What is grey fleet management?
A Grey Fleet is the title given to personal vehicles which are used for business purposes.
A Grey Fleet is the title given to personal vehicles which are used for business purposes. Often this means employee owned vehicles which are being regularly used for business travel. Managing a grey fleet can have different time and cost implications than operating with a regular fleet.
Effective grey fleet management can have its benefits over managing company owned vehicles however, it can pose problems which don’t exist when dealing only with business vehicles.
Cost of grey fleet management
Allowing and incentivising drivers to use personal vehicles for business travel can be more cost-effective for smaller, low-mileage companies than managing a fleet of their own vehicles.
Reimbursing fuel costs for employees who must travel for work outside of the normal commute is often much cheaper than the cost of owning and maintaining company vehicles, particularly when business trips are few and far between.
Nevertheless, it can become difficult to accurately track the extra mileage employees do on business related journeys and employers operating grey fleets can open themselves up to the risk of overpaying for business travel.
As well as tracking mileage, another threat posed by grey fleets is that the business could be made liable for any accidents or vehicle damage employees may encounter while driving their vehicle for work purposes – something which could end up costing the company more than if they had their own fleet in the first place.
In addition to the cost implication of employee car accidents and maintenance, the employer must also contemplate the duty of care they are required to take over their employees.
This duty of care can easily be neglected by a business which is happy to allow a poorer standard, or poorly maintained vehicle to be used by its employees.
Company, or pool cars are usually newer and often in better condition than personal vehicles and consequently driver safety – particularly where longer journeys are carried out – must be considered by the employer when deciding if the benefits of a grey fleet outweigh that of a regular business fleet.
3 steps to effective grey fleet management
When deciding whether your business is better off sticking with a grey fleet, there are a few key decisions to consider.
1. Is a Grey Fleet right for you?
First and foremost; assessing the travel needs of your business is a must. In many cases pool cars, car shares or even rentals may be more appropriate.
2. Ensure employer and employees are on the same page
If a grey fleet is the prevalent option for your business, the next step is to set a plain and simple grey fleet management plan which clearly sets out processes to employees such as how to report and claim mileage, or journey justification approval.
3. Get hands-on with your Grey Fleet
Once you have established a grey fleet, it is important for you to manage it in the same way you would with a business fleet.
It is crucial that regardless of vehicle ownership, a business can still track and diagnose anything wrong with the vehicle to remain as efficient as possible both in cost and in time spent off the roads.
Grey Fleet Manager’s checklist
Track vehicle fuel consumption and general wear and tear.
Make sure you’re covered! Check your insurance and breakdown cover is valid.
Keep a log of the grey fleet vehicles in use in your business.
Consider telematics solutions to increase your fleet’s efficiency.
Fleet vs grey fleet
Grey fleet management is a great way to allow employees to use their own vehicles, for business purposes – so long as you keep on top of the health and maintenance of those vehicles.
It can reduce costs far below those of running a fleet of business vehicles and reduces the up-front cost associated with purchasing or leasing vehicles in the first place.
However, it is important to accurately monitor personal vehicle use and stay on top of mileage claims and vehicle maintenance within your grey fleet.
In doing so you will have better insight into the efficiency of your grey fleet and may be better equipped to judge whether the business reaches a point where a company-led fleet becomes a more cost-effective option.
Are you looking for business breakdown cover for your fleet? Take a look at our options for other vehicle types such as Taxi Breakdown cover or Minibus breakdown cover. Electric vehicles are covered as standard with our business breakdown cover.