Government analysis of mileage and fuel expenses could trigger major reclaim shake-up

Businesses could see the abolition of tax allowances on travel and subsistence expenses as a result of a government consultation.

HM Treasury is now analysing feedback to its call for evidence on the current tax rules for employee expenses amid its claim that tax reliefs on expenses, which include mileage claims, costs the Exchequer £800 million a year with a 25% increase in claims between 2009-10 and 2014-15.

The government says it has no plans to remove the relief on employee expenses, but given the size and importance of the relief, it wants to understand the use of the relief better.

The consultation, which concluded this month, was signalled in the spring Budget when the government said it was considering how the tax system could be made fairer and more coherent, including by looking at the taxation of benefits-in-kind and employee expenses.

The consultation document highlighted both Approved Mileage Allowance Payments (AMAPs) and business travel and associated expenses among commonly claimed expenses and sought views on current employer practices on employee expenses, current tax rules on employee expenses and the future of employee expenses.

Employees that drive their own cars on business are able to claim tax free up to 45p a mile for the first 10,000 business miles and 25p per mile thereafter. Many employers pay a lower mileage reimbursement rate, leaving employees to claim the difference through their tax return which is a cost to the Exchequer.

Similarly, HM Treasury may also look to eliminate claims for tax relief on Advisory Fuel Rates that were paid by employers at a sum lower than the allowed rate when reimbursing company car drivers.

Industry experts suggest that the implications for the fleet industry of revoking travel expenses will be dramatic.

Despite the government saying that it had no plans to remove the relief on employee expenses, some experts have suggested HM Treasury wanted to eliminate claims for tax relief on expense costs that either weren’t reimbursed by employers or were reimbursed at less than the relevant Advisory Fuel Rate or AMAP rate.

Three years ago a report by the Office of Tax Simplification (OTS) suggested that travel and subsistence expenses should be allowable only if reimbursed by the employer.

Whatever the government decides it is clear that company expenses are a looming challenge for businesses. With many businesses offering cash alternatives to company cars, which potentially exacerbates the expenses issue for the government, what it decides to do could have a major impact on corporate fleet, travel and subsistence policies.

For example, if the OTS recommendation was adopted, the shock would be profound. From a fleet perspective, all drivers would want to be reimbursed for fuel and mileage at the full-scale rates since they could no longer claim tax relief if paid less.

It would also entail more administration for businesses because employees would take care to put every scrap of travel costs through the expenses process, knowing that they would not be able to claim tax relief on non-reimbursed costs at the end of the tax year.

Experts typically suggest that flat rate expense allowances were beneficial provided they were set at a realistic level. They also mean less paperwork for drivers, employers and HM Revenue and Customs as realistic flat rates resulted in fewer claims for tax relief at year-end.

The government says it will use the information gathered from the call for evidence to inform potential future policy developments. It could be that any new measures are announced in the Autumn Budget.

Meet the team – Sarah Clifford

Name: Sarah Clifford

Job Title:  Head of service delivery

Explain your role in 10 words:   Managing our people and process to ensure effective service delivery.

What’s the best aspect of your job?  Scoping and delivering solutions to meet the needs of our customers.

What’s the worst aspect of your job?  Working with the sales team

How long have you worked at Fleet Service GB?  Since January 2015 when I started to help develop and then launch the business.

What was your first paid job?  Waitress (with the worse uniform I have ever seen).

What’s your favourite car?  Jaguar F Type

What one thing would you like to achieve before you retire?  Have theFleet Service GB Team recognised in the industry as the fleet management partner of choice.

Outside of Fleet Service GB, what would your dream job be?  Difficult one, I like driving vans and wearing high-vis so maybe a delivery driver! Either that or I’ve always thought I would make a good police officer.

Who in the world would you most like to meet?   Either Tom Hardy or Andrew Lincoln (not fussed which)

What is your favourite way to spend a day outside of work?  Some retail therapy with a long lazy lunch with friends.

If you won the lottery how would you spend the cash?   Just the usual – cars, house, holiday home, trust funds for the kids.

Not a lot of people know that… I’m a great tap dancer 😊

Industry experts reassure fleets over future of diesel vehicle values

Diesel is likely to remain a crucial part of the motor trade’s fuel mix for the foreseeable future and the motor industry should “remain calm” over future values, according to the Vehicle Remarketing Association (VRA).

