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Global Fleet Consultant
Senior Consultant
Posted on: 02 July 2014

Why you’re spending more on fuel than budgeted

spending more on fuel than budgeted

All European cars come with a norm fuel consumption stating how many litres per 100 km the car will use. But, at the end of the day, actual fuel consumption is often significantly higher. But, what are the exact figures and how can you make sure your budget is in line with your fuel spend?

How do different cars compare

If you have been budgeting fuel costs on the basis of the norm consumption, you might want to take a look at the results of a study carried out in the Netherlands into fuel consumption of 240,000 company cars. These results show that, on average, regardless of car brand or fuel type, diesel cars use 18% more fuel, and petrol cars 16%. Surprisingly, Green cars are at the top of the league with up to 45% more fuel consumption than the norm. This is due to the fact that, for example, hybrid cars are often not ‘properly used’. The low norm emission assumes regular use of the electric engine (low speed, short distance) but if driven long distance on the highway, the car will primarily use the combustion engine.

The real costs

What do these percentages look like in plain costs? Well, take an average car doing 30,000 km per year. If you base its annual fuel cost on the norm, you’ll have it in the books for around €2,500 euro per year. But with actual consumption 16% to 18% higher, end-of-year costs per car will easily add up to an additional €450!

2 ways to give your budget a break

1. Increase your budget for fleet, if based on norm consumption, to reflect the anticipated actual fuel consumption. With fuel costs representing 24% of your total fleet costs, a spend of 16% to 18% above the norm means you need to increase your budget by approximately 4%.
 2. Alternatively, keep your budget as is, but base the fuel provision on the anticipated actual fuel consumption. This means that drivers will be forced to select a smaller or more fuel-efficient car in order to stay within their allowance.

Here’s an example:

If today you work with a budget of 800 euros including fuel based on the OEM norm, you may need to pay an additional 30 euro’s per car per month for the higher actual fuel consumption/costs.

You can either set a new budget at 830 euro’s to avoid a major fuel settlement or you could leave the budget at 800 euro but ask the lease provider to apply an experience figure when it comes to fuel. Whereas the OEM consumption would lead to a fuel provision of 192 euros per month, you would now allocate 222 euros to fuel. If a bigger portion of the unchanged budget is allocated to fuel, it leaves the driver with less money to spend on his/her car.

 

Raising driver awareness will help keep fuel consumption as budgeted

The gas guzzlers: or how to keep your drivers and your budget happy

The difference between norm and actual consumption has much to do with testing under ideal circumstances. But, time and again we’ve also found that a critical component to controlling costs is driver behaviour. Raising driver awareness will help keep fuel consumption as budgeted. Make it clear to your drivers what your fuel consumption targets are and give them the tools to experience how they can make the difference. Identify and give your biggest gas guzzlers an eco driver training to help them keep their feet off the throttle and the pressure off your fuel spend!

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About the author

Global Fleet Consultant

Nathalie de Vries is currently employed as a Consultant at LeasePlan International. She has worked for many years in the area of product development and product harmonisation across the LeasePlan Group and was actively involved in the setting up of the International Fleet Managers Institute (IFMI).

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