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Sustainable cleaning company, Tennant Group, has switched to a whole life cost (WLC) model to construct its company car list and accelerate the electrification of its fleet. The strategic switch was recommended by Arval UK, which supplies sustainable mobility services for the Northampton based company. Operating more than 120 vehicles in total under its Tennant and Vaclensa brands, its two fleets each consist of around 60 cars and vans.
Tennant Group Head of Human resources, Michelle Terry, took over responsibility for the fleet in 2019. She immediately started to investigate opportunities for new approaches that would potentially bring cost savings and sustainable operational improvements.
“I had limited experience with fleet management, but I wanted to make sure that our operations were in line with the latest thinking, especially when it came to electrification, something for which we were seeing increasing interest from drivers because of the low benefit-in-kind rates that electric vehicles (EVs) attract,” said Michelle.
“We took a top-to-bottom look at the entire fleet with the help of Arval UK’s consultancy team, who came up with a number of recommendations. The most important of which was to introduce a WLC-based method of deciding which vehicles would be added to the company car list.
“Previously, we used lease rates to build our choice lists but this made electrification very difficult. Moving to WLCs has provided a much more rounded picture of costs and we’ve been able to include EVs and plug-in hybrids for the first time which is, we believe, an important move.
“In addition to the obvious and very welcome environmental benefits, we have employees who have saved £250 per month by choosing an EV over their previous internal combustion-engined car. This is a development that has been very well received within the company and we are already seeing a marked swing away from petrol and diesel.
“Also, the shift to electrification means that employees are thinking much harder about their car options and which vehicle is right for them. We’ve had cases where, after talking to Arval, people have switched from ordering a model with a 24% benefit-in-kind tax rating to one with 6%. That represents a substantial amount staying in their pay packet.”
As a further result of the Arval consultancy exercise, a whole new fleet replacement policy was introduced at Tennant Group and all vehicles were brought onto a leased four year/80,000 mile model for the first time, rather than using mixed acquisition methods. Michelle added: “This move has been important because it means we can offer a more appealing range of better-equipped vehicles than previously, which is increasingly important in our sector from an employee attraction and retention point of view.”
David Watts, Senior Consultant at Arval UK, added: “When it comes to integrating EVs, fleets which have constructed their choice lists based on lease rates have frequently encountered the same issues as Tennant Group. We’ve helped a large number of customers over the last couple of years to undertake consultancy exercises that have seen them move to WLCs and in turn increase the number of EVs on fleet and give staff a virtual pay rise due to tax savings.
“It has long been our view that WLCs are a better and more complete method of deciding which models should be made available to employees. In this way, it is possible that the switch to electrification could play a part in helping the company car sector as a whole to make a shift to better methods of calculating vehicle costs while CO2 emissions are reduced.”
To read a case study on Tennant Group’s new fleet policy visit https://www.arval.co.uk/insights/tennant-group-case-study