The trade organisation, which represents companies that are involved in remarketing more than 1.5 million vehicles every year, said that there was “every reason to expect that the values of most diesels will stay relatively stable” despite the so-called ‘demonisation of diesel’ in the media (The Buzz: May 2017).

What’s more, used car diesel values were remaining stable despite mainstream media coverage blaming ‘oil burners’ for city and town centre pollution and residents’ health problems, according to Andy Cutler, forecast editor at automotive industry providers and vehicle valuation experts Glass’s.

He said: “There has been a lot of negative press recently about how bad the diesel engine is, and how London in particular is being seriously polluted by diesel fumes. There is a lot of misunderstanding with regards to the ‘dirty diesel’ theory; it relates mainly to anything manufactured prior to Euro5 and Euro6 engines.

“The latest vehicles are much cleaner than they have ever been, however, the UK motorist appears to be an easy target and yet again seems to be getting singled out as the root cause of the majority of the pollution, which is not believed to be the case.”

Meanwhile, Glenn Sturley, chairman of the VRA, said: “There is a lot of noise going on around diesel which is causing some people to speculate on an unexpected decline in demand but, we believe, the picture is much more complex and less worrying.

“The main point to bear in mind is that there is no such thing as a single ‘diesel’ car – instead there is a whole range of Euro4, Euro5 and Euro6 models, and the prospects for each of them are very different.

“At one extreme, Euro4 vehicles are much more likely to be affected by clean air legislation and their values could fall quickly but most of these cars are now quite old and probably in ‘banger’ territory.

“At the other, Euro6 vehicles meet the latest emissions regulations and, however you measure them, are highly unlikely to be hit by any new rules and regulations. These are newer vehicles and there is no concrete reason buyers won’t want them.”

So far, impacts on diesel values had been limited, but Mr Sturley said the VRA was monitoring the situation closely.

He explained: “Our members are reporting a slight fall in trade values for newer diesels against forecasts but this has not really fed through into the retail market. This shows how all the noise surrounding diesel is only having a limited material value.

“The fact is that car buying habits usually take years to gain momentum and also take years to fall away. There are many, many people who see themselves as diesel buyers, and they will not just change overnight.

“There may be some specific instances that have a localised effect, such as where different cities introduce clean air tariffs that affect diesels over the next couple of years, but these are only likely to hit the oldest models.”

Mr Sturley added that newer diesel cars were, in fact, following a largely predictable depreciation curve and that it was because petrol had performed better than expected in some market sectors that it could look as though diesel was falling away.

He said: “The latest generation of petrol engines are very strong in terms of emissions and driveability and, as a result, they are enjoying better than expected residual values, largely because they are around in quite small numbers.”

In the medium-long term, Mr Sturley said, the VRA expected to see a gradual readjustment in diesel values as part of a wider spread of fuels available on the used car market.

He concluded: “Our view is that we are moving to a situation where there will be a portfolio of fuels where electric vehicles, different kinds of hybrids, petrols and diesels will all be around in quite large numbers. Buyers will become more conversant with the advantages of each.

“However, reaching that point will take some time and, while the media is doing its best to present diesel as untouchable in many cases, newer diesel cars remain a sound new and used buy in emissions, cost and value terms. Their values should remain stable.”

Mr Cutler added: “The Mayor of London has indicated that he wants to kill off diesel vehicles in London and the UK press have jumped on the bandwagon.

“It has been suggested that as a result of the negative press coverage, some dealers and underwriters in the London area are extremely worried about taking anything diesel into their stock. If you live in central London and don’t travel outside the area very often, then why would you have a diesel vehicle anyway?

“The main benefit of owning and running one is the additional fuel economy that you are able to achieve over a similar sized petrol engine model, in particular when travelling on an extended journey using the motorway network, sitting at a steady 60-70 mph, as the diesel engine will be hardly working at this speed and using very little fuel.  Therefore should we be surprised that diesel is not so popular in and around the London area?

“If you look elsewhere in the UK, to more rural areas that aren’t in the vicinity of a major city then diesel is still as popular as ever.

