Follow our step-by-step profile of one company’s strategy to rid itself of its ‘grey fleet’ and keep staff morale high. Gillian Upton has the detail

Heather Thomas has many headaches in her business as managing director of housing association Servite Thames Homes, but one that was particularly vexing was the supply of cars for her staff.

The company merged with Thames Housing in October last year and is now the largest housing association in South London and the largest in its London borough.

The real crunch came this March when the operational merger saw the combined company move to offices in South West London and the 60 staff had to share only 14 car parking places.

“You can see the problem. It was affecting staff morale as at least half wanted to drive to work. We needed to do something radical,” she says. Thomas had just joined and this issue percolated to the top of her agenda.

The company’s operational radius is the whole of London as staff visit tenants. New-fangled car sharing is their solution, where the company joins a car club or car sharing organisation for cars on demand by the hour. Thomas has set up a car club at her offices.

Car sharing does away with the legal worries of utilising private cars for business use (known as ‘grey fleet’) and the worry of them not being fit for purpose under the Corporate Manslaughter legislation; it eradicates pool cars and company fleets and taxi costs, and an element of administration in all of the above options. All vehicle maintenance and repairs are taken care of by the car club, thus freeing up time spent on car management.

“Users enjoy greater convenience as the car will be outside the office or front door, or very close by,” explains Paul McLoughlin, managing director UK of Zipcar, the supplier that won the Servite Thames business. Zipcar, like its rivals, utilises smartcard technology. Each member books online (up to 30 minutes before the car is required) and is given a smartcard to access the car and a pin number in order to be able to drive away. “You just place the swipe card against the window and the car opens,” he says.

”Our service complements car hire, it isn’t a substitute for it,” says McLoughlin. “If you work out the average length of a car rental you’ll find that a corporate is paying daily rates but only using the car for a few hours per day. This way, you only use the car for the time you need it so it has great CSR benefits too.

“A small business, such as an estate agent with six cars, that is feeling the pinch with increasing fuel prices and congestion charges is an ideal customer,” says McLoughlin. “They’re only using a car for half an hour here and half an hour there.”
Read on to discover how Servite Thames Homes began the process of switching to the new-fangled concept of car sharing.

STEP 1: Research the market. One colleague at Servite Thames was given the task of researching the market for solutions. One option was to purchase lease cars and create a company fleet, but cost and the time it would take to set up that arrangement ruled this out. Another option was to lease car parking spaces but MD Thomas wanted to pay more than lip service to the company’s green agenda, so that was also a non-starter.

STEP 2: Two companies in the car sharing arena – Zipcar and Street Car – presented to Servite Thames, then submitted written proposals. Zipcar won the bid. “Zipcar’s prices were competitive and we liked the idea that members could use the cars for private use so it gave staff an added benefit,” says Thomas.

STEP 3: Check how the technology will operate with existing systems you have. It has to be easier than the status quo. Servite Thames had two mechanisms for getting staff on the road: essential car users received a mileage allowance plus a lump sum to cover for wear and tear of their car; casual users received the mileage allowance only. Zipcar provided the online booking system at no cost to Servite Thames, presented to all staff, helped get drivers signed up and explained how users could review Zipcar accounts and their MI.

STEP 4: Test before you go live. Servite Thames set up a pilot programme and allocated one staff member to monitor progress. Some 20 staff signed up for membership and each opened their own Zipcar account. The pilot commenced in June 2008 for a three-month period and now it has been extended for a further three months, until the end of October. “It seems to be going quite well,” says Thomas. “Staff were quite sceptical and scared about using somebody else’s car and whether it would be what they wanted, but people have got used to the idea. It’s been quite positive.

We have six cars parked in our car park so it’s no hassle at all. Staff can book one up to 30 minutes before using it,” explains Thomas.

STEP 5: Monitor progress and check that the pilot is meeting objectives. “We haven’t looked at costs in detail yet as ease of use is the biggest thing for us. It’s easy to book online and staff are more confident about using it,” says Thomas. “Staff morale is better and it’s gone more smoothly than we anticipated.

Potentially, it will save us money but I’ve yet to get detailed usage to drill down to exact savings.” The cost of utilising Zipcar is a one-off corporate membership of £75 then an annual fee of £10 for each driver plus a flat rate of £4.50 per hour (£35 per day), for a Band 1 car (see panel above) including congestion charge, MOT, fully comprehensive insurance, valeting and 60 miles of free fuel per 24-hour period.

STEP 6: Zipcar MI will allow Servite Thames to break down cost by team, “which is really useful”, says Thomas. Figures from the first couple of months pilot scheme revealed that for Servite Thames it is no cheaper to use Zipcar, but Thomas explains: “I would stress that this pilot was not about cost savings but to find a different way to deal with business travelling, so these figures wouldn’t prejudice any decision about using Zipcar permanently.” Zipcar claims its service can save members an average of £450 per month on car related costs.*

STEