The Grey Fleet
The Grey Fleet is a term used to describe employee owned vehicles which are being used for business travel.
Describing this area of the fleet as “grey” is a very apt term because normally this mode of transport is often not managed or even ignored by senior management.
It can be a useful solution to support business travel requirements as it can be used on an ad hoc basis and paid for through mileage claimed back through the expenses process. It doesn’t need contracts or any other financial risk to run, just a payment based on use.
The issue is however, the legislation surrounding driving at work still applies to this section of drivers in much the same way as it would to company car drivers. So what do you need to do to manage this area effectively taking into account cost, operational, risk and environmental factors?
Establish a Baseline
It is important to identify exactly how much grey fleet is being utilised within your business.
Expenses records will be the best source of information for this. From these records you should establish:
The numbers of journeys
The mileage for each journey
The purpose for completing the journey
The cost of each journey
The vehicle used for the journey
The individual who completed the journey
Were there any passengers carried
Whilst some of this information will be readily available other aspects may be much harder to find as a lot of expenses systems are not configured to collect all of this information.
The Cost Of Grey Fleet
Private vehicles are usually paid mileage at the government advisory fuel rates. Here it is useful to distinguish what the rates are designed to compensate the driver for.
The government Approved Mileage Allowance Payments (AMAP) rates are currently set at 45p per mile, for the first 10,000 miles of a tax year and 25p thereafter. This payment covers both the depreciation and maintenance the vehicle incurs as well as the fuel cost. AMAP rates should therefore only be used to pay for those grey fleet drivers not in receipt of a cash allowance (as the cash allowance itself is supposed to cover the provision of any vehicle).
Cash allowance drivers should be re-imbursed at the advisory fuel rates which vary according to engine size and fuel type.
For grey fleet drivers (not in receipt of the cash allowance) there is a point at which it is often more cost effective to hire a vehicle instead of using the grey fleet. Depending on the daily hire rates you have with your supplier the breakeven point is approximately 70 miles for a round trip. Therefore for trips in excess of 70 miles it is more cost effective for the driver to hire a vehicle.
Where organisations have a regular requirement to travel out of particular locations it may be beneficial to have pool vehicles on site which drivers can utilise. It is important however to make sure this utilisation is sufficient to warrant getting permanent vehicles rather than regular hired vehicles.
For individuals with heavy grey fleet use (10k+ miles per annum) may be more cost effective to be offered a company car.
Implement Best Practice
Organisations should have policies and procedures in place to effectively manage the grey fleet. Managers should be trained so they are consistent in the approach to grey fleet across the organisation and aware of its risks.
In simple terms the journeys should be legally compliant. Basic compliance will require the following:
Up to date road tax
Insurance covering business journeys
Adequate maintenance to keep the vehicle road legal
Valid drivers licence for the class of vehicle being driven
No health or eyesight issues which would affect the ability to drive safely
The organisation should have the means to demonstrate that the journeys have been legally compliant through accurate records keeping and effective audit trails. Drivers are able to confirm they meet the required standards through self certification but these records should be kept centrally to cover audit requirements. Where organisations are geographically dispersed then electronic systems are better at fulfilling this requirement.
Many organisations wish to go beyond the basic legal compliance required to reduce the risks associated with grey fleet use. These steps are likely to involve some automation of the drivers details such as driver licence checking and checking the details of the vehicles directly with the DVLA.
Ideally third party suppliers can be used to automatically collate the information on drivers and vehicles giving the organisation a clear picture of the risks posed by the grey fleet.
Where vehicle details are collected it is also possible to provide the carbon footprint for the organisation to form part of ESOS reporting requirements.
For more information regarding the management of your grey fleet then please