“Using data from Glass’s Rada product which can analyse retail asking prices by region, we see that diesel cars advertised over the last 12 months, show on the whole to have remained stable. It is clear that whilst diesel cars remain in the spotlight and some individual segments are beginning to perform differently, the overall market remains consistent.”

Under-inflated car and van tyres leave motorists with £600m fuel bill

Under-inflated car and van tyres could mean vehicle owners are spending an additional £600 million on fuel bills, it is claimed.

In the build-up to this year’s annual Tyre Safety Month campaign in October, TyreSafe, which promotes the initiative, says research suggested that as many as 57% of car and van tyres on the roads were being driven below recommended inflation pressures, increasing vehicles’ fuel consumption and the risk of being involved in an incident.

As a result, the question the tyre safety charity is posing to the country’s drivers during Tyre Safety Month is: Are you having a Good or Bad Air Day?

The chances are that most motorists are having a ‘bad air day’ without even knowing it, especially as the research suggested that a shocking 35% of tyres were being driven at least 8psi below the vehicle manufacturers’ recommendation. At that level of under-inflation, tyres were not only more vulnerable to damage and wear more quickly but they also made the vehicle more difficult to control.

In fact, when pressures are 7psi below the recommended setting, they can halve the amount of tyre in contact with the road, according to TyreSafe. That, it says, can be especially dangerous in the wet as the chances of aquaplaning are significantly increased.

TyreSafe chairman Stuart Jackson said: “The sheer number of tyres being driven below recommended pressures demonstrates a concerning lack of appreciation among drivers of the risks and costs this brings with it. It’s the most common tyre defect and seemingly taken lightly but drivers should remember that it brings with it potentially serious consequences. Regular tyre checks can reduce your chances of an incident on the road and ensure you have a good air day every day.”

Under-inflated tyres affect handling and grip, potentially causing irregular or unpredictable vehicle behaviour. They are also much more likely to suffer from a dangerous sudden rapid deflation, especially on high-speed motorway journeys.

Under-inflated tyres also require a bigger force to make them turn, so vehicles use more fuel and additionally, tyres not set to their correct pressure wear out more quickly.

Ensuring tyres are at their optimum pressure delivers fleet operating cost savings as a result of lower fuel bills and longer tyre life. Further spin-off benefits include increased safety and reduced CO2 emissions.

TyreSafe recommends that a vehicle’s tyre pressures are checked at least every month and before long journeys, and they are likely to need adjustment when carrying a full load.

Further information is available here.

VPS UK on the road to reducing fleet costs and boosting compliance with FSGB

Major vehicle service, maintenance and repair (SMR) cost savings – which are expected to ramp up further following implementation of a robust driver compliance initiative – are being achieved by fast-expanding VPS UK in partnership with Fleet Service Great Britain (FSGB).

Driver influenced costs are the single largest drain on a company’s in-life fleet vehicle expenditure, which is why, following a change in senior management, Manchester-headquartered VPS is working with FSGB to transform its fleet into ‘best in breed’.

Read the full case study here.

CASE STUDY – VPS GROUP

Reducing fleet maintenance costs and risk management compliance focus of business partnership

FACT FILE

Organisation name: VPS Group

Head of fleet: Steve Mulvaney

Vehicle details: 488 light commercial vehicles; 79 company cars, 4 HGVs, 40 items of plant and machinery including trailers

Business: VPS Group secures more than 50,000 properties and employs 1,500 staff in locations across the UK and mainland Europe. The company specialise in securing, maintaining and managing vacant property across a wide range of customer and industry sectors including retail, pubs, social housing, commercial property and construction sites. Core building services cover the vacant, unoccupied and void property lifecycle from an initial risk assessment, to security, including guarding, CCTV monitoring, clearing, cleaning, maintenance and preparation. The services protect properties against unauthorised access and a variety of hazards such as arson, theft, squatting and unauthorised occupation.

Head office location: Manchester

EXECUTIVE SUMMARY

Driver influenced costs are the single largest drain on a company’s in-life fleet vehicle expenditure.
This is why the fast-expanding VPS Group is working in genuine partnership with Fleet Service GB to transform its fleet into ‘best in breed’.

