There’s no stopping vehicles costing money and losing value. Luckily, how fast they depreciate, and how much money they cost, is well within the control of managers - given the right tools.
Understanding the Insurance Enigma
Essentially, we are talking about how to limit TCO (total cost of ownership) of fleet vehicles. That’s the insurance enigma. Is repairing cheaper than selling? How much will the vehicle be worth in a year? What will a claim to do premiums? These are the day-to-day decisions that have a dramatic impact on the cost of maintaining a fleet.
1. The Importance of Residual Values
The value of a vehicle when it reaches the end of its service life is a major motivator when investing in new fleet vehicles. Some vehicles hold their value better than other, but high residual values are always a result of slower depreciation, which can be controlled to some extent. Maintain vehicle value, it’s the surest way of maintaining the financial stability of the fleet.
2. Using Data To Manage Depreciation
Telematics is the key to a truly reliable understanding of fleet performance, including depreciation. Maintenance and driver monitoring are just two of the areas that can be monitored to reduce the impact of depreciation.
3. Intelligent Maintenance Schedules
Telematics, when combined with advanced fleet management software, can provide real-time insights on vehicle health. This lets fleet managers deal with potential issues before they have a negative effect on depreciation, and ultimately residual value. Basically, vehicles remain in good condition for longer, and they still hold on to the maximum value when they reach the end of their service life.
4. Driver Behaviour Monitoring
Harsh braking, rapid acceleration, and idling are all habits that can lead to rapid depreciation. With sophisticated telematics, it is possible to identify and correct these behaviours before they’ve had an impact on the vehicle’s value.
Repair or Replace?
When a vehicle is damaged, the decision to repair it or replace it is not always straightforward. There’s a lot to think about. The basic calculation is comparing the cost of repair against the cost of replacement. This choice affects fleet size, operational capacity, and insurance costs. Telematics can provide the data needed to make informed decisions.
Accurate Accident Data
When the worst happens, and a vehicle is involved in an accident, telematics is there to give all stakeholders the data they need to limit the negative impact. Detailed reports on vehicle incidents, including speed, braking patterns, and impact data helps users to assess the extent of damage accurately. Not only can this help with repair decisions, it is also invaluable evidence that can be used by insurance companies during investigations.
Predictive Repair Data
How a vehicle is being used can give clear indications of when repairs are likely to occur, and how costly they’re likely to be. By analysing this data, telematics can predict potential future issues. This aids in making decisions about whether investing the future cost of repairs is going to be worth it. It can also let managers know when the best time is to replace a vehicle.
Mastering the Insurance Enigma with Telematics
For managers, repairs, write-offs, residual values, and insurance is a complex, and often confusing, costing exercise. However, with the right tools, this mess of best guesses can become a real opportunity for financial stability. A sophisticated Telematics system doesn’t offer data, it often insights. Easy-to-understand, clear visualisations that point fleet and operation managers in the right direction.
Not only do data-driven vehicle insights preserve vehicle value but also lead to better insurance premiums and coverage terms. By effectively managing these factors, fleet managers can ensure their operations are both financially and operationally efficient, navigating the complexities of modern fleet management with confidence and precision.
