What Is a Fleet Vehicle? Types and Benefits

What is a fleet vehicle?

A fleet vehicle is a car, bus, or any other vehicle used by a company for business purposes. It’s worth noting that a fleet vehicle doesn’t have to be owned by the business. Companies may choose to purchase, lease, or rent vehicles according to their specific needs. Vehicles can even belong to an employee — these are referred to as a “gray fleet.”

Depending on the type of vehicle and the company, fleet vehicles can be used for:

• Transportation
• Logistics
• Delivery services
• Field services and maintenance
• Construction
• Emergency and utility services
• Waste management

Quite often, companies utilize dedicated Fleet Management Systems to streamline the entire process of fleet management.

Fleet vehicle management

Effective fleet vehicle management relies on four key elements: acquisition, maintenance, expense and mileage tracking, and disposal. 

Acquisition involves selecting suitable vehicles for the intended purposes while considering factors like fuel efficiency, reliability, and cost-effectiveness. A well-planned acquisition strategy ensures that acquired vehicles are within the budget and perfectly answer the company’s needs. 

The second element, maintenance, means ensuring fleet vehicles remain safe for drivers, comply with emissions standards, and are generally reliable and efficient throughout their lifecycle. The best practice is implementing a proactive maintenance schedule to prevent breakdowns and vastly reduce repair costs. This includes routine inspections, oil changes, tire rotations, and other preventive measures. 

Tracking mileage and expenses associated with fleet vehicles provides valuable data about vehicle usage and  driver behavior. It allows fleet managers to identify inefficiencies, address issues promptly, and create policies about routes and road safety. Mileage and expense tracking is also essential for claiming tax deductions and properly reimbursing employees for any out-of-pocket costs related to driving for business. 

The fourth element, proper disposal, is essential for minimizing financial losses and environmental impact. When vehicles reach the end of their useful life or become unfit for their original purpose, they’re usually sold or recycled. Companies that manage a fleet should have a clear process, ensuring compliance with relevant regulations and minimizing environmental liabilities. For that purpose, it’s highly recommended to keep detailed documentation of vehicle history.

Benefits of fleet vehicles

Fleet ownership offers considerable advantages for companies that have ongoing needs for vehicles. 

One of the most appealing advantages is the possibility of a massive discount for companies purchasing many vehicles at the same time. By negotiating lower prices per unit, businesses can significantly reduce acquisition costs, optimize their investment, and improve overall financial efficiency. Of course, companies should also consider possible tax deductions for various vehicle-related expenses, including maintenance, insurance, fuel, and depreciation. 

It’s also worth noting that fleet vehicles can be customized to meet specific operational requirements, such as adding specialized equipment or modifying interiors for enhanced functionality. They can also be branded with company logos, slogans, and contact information, turning vehicles into marketing assets.

Challenges in fleet vehicle management

Fleet management comes with its unique set of challenges.

Perhaps the most significant one is managing costs. Companies must track and analyze various expenses, including vehicle acquisition, fuel, maintenance, repairs, and administrative overhead. Balancing these costs while maintaining service quality and operational efficiency requires careful planning, budgeting, and ongoing cost optimization.

Maintenance is another massive challenge. Coordinating maintenance schedules, managing service appointments, and addressing unexpected repairs can be complex and time-consuming. A fleet vehicle that’s not well-maintained can easily become a liability. In addition to the much higher repair costs and potential safety risks for drivers and passengers, a fleet vehicle out of commission can lead to lost business.

Then, there’s insurance, which can be a huge task in and of itself, especially when insuring a larger fleet. It involves dealing with complex policies, assessing risk factors, and securing adequate coverage. 

Last but not least, companies must ensure compliance with various regulations and standards, including safety, emissions, driver licensing, and service hours. Staying up to date with regulatory changes and implementing policies accordingly are essential tasks to avoid fines, penalties, and legal liabilities.

Tools for more efficient fleet management

Fleet management is still a fairly complex process, but the days of pen-and-paper mileage logs and complicated spreadsheets are mostly in the past. Businesses can now compile a tech stack that makes managing vehicles, mileage, and drivers much less time-consuming and confusing.

GPS tracking gives fleet managers real-time data on drivers' routes and movements. This capability provides several benefits, including improved fleet visibility, enhanced route optimization, and more efficient vehicle dispatching. Using GPS data, companies can reduce fuel consumption, minimize vehicle idle time, and improve overall operational efficiency. Additionally, GPS tracking helps with theft prevention and facilitates quick recovery of stolen vehicles.

The other key technology is telematics, which integrates GPS technology with onboard diagnostics to collect and transmit data related to vehicle performance, driver behavior, and operational metrics. These systems help fleet managers gain valuable insights, including fuel efficiency, vehicle health, and driver safety. By analyzing telematics data, companies can identify areas for improvement, implement training programs, and optimize maintenance schedules to prolong vehicle lifespans and reduce repair costs. 

Companies can also use mileage tracking solutions with GPS capabilities (like MileIQ!) to create tax-compliant mileage reports, analyze routes, and reimburse employees — all without having to resort to spreadsheets with 27 different tabs. 

Businesses with larger fleets and more complex operations may want to consider investing in a fleet management platform. Having a single dashboard for fleet operations, including vehicle tracking, maintenance scheduling, driver management, and reporting can help make the entire process more transparent and less prone to errors. Those dedicated systems streamline administrative tasks, automate processes, and centralize data management. Fleet managers can also access real-time dashboards, generate customizable reports, and track KPIs to monitor fleet performance and identify areas for optimization.

Environmental considerations for fleet vehicles

As awareness about the environmental impact of motor vehicles grows, businesses are shifting their focus to eco-friendlier fleet options. Some categories of environmentally friendly fleet vehicles that businesses can consider include:

• Electric vehicles (EVs)
• Hybrid vehicles
• Compressed natural gas (CNG) vehicles
• Biodiesel-powered vehicles
• Hydrogen fuel cell vehicles

However, adopting environmentally friendly practices is not only about the vehicle type. Efficient fleet management can also help businesses reduce their carbon footprint. By optimizing routes and ensuring regular maintenance, businesses can significantly reduce their fleet’s emissions and contribute to a healthier environment.

Safety and training for fleet drivers

Safety remains a top priority in fleet management. Programs like DriveSafe Online® and NSC Fleet Essentials Online Training Program provide comprehensive training that equips drivers with the knowledge and skills to operate vehicles safely.

Driver training is also important for monitoring hours of service — make sure your drivers know when and how to take proper breaks and do not drive beyond allowed hours. This is of course crucial for the safety of everyone on the road, but may also help with compliance.

With GPS tracking and telematics, businesses can monitor their fleet in real time, ensuring that all vehicles are operating within safety standards and that any potential issues are addressed promptly.

Key takeaways: Fleet vehicles and fleet management

Owning, leasing, or renting a fleet of vehicles can be a valuable asset to your operations and make the lives of your employees easier. It also offers a set of challenges, including tracking and managing costs of maintenance and fuel, as well as the initial cost of acquiring vehicles and purchasing insurance. Though managing a fleet is not a simple task, thanks to developments in GPS tech and telematics, keeping track of driver and vehicle safety is within reach for many more companies.