Initially responsible for the maintenance management of almost 300 vehicles, FSGB now ‘touches’ more than 600 company cars, vans, HGVs, trailers and items of plant delivering a wide range of services, including work-related road safety and compliance with health and safety regulations.

VPS head of fleet Steve Mulvaney said: “Improving the safety of all our drivers and fleet is a key priority for VPS. Working with FSGB has been great as the company acts as part of our fleet team. They are really nice people and easy to do business with, responding immediately to any requests.”

Mr Mulvaney took on the role as head of fleet in late 2016 and said: “The FSGB team is hugely knowledgeable and experienced. VPS is benefiting from financial savings across its fleet as well as ensuring our compliance with best practice.”

Additionally, FSGB has been instrumental in helping VPS rewrite its driver handbook so that it is now a “quick start guide” that employees can easily read.

BACKGROUND

VPS is a leading provider of vacant property and site security solutions throughout the UK and across Europe.

Owned by PAI Partners, a major European private equity firm, VPS has, over the last few years, expanded rapidly across the UK, but also in France, Germany, Ireland and the Netherlands, while also increasing its presence in Italy and Spain.

In the UK the company’s acquisitions include Redfields Landscaping, Lotus Landscaping and Design and most recently Evander Glazing & Locks.

Headquartered in Manchester, VPS UK operates out of 23 combined service centres across the UK and Ireland. The expanded businesses’ focus on the protection of people, property and assets on a temporary or emergency basis. Core services cover the vacant, unoccupied and void property lifecycle from an initial risk assessment, to security, including guarding, CCTV monitoring, clearing, cleaning, maintenance and preparation.

FSGB launched in early 2015 and a member of its independent garage network referred the company to VPS UK.

At the time VPS UK operated a fleet of 282 light commercials and company cars with the vast majority of the vehicles being vans. Expansion of the company has taken the total number of vehicles operated to more than 600, of which almost 500 are light commercials.

Critically, following the company’s rapid expansion – and further growth is anticipated which will also mean the number of fleet vehicles increasing – a major restructuring that included the appointment of a new top management team that included David Taylor-Smith as chief executive and Colin Woodland as operations director led to integration of the businesses.
Integration also led to the appointment of Mr Mulvaney as VPS head of fleet from his previous role as network operations southern manager at Evander Glazing & Locks.

That triggered an in-depth fleet review and ultimately an expansion of the business partnership with FSGB with the delivery of a broader range of in-life fleet services.

THE FLEET MAINTENANCE CHALLENGE

All fleets are striving to reduce their cost base and VPS conducted a wide-ranging strategic review of its vehicle operations in 2014 and decided to appoint a new fleet management company after discovering that its incumbent partner was not delivering value for money and there were weaknesses in its service provision.

VPS wanted to appoint a company that was focused on client communication and working hand-in-hand to further improve best practice across the fleet.

James Freeman, head of procurement, VPS UK, but in spring 2015 head of operational support, said at the time: “We were looking to bring a more scientific approach to the management of our fleet. It was clear we had to make major changes to the way our fleet was externally managed.”
Following a series of meetings between Mr Freeman and FSGB’s head of sales Marcus Bray, VPS became the fleet management company’s first major client.

It was, acknowledges FSGB, a tremendous show of faith in a newly launched company, while VPS said it was aware of how the business came into being and the history of its management team in the industry.

But the partnership has gone from strength-to-strength and that is underlined by VPS asking FSGB to take on more responsibility and a greater number of vehicles as the company has expanded.

VPS has a track record of outright purchasing all vehicles, which are typically utilised over a five-year/150,000-mile operating cycle, although replacement is influenced by mileage and service, maintenance and repair costs. In-life management services provided by FSGB were initially: vehicle maintenance and rental management and management services related to vehicle taxation and the payment of fines.

Rapid acquisition increased the fleet size, with the major growth coming with the 2016 purchase of Evander Glazing & Locks, which added a further 234 vehicles all on contract hire.

The appointment of Mr Mulvaney and the fleet review led to FSGB supplying additional services that included accident management across the newly expanded fleet and VPS introducing FSGB’s newly launched Achieve Driver Management programme.

Mr Mulvaney said: “VPS had expanded as a business, but we only started integrating the UK acquired businesses in mid-2016. It was clear to me that FSGB’s knowledge and experience would be vital in transforming the fleet operation.”

What’s more, as contract hire vehicles on the Evander fleet reach the end of their operational life, they will be replaced with vans bought outright by VPS with FSGB taking on the maintenance management responsibility. VPS’s early 2017 replacement programme included the introduction of 78 new vehicles comprising 42 specialist tippers, 35 panel vans and a motorcycle with a similar number of new models being introduced later in the year that will include 55 panel vans and 23 tippers.

Additionally, VPH has a further 300 vehicles operating outside of the UK that eventually will come under Mr Mulvaney’s remit.

CUTTING MAINTENANCE MANAGEMENT COSTS

AlThe cost of most products and services increase year-on-year but, remarkably, the pence per mile vehicle operating costs on the VPS fleet have reduced since FSGB took over management responsibility.
All VPS vehicles have service, maintenance and repair work undertaken through FSGB’s nationwide independent garage network.

When FSGB took over maintenance management of the fleet the pence per mile operating costs on a sample of 176 vans were 5.12p per vehicle. That figure has now reduced to 5p per vehicle per mile across a sample of 196 vans – a 2.3% cost reduction per vehicle per mile despite a 16% fleet size increase.

What’s more, FSGB’s data analysis highlights that the average age of vans in the sample has reduced by four months to 39 months (down 9.3%), while average annual mileage has increased 3,669 miles to 23,971 (up 18%) with average total mileage up 2,927 miles to 73,264 miles (up 4%).

What the figures reveal is that despite the fleet working harder with average mileage rising, average fleet costs per vehicle are continuing to reduce.
Mr Mulvaney said: “It was clear to me that previously VPS did not have a real grip on fleet costs. FSGB was providing data, but it was not being used.”
VPS now employs a data analyst within the company’s fleet department to study the information provided by FSGB.

Mr Mulvaney said: “The data we are provided with is extremely robust and it is highly probable that the cost savings are even higher because at the time FSGB took over maintenance management of the fleet costs were not being recorded as accurately as they are now.”

Marcus Bray said: “There is no doubt that the current VPS management working closely with FSGB is continuing to drive out costs. As FSGB builds up its database on each vehicle, we are confident that significant further costs savings will accrue on a per vehicle basis.”

Building up a vehicle operating lifecycle report on every vehicle and the service, maintenance and repair spend associated with the van or car, while also closely managing vehicle mileage, enables FSGB to calculate the pence per mile data.

Mr Mulvaney said: “FSGB is responsible for the day-to-day management of the fleet and all remedial vehicle work is carried out through its own appointed garage network. With service centres nationwide it is important that we have reliable garages that are close to our vehicle locations.”

He continued: “Safety is paramount along with compliance with manufacturers’ service schedules. I like the idea that FSGB’s garage network is fully audited and that gives me confidence that all maintenance work is carried out in accordance with best practice.

“We have depots nationally and I am receiving very positive feedback from the managers that vehicles are being well maintained and customer service is first class.

“The excellent service is one of the many reasons why we have expanded our business partnership with FSGB as our fleet has grown. FSGB has delivered enhanced service, fleet efficiency and sustainable cost reduction and control.

“FSGB is going the extra mile in managing the VPS fleet and delivering an excellent service. FSGB maybe a new company, but the management team has a long-established pedigree in the industry.”

Mr Mulvaney added: “We are totally satisfied that FSGB is spending our money as though it was their money and is constantly monitoring every penny to ensure we receive value for money.

“FSGB has maintenance control over significantly more than 50% of the VPS fleet and that figure will increase as VPS move from contract hiring vehicles to outright purchase.

I am confident that the data I am being provided with is accurate so I can talk to drivers and their managers from an informed position.”

ACHIEVE – MANAGING DRIVERS, VEHICLES AND JOURNEYS EFFECTIVELY

Achieve Driver Management is FSGB’s industry-leading and unique ‘driver centric’ differentiator which provides clients with the necessary tools to assist all their drivers to take ownership and responsibility for work-related road safety compliance.

