Grey fleet management part of best practice globally

Imagine a company director being held liable for an accident that happens with a car belonging to a staff member. The scenario is not as far-fetched as it sounds. In the United Kingdom, legislation has been introduced that requires each business to ensure that not only the vehicles belonging to the company are inspected for their safety and road-worthiness, but also any vehicle belonging to a staff member that happens to be used for business purposes.

This approach is fast becoming the norm in the developed world and best practice globally, along with the rise of the concept “grey fleet” – cars belonging to staff members but used for business purposes.

“Not surprisingly, the idea of a business having a ‘grey fleet’ is not well known in South Africa, where the art and science of managing a company’s formal fleet is not yet all that well developed, more so in smaller companies that do not have a dedicated fleet manager,” says Dr David Molapo, Head of Standard Bank Fleet Management.

The suggestion of having any management obligation over the cars belonging to staff members, apart from compensating them for when they use it for work, is at best likely to draw a blank stare from most local fleet managers, and at worst protest over the thought of added responsibility.

The results of a recent research project commissioned by Standard Bank Fleet Management seem to bear this out.

The Fleet Management Excellence 2015 survey, conducted among a mix of 60 South African fleets of passenger and light commercial vehicles, found that only 7% of them had ever inspected the vehicles belonging to its grey fleet for safety. An annual inspection of such vehicles is considered best practice.

The research was drawn from a model of fleet management excellence, and measured the key indicators of a well-run fleet. Apart from annual vehicle safety inspections, the model puts forward a further three requirements for managing a company’s grey fleet:

• Keeping a register of all the vehicles owned by staff members and used for business purposes. Only 15% of the fleet managers in the survey said they kept such a register.
• Keeping a register of the driver licenses of staff members who use their own cars for business purposes. Again, only 15% of the research participants recorded this information.
• Insuring grey fleet vehicles for business travel. Only 13% of the surveyed fleets conformed with this requirement.

Given the lack of legal obligation on South African companies to manage their grey fleets, the issue of insuring staff-owned vehicles for business travel is likely to be the main driver of the grey fleet concept and the idea that at least some company responsibility is required beyond compensating staff members for kilometres travelled. Some insurance policies will not pay out in the case of an accident in which a private vehicle was used for business purposes.

But the research suggests that South African fleets have some way to go. Only about a third of South African fleet managers are proactive enough to keep systematic track of the risks to which the company-owned vehicles are exposed, let alone their grey fleet. It therefore seems that, for now, most local companies will only become aware of the insurance issue – and their grey fleet obligations – after an accident.

“The value of the Fleet Management Excellence research is that it provides a comprehensive model of a well-run fleet, including grey fleet management.  This research provides a benchmark to fleets of how they compare with their South African peers,” says Dr Molapo.

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