Mileage-savvy fleets double their gains from lower fuel prices

Posted By: TMC - 21st abril 2015

While official figures show UK business mileage rising in response to lower fuel prices, some fleets are reaping financial rewards by maintaining mileage discipline.

Customers of The Miles Consultancy (www.tmcuk.co.uk), whose drivers use TMC’s audited mileage capture solution, covered three million (9.4%) fewer business miles last February than in February 2014. The move saved the fleets almost £1 million at the pumps over 28 days.

By contrast, HMRC reported last month that total UK sales of diesel, the primary fleet fuel, rose by 4.5% year-on-year in February. It attributed the increase to drivers clocking up more miles as pump prices fell – eroding the financial benefit of cheaper fill-ups.

TMC analysed mileage reports from 42,500 drivers employed by 72 of its customers. The drivers clocked up 29 million business miles in February 2015, down from 32 million miles the year before. Private mileage was unchanged at 11 million miles.

The companies’ controlled approach to business driving netted them more than £370,000 in business fuel savings on top of a £580,000 windfall from the 22-pence-per-litre drop in fuel prices.

Paul Jackson, managing director of TMC, said: “The report by HMRC illustrates the so-called ‘rebound effect’ where lower prices lead to higher consumption. Had the fleets in our sample followed the national trend, they would still have benefited from the drop in fuel prices. But, because of the extra mileage, they would have saved around £490,000 instead of nearly £1 million.”

He added: “Mileage is the primary driver of fleet operating costs. Fleets that use effective tools to manage their drivers’ fuel purchases and mileage claims are able to maximise the benefit from low oil prices and minimise the financial pain when they rise again.”

Mileage-savvy savings in numbers

Fleets in sample……………………………. 72

Drivers in sample………………………….. 42,500

Feb 2014 business mileage…………….. 31,996,699

Feb 2015 business mileage…………….. 28,998,447

Mileage change…………………………….. -2,998,252 (9.5%)

Cost saving from lower fuel price……. £580,000 (15%)

Fuel saving from reduced mileage….. £375,000 (9.4%)

Total fuel cost reduction…………………. £955,000 (23.9%)

But if fleets had followed the national trend of a 4.5% increase in mileage:

Feb 2014 business mileage…………….. 31,996,699

Feb 2015 business mileage…………….. 33,436,550

Mileage change…………………………….. +1,439,851 (4.5%)

Cost saving from lower fuel price……. £640,000 (16%)

Fuel cost of extra mileage………………. £151,000 (3.8%)

Net fuel cost reduction…………………… £489,000 (12.2%)

Assumptions.

2014: Fuel price – £1.37ppl; consumption – 55mpg; cost per mile – 12.5p.
2015: Fuel price – £1.15ppl; consumption – 55mpg; cost per mile – 10.5p.