The Achieve programme is continually evolving, but at its heart is a driver compliance programme that ensure companies manage their work-related road safety responsibilities in accordance with best practice and legislation.
The Achieve ‘toolbox’ already includes a driver app with a wealth of sophisticated cutting-edge features delivering 24/7 support to employees at the wheel of company vehicles. Features include:

  • Interactive notifications, prompts, reminders and alerts
  • The ability to arrange bookings for servicing, maintenance and repairs, including tyres
  • A facility to report an incident, crash or breakdown, using GPS-enabled location services, which directly link to the FSGB Support Team
  • A facility to upload images, capturing incident and/or vehicle condition
  • The ability to update vehicle mileage in real-time
  • Multiple vehicle management options
  • A bespoke configurable check sheet for vehicle condition reporting
  • The ability to view vehicle lifetime history.

Mr Mulvaney said: “The driver app benefits VPS by allowing us to carry out full vehicle inspections both scheduled and ad hoc at the touch of a button. This information is seamlessly uploaded into the customer portal for immediate review. We now have a better view of the condition of our fleet at our fingertips. Additionally, drivers can now book service, tyres and glass requests direct on the app. It is excellent technology, seamlessly delivered.”
Additionally, Achieve:

  • Embraces driver licence validation
  • Measures driver performance with data fed into the online system from a variety of data gathering sources including telematics.

FSGB’s expertise identifies that the single biggest influence on fleet operating costs is the driver and improving their performance is the key to keeping costs under control.

The Achieve programme has been developed to continually measure driver performance and behaviour, while also ensuring compliance, and by acting on the data and management reports provided, vehicle-related costs will reduce.

The Achieve programme fully supports VPS’s work-related road safety objectives, for 100% driver and vehicle compliance.

Every driver is tasked to undertake a weekly check on their vehicle using the app. This important initiative is supported by monthly checks of all vehicles by service centre and depot managers.

Mr Mulvaney said: “VPS is now able to manage its driver influenced costs through Achieve. We are receiving some excellent information on all aspects of the fleet. We are taking the raw data and using it in management reports that are sent to the board weekly and monthly.”

Furthermore, VPS vehicles are equipped with telemetry – four systems are currently used due to the company’s acquisition but that figure will be reduced to a single supplier over time – and the information will be married to the Achieve data to further improve driver, vehicle and journey performance monitoring.

What’s more, VPS is using the data relating to cost-influencing factors such as fuel use, tyre wear, the replacement of friction parts and in numerous other areas as the basis for a driver reward scheme.

VPS operates through six business units and drivers in each will every month have the opportunity to win a prize based on their performance and their vehicle’s maintenance record. The monthly winners will then go on to contest an annual prize.

Mr Mulvaney said: “Driver education and participation is critical to both safety and cost management. We can use the data FSGB is generating to show drivers how they can improve and, potentially, introduce new initiatives and targeted interventions where an issue is highlighted.”

Not only that, but there are pockets in the VPS business where vehicle mileage is inconsistent with age. For example, some vans at three-years-old have clocked up 150,000 miles, while others at five-years-old have travelled just 60,000 miles.

Mr Mulvaney said: “The data will enable VPS to reallocate vehicles so age and mileage on a per vehicle basis is more consistent. That, in turn, will also help to reduce fleet maintenance costs.”

GEOFFREY BRAY EXECUTIVE CHAIRMAN, FLEET SERVICE GB

“In my experience companies that genuinely embrace a partnership philosophy will always succeed if they set out achievable objectives and then agree a delivery plan.

“VPS management clearly recognised during the early discussions that whilst Fleet Service GB was a new start business, the collective knowledge and experience of the management team would play an important role in helping it formulate and implement an operationally efficient and cost effective fleet policy.

“Both teams are to be congratulated on the open and transparent approach adopted since the beginning of the partnership.  Daily, weekly and monthly analysis, and most importantly enhancements of the operating systems and procedures, ensure that challenges or issues as and when identified are dealt with immediately.

“Understanding the VPS needs and then becoming a genuine extension of the company’s management team is an embedded trait of Fleet Service GB. The results to date, in particular the implementation of Achieve, the driver management programme, within a very short time frame, demonstrates from both sides a professional commitment to deliver the objective.

“I have every confidence that the operating formula applied to the management of the vehicle fleet by VPS and Fleet Service GB will continue to strengthen and deliver significant mutual benefits.”

End of the road for petrol and diesel cars as Volvo goes all electric

Volvo says that every car it launches from 2019 will have an electric motor, marking the historic end of models that have only an internal combustion engine and placing electrification at the core of its future business. 

The announcement represents one of the most significant moves by any car maker to embrace electrification, and highlights how, over a century after the invention of the internal combustion engine, electrification is paving the way for a new chapter in automotive history.

Volvo’s announcement comes with the UK government investing hundreds of millions of pounds in encouraging business and retail uptake of plug-in vehicles through a range of fiscal measures including tax incentives and grants to offset the cost of buying vehicles and recharging points.

The government’s ambition is for all new vans and cars to be zero emission by 2040 – the transformation to a wholly electric car and van parc is expected to be completed by 2050.

In announcing Volvo’s move, Håkan Samuelsson, president and chief executive of Volvo Cars, said: “This is about the customer. People increasingly demand electrified cars, and we want to respond to our customers’ current and future needs. You can now pick and choose whichever electrified Volvo you wish.”

Volvo Cars will introduce a portfolio of electrified cars across its model range, embracing fully electric cars, plug-in hybrid cars and mild-hybrid cars.

It will launch five fully electric cars between 2019 and 2021, three of which will be Volvo models and two of which will be high-performance electrified cars from Polestar, Volvo Cars’ performance car arm. Full details of the models will be announced at a later date.

Those five cars will be supplemented by a range of petrol and diesel plug-in hybrid and mild-hybrid 48-volt options on all models, representing one of the broadest electrified car offerings of any car maker.

It means that there will in future be no Volvo cars without an electric motor, as pure petrol and diesel cars are gradually phased out and replaced by internal combustion engine cars that are enhanced with electrified options.

“This announcement marks the end of the solely combustion engine-powered car,” said Mr Samuelsson. “Volvo Cars has stated that it plans to have sold a total of one million electrified cars by 2025. When we said it we meant it. This is how we are going to do it.”

The announcement also underlines Volvo Cars’ commitment to minimising its environmental impact and making the cities of the future cleaner. Volvo Cars says it is focused on reducing the carbon emissions of both its products as well as its operations. It aims to have climate-neutral manufacturing operations by 2025.

The decision also follows this month’s announcement that Volvo Cars will turn Polestar into a new separately branded electrified global high-performance car company.

VPS UK on the road to reducing fleet operating costs and boosting compliance with FSGB partnership

Major vehicle service, maintenance and repair (SMR) cost savings – which are expected to ramp up further following implementation of a robust driver compliance initiative – are being achieved by fast-expanding VPS UK in partnership with Fleet Service Great Britain (FSGB).

Driver influenced costs are the single largest drain on a company’s in-life fleet vehicle expenditure, which is why, following a change in senior management, Manchester-headquartered VPS is working with FSGB to transform its fleet into ‘best in breed’.

Operating 488 light commercial vehicles, 79 company cars, four HGVs and 40 items of plant and machinery, including trailers, from 23 combined service centres across the UK and Ireland, VPS specialise in securing, maintaining and managing more than 50,000 vacant properties across a wide range of customer and industry sectors including retail, pubs, social housing, commercial property and construction sites.

Following a series of business acquisitions resulting in significant fleet expansion and a major restructuring that included the appointment of a new top management team, Steve Mulvaney was appointed VPS head of fleet from his previous role as network operations southern manager at Evander Glazing & Locks, one of the firm’s bought.

That triggered an in-depth fleet review and ultimately an expansion of the business partnership with FSGB with the delivery of a broader range of in-life fleet services that now includes accident and risk management as well as vehicle maintenance and rental management and management services related to vehicle taxation and fine payment.

The cost of most products and services increase year-on-year but, remarkably, the pence per mile vehicle operating costs on the VPS fleet have reduced since FSGB took over management responsibility when the fleet specialist was launched in 2015.

All VPS vehicles have SMR work undertaken through FSGB’s nationwide independent garage network. VPS has a track record of outright purchasing all vehicles, which are typically utilised over a five-year/150,000-mile operating cycle, although replacement is influenced by mileage and SMR costs.

