Q: What is the role of ACFO, who should join and what are the benefits?
A: ACFO was founded in 1972 and has expanded to become Britain’s premier organisation not only for fleet managers, but for anyone whose job embraces fleet decision-making responsibility. Today, that includes finance, HR and procurement directors, for example, and we are increasingly counting people with such job titles among our membership. The organisation provides invaluable networking opportunities through regular regional meetings and at our annual AGM and conference for all fleet decision-makers to share best practice in fleet management.
Indeed, as fleet management continues to evolve and a raft of different issues continue to confront fleet operators and other employees with responsibility for cars and light vans, the networking opportunities available have become even more important, particularly for employees who are not full-time, professional fleet managers.
Outside of meetings the ACFO website - www.acfo.org - provides members with an extensive range of information and regular news updates on key issues impacting on fleet operations.
In addition, ACFO continues to represent the legitimate interests of vehicle fleet operators, to a range of organisations and bodies including vehicle manufacturers, service company suppliers and government departments and agencies, such as HM Treasury, HM Revenue & Customs, the DVLA and the Department for Transport.
Q: What are the issues with forthcoming changes to Corporation Tax changes in April 2009 and how will this affect fleets?
A: The key issue for all fleet decision-makers with the introduction of corporation tax changes next April is to focus on vehicle choice lists.
Fleet decision-makers who fail to analyse the vehicles available to company car driving employees or, who make the wrong choices when compiling new choice lists, will find that the cost implications are huge.
The focus for fleets should be on largely ensuring that all vehicles fall below the 160 g/km of carbon dioxide (CO2) threshold. In simple terms, although there are many variables, company cars with CO2 emissions above that level will cost more to run than they do at the moment.
Current projections indicate that the post tax net effect could see ‘effective’ costs for a company car increase by £20 per month or more on vehicles emitting over 160 g/km.
However, within that broad guideline there are numerous other factors such as the cost of funding that need to be taken into account in calculating vehicle operating costs. Full wholelife costs including the value of any tax relief will be required to establish the real costs to the business. As a direct result, many fleets will need to give serious consideration to their allocation policies if they are to avoid significant increases in costs at both pre-tax and after-tax levels.
Therefore, fleets decision-makers should: understand the tax changes; understand how they impact on the current fleet; carry out a cost analysis of the changes to understand the financial implications of the new measures; and then decide the vehicles that will be offered to company car drivers post-April 1, 2009.
Businesses that fail to take such actions will find that costly errors could be made at a time when economic turmoil means corporate expenditure is under the spotlight at board level.
The complexity of the changes led to ACFO holding two recent members’ seminars where industry experts addressed the fundamentals of the changes. Further information on the changes can be found on the ACFO website at www.acfo.org
Q: How did the Corporate Manslaughter and Corporate Homicide Act 2007 affect fleet managers?
A: Under health and safety at work legislation, companies have always owed a duty of care to their employees - including those driving as part of their job and, as a result, other road users.
Therefore, at face value, the Corporate Manslaughter and Corporate Homicide Act did not introduce any new legislation that responsible companies and fleet decision-makers should not already have been aware of.
What the legislation did do when it was introduced in April 2008 was to focus the minds of fleet chiefs and raise awareness in public and private sector organisations of the importance of checking that all reasonable health and safety policies and procedures were in place to safeguard drivers and all other road users.
The Act made clear, just as existing health and safety legislation does, that organisations should have in place audit trails relating to drivers, vehicles and journeys. Therefore, in the event of a fatal road crash, companies and public sector fleets can prove they had taken all reasonable steps to prevent such a tragedy and thus safeguard themselves from prosecution.
Q: For fleets looking for new cars, what do you recommend in terms of MPG and CO2 emissions?
A: There is no simple off-the-shelf solution as to what are the ‘best’ cars to operate.
Apart from the myriad of funding options available that must be analysed to determine the most appropriate for each individual business scenario, every vehicle must be ‘fit for purpose’.
For example, designating a so-called ‘city car’ for a 25,000-mile a year salesperson would not pass the ‘fit for purpose’ test. Equally, for example, service engineers who have goods and spare parts to carry are likely to best equipped by driving an estate car or car derived van. And, for fleets with vehicles travelling in and out of London hybrid vehicles may be an option as they are exempt from the capital’s congestion charge.
Having, decided on the most suitable type of cars for each category of driver according to job-need, fleet decision-makers should then analyse wholelife cost data to select the most cost-effective vehicles available within each segment. Such data is available from a variety of independent sources, including trade publications and websites.
As wholelife costs calculate the cost of running a vehicle on a pence per mile basis they are more accurate in helping compile fleet budgets than simply using vehicle list price or monthly lease rates.
In terms of fuel economy and CO2 emissions, vehicle engineering advances mean that the old established idea of a ‘small car’ being the most fuel efficient does not always stand up to scrutiny.
