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"Having the wrong type and number of vehicles has a cost impact for organisations. Developing a fleet strategy that ties in with the business is key to reducing fleet costs and CO₂ emissions, ultimately contributing to a stronger bottom line.”

Charlie Henderson, PA transport expert

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Developing an effective fleet strategy to cut CO₂ emissions and drive down costs

Many organisations are seeking to reduce the cost and CO₂ emissions of their vehicle fleet. Targeted performance improvement initiatives, such as focusing on engine efficiency in fleet vehicles, can deliver some reductions. However, this neglects significant opportunities that can only be realised by developing a coherent fleet strategy.

Organisations must establish a long-term strategic view of their fleet requirements as the basis for a fleet strategy that delivers a more cost-efficient capability and enables the organisation to meet targets for reducing CO₂ emissions.

Understanding fleet requirements

To establish a more efficient fleet and reap the benefits in terms of lower costs and an enhanced reputation with stakeholders and customers, organisations must:

  • understand their current and future business operating models: in recent years many businesses have significantly changed the way they provide goods and services to customers. However, often they have not changed their transport capability to reflect this, often neglecting to re-shape their fleet to reflect a new mix of long, medium and short journeys.

  • identify the type of transport required to support the business operating model: does the organisation actually need a vehicle fleet? Can services be delivered remotely? Should staff make better use of public transport? Can delivery of goods be outsourced?

  • assess the role of vehicle provision within an overall compensation package: given the evolution of vehicle tax policy, are there more tax-efficient ways of rewarding staff than by providing a fleet vehicle? For many employees working in cities, the benefits of a company car are diminishing.

Improving fleet performance

With a clear understanding of future fleet requirements, organisations are in a stronger position to develop a fleet strategy to reduce CO₂ emissions and costs. In particular they can:

  • procure the right number and type of vehicles more cost-efficiently. Spare fleet can be minimised, vehicles are not over-specified, greater discounts can be negotiated and more efficient procurement routes can be used

  • take a more strategic approach to CO₂ reduction across vehicle type (including the use of hybrid and electric vehicles) and vehicle usage (for example vehicle loading, driving style, vehicle routing). For example, for urban usage, fleet managers can consider electric vehicles (EVs), scooters and electric bikes. For long-distance journeys, diesel-fulled vehicles are still the most efficient, but alternatives such as biodiesel, plug-in hybrids and CNG-powered vehicles are emerging, providing fleet managers with new possibilities for aligning business objectives with environmental targets.

  • capitalise on financial incentives for EVs and Plug-In Hybrid Electric Vehicles (PHEVs). Incentives, either in the form of bonus payments or tax relief/exemptions, are available in most EU countries. France, for example, offers €7,000 towards the purchase of EVs and €5,000 towards PHEVs. Norway excludes EVs from VAT, which represents a saving of approximately €4,500 per vehicle.
  • set appropriate performance indicators for the fleet, allowing the organisation to monitor and drive down costs and CO₂ emissions

  • integrate vehicle (and driver) related technology. In some cases organisations are currently buying vehicle-tracking technology that replicates handheld technology provided to drivers.

PA Consulting Group has worked with a range of private and public sector organisations to develop fleet strategies reducing fleet costs by an average 10% and CO₂ emissions by a similar amount.

To find out how PA can help you develop an effective fleet strategy, please contact us now.

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