When FSGB took over maintenance management of the fleet the pence per mile operating costs on a sample of 176 vans were 5.12p per vehicle. That figure has now reduced to 5p per vehicle per mile across a sample of 196 vans – a 2.3% cost reduction per vehicle per mile despite a 16% fleet size increase.

What’s more, FSGB’s data analysis highlights that the average age of vans in the sample has reduced by four months to 39 months (down 9.3%), while average annual mileage has increased 3,669 miles to 23,971 (up 18%) with average total mileage up 2,927 miles to 73,264 miles (up 4%).

What the figures reveal is that despite the fleet working harder with average mileage rising, average fleet costs per vehicle are reducing.

Mr Mulvaney said: “It was clear to me that previously VPS did not have a real grip on fleet costs. FSGB was providing data, but it was not being used.”

VPS now employs a data analyst within the company’s fleet department to study the information provided by FSGB.

Mr Mulvaney said: “The data we are provided with is extremely robust and it is highly probable that the cost savings are even higher because at the time FSGB took over maintenance management of the fleet costs were not being recorded as accurately as they are now.

“FSGB is responsible for the day-to-day management of the fleet and all remedial vehicle work is carried out through its own appointed garage network. With service centres nationwide it is important that we have reliable garages that are close to our vehicle locations.

“We are totally satisfied that FSGB is spending our money as though it was its money and is constantly monitoring every penny to ensure we receive value for money. Working with FSGB is great as the company acts as part of our fleet team.”

Meanwhile, Achieve Driver Management, FSGB’s industry-leading and unique ‘driver centric’ differentiator, is at the hub of VPS’s work-related road safety requirements with 100% driver compliance on both driver licence validation and vehicle checks. The programme has been developed to continually measure driver performance, while also ensuring compliance, and by acting on the data and management reports provided, vehicle-related costs will reduce.

The Achieve programme is continually evolving, but the ‘toolbox’ includes a driver app with a wealth of sophisticated cutting-edge features delivering 24/7 support to employees at the wheel of company vehicles including, for example, ensuring every driver undertakes a weekly check on their vehicle which is supported by monthly checks by service centre and depot managers; and driver performance with data fed into the online system from a variety of sources including telematics, details of any fines and crash history.

Mr Mulvaney said: “The driver app benefits VPS by allowing us to carry out full vehicle inspections both scheduled and ad hoc at the touch of a button. This information is seamlessly uploaded into the customer portal for immediate review. We now have a better view of the condition of our fleet at our fingertips. Additionally, drivers can now book service, tyres and glass requests direct on the app. It is excellent technology, seamlessly delivered.

“VPS is now able to manage its driver influenced costs through Achieve. We are receiving some excellent information on all aspects of the fleet. We are taking the raw data and using it in management reports that are sent to the board weekly and monthly.”

What’s more, VPS is using the data relating to cost-influencing factors such as fuel use, tyre wear, the replacement of friction parts and in numerous other areas as the basis for a driver reward scheme.

Mr Mulvaney said: “Improving the safety of all our drivers and the fleet is a key priority for VPS with driver education critical to safety and cost management. We use the data FSGB is generating to show drivers how they can improve and, potentially, introduce new initiatives and targeted interventions where an issue is highlighted.”

Not only that, but there are pockets in the VPS business where vehicle mileage is inconsistent with age. For example, some vans at three-years-old have clocked up 150,000 miles, while others at five-years-old have travelled just 60,000 miles.

Mr Mulvaney said: “The data will enable VPS to relocate vehicles so age and mileage on a per vehicle basis is more consistent. That, in turn, will also help to reduce fleet maintenance costs.”

FSGB head of sales Marcus Bray said: “There is no doubt that the current VPS management working closely with FSGB is continuing to drive out costs. As FSGB builds up its database on each vehicle, we are confident that significant further costs savings will accrue on a per vehicle basis.”

Building up a vehicle operating lifecycle report on every vehicle and the SMR spend associated with the van or car, while also closely managing vehicle mileage, enables FSGB to calculate the pence per mile data.

Mr Bray said: “In my experience companies that genuinely embrace a partnership philosophy will always succeed if they set out achievable objectives and then agree a delivery plan.”