-of-the-art technology that ensures the most efficient fleet management implementation. Whether you manage a couple of cars or you are looking for a complete truck fleet management system, your corporate SIXT account will serve as the command center from which you will have a total overview of anything concerning your corporate fleet. With our smart e-billing system, all your invoices are generated digitally. You can easily use the company’s bank account to pay for different rental services. All your data will be securely stored so that your employees have access to their vehicles with minimum paperwork. With SIXT, you will have immediate access to ready-to-print reports with attractive data visualizations that are ready to be presented in your next strategy meeting. All the tools that you require for the most efficient fleet management are there for you without any additional cost.
An efficient fleet management system is mandatory to make companies more competitive. Before selecting a company fleet modality, make sure that you analyze your mobility needs and plan accordingly. It is necessary to consider all mobility-related costs. Usually, companies make the mistake of over-emphasizing some acquisition costs and neglecting other costs related to depreciation and operative costs. At SIXT, we have developed entirely innovative solutions for corporations. Our concept is based on “using vehicles instead of owning them.” Our services are designed to reduce costs and the complexity in your corporate fleet management. We have also developed the most modern technological applications to ensure swift implementation. If you have any questions, our customer support team is happy to assist you.
i Gorzelany, Jim. “Burning Money: Vehicles That Depreciate the Fastest, and Those That Hold Onto Their Value Best,” Forbes. Online available at: https://www.forbes.com/sites/jimgorzelany/2019/11/07/burning-money-vehicles-that-depreciate-the-fastest-and-those-that-hold-onto-their-values-best/?sh=20a620b35f4a
ii “Fleet Leasing and Management in North America: Key enabler for the future of mobility”, Deloitte. Online available at: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-business/us-cp-fleet-leasing-and-management-in-north-america.pdf