The Government’s fiscal regime of basing motoring taxes on CO2 emissions has focused vehicle manufacturers on delivering increased performance from smaller engines. That, as a result, means that many of today’s 1.4 and 1.5 litre engines, for example, deliver the same performance as yesterday’s 1.8 and 2.0 litre engines but with the added benefit of lower CO2 emissions and better MPG.
In choosing the most cost-effective vehicles, fleet operators from a corporate tax perspective should look for sub-160 g/km CO2 vehicles. While, from a driver perspective the Government has introduced a special 10% benefit-in-kind tax rate for sub 120 g/km cars. It should also be remembered that typically the lower a car’s CO2 figure the better the fuel economy.
Choosing lower CO2 emission vehicles will not only cut fleet operating costs and corporate and employee tax bills, but they will also enable businesses to underline their carbon footprint-cutting credentials and their focus on corporate social responsibility.
Q: What is ACFO’s opinion of proposed congestion charging for Manchester and other cities and how do you think this will affect businesses?
A: City-based road charging is bad because the fees paid by business drivers have to be born by companies and amount to yet another corporate cost. Ultimately, such charges feed through to customers and result in higher prices for goods and services.
The problem is that congestion charges are being discussed and introduced with no viable transport alternative available. If there was convenient, effective and suitable public transport available then support for urban tolling might increase, but there is not.
However, where tolling has been effective is, for example, on the M6 around Birmingham. I frequently pay to use the M6 Toll Road because it is significantly more time-effective than negotiating the traffic on the congested motorway lanes of the M6. The M6 Toll Road is a viable alternative with drivers and businesses prepared to pay the charge benefiting.
Q: What do you make of the current management of UK roads?
A: The amount of money being collected annually from motorists in the form of various taxes is of the order of £46 billion. Yet, less than a fifth of that is reinvested in the road network.
Meanwhile, numerous annual surveys highlight that local authorities are struggling to find the cash to repair roads in their respective areas. In short, the current management of the roads could be better, but at a time when money is tight and politicians are discussing tax cuts it is difficult to see any change in the future.
Instead, what everyone must do - individuals and corporates - is to analyse their own vehicle use. Motoring organisations have reported that as a result of this summer’s record fuel prices, vehicle usage dropped.
That implies that travel is not always essential and that alternatives are available. If people got out of their cars and used other forms of travel - including walking, as many car journeys are ‘local’ - as well as audio and tele conferencing for meetings, road travel would become more efficient, the roads would be safer, emissions would reduce and fewer repairs would be required.
Q: With the recent news concerning the switching off of speed cameras in Swindon, how do you feel this could affect fleets and do you think other public bodies will follow suit?
A: Government and local authorities call ‘speed’ cameras ‘safety’ cameras. Yet there is no unarguable evidence to suggest that the plethora of road cameras criss-crossing the UK saves lives.
In my view ‘speed’ does not kill, but ‘inappropriate speed’ does kill. For example, 20 mph may be too fast if driving past a school when children are about. Equally, if the road is clear and driving conditions are good at midnight on a motorway driving above 70 mph maybe possible.
Fleets have little say in the matter of whether or not speed cameras are part of the landscape. What safety-focussed fleet operators need to continually remind drivers to drive within the law. Indeed, light commercial vehicle fleets are increasingly fitting speed limiters to vans to prevent them going above 70 mph.
Whether or not other public bodies will follow the lead of Swindon I have no idea. What I do know is that speed cameras are viewed by many as a ‘cash cow’ and local authorities need money.
Q: How do you think fleet industry will look in 10/20/30 years time? Will we all be driving electric cars?
A: The trend for tomorrow’s motoring is beginning to emerge - small, low emission vehicles.
The focus on climate change and cleaning up the environment will only increase in the years ahead. As a result, the trend that has already started of slowing demand for so-called gas-guzzlers and rising demand for fuel-sipping cars will increase.
Various alternatives to the traditional petrol and diesel cars have been available for many years and more continue to arrive in showrooms. However, currently it seems there are drawbacks to each technology.
For example, liquefied petroleum gas won support from some fleets in the mid-1990s, but a lack of an effective nationwide refuelling infrastructure and the Government’s taxation policy has seen use dwindle away except by a handful of largely depot-based businesses.
Meanwhile, electric vehicles are being touted as the next best thing, but limited battery range means such vehicles are unsuitable for all but very short journeys before recharging is necessary.
And, motor manufacturers have historically always viewed hydrogen as the ultimate Holy Grail, but costs will have to significantly reduce for the technology to be commercially viable.
There will always be a need to move around the country and, at the moment, it is difficult to see that anything will replace cars as the favoured form of transport.
What the number one power source will be in the years to come is open to debate. What we do know is that fossil fuels are running out, environmental demands means that smaller more efficient cars are growing in popularity and alternatives to the combustion engine are being developed.
If engineers are right hybrid and electric vehicles will become a stop-gap on the road to hydrogen fuelled cars being widely available from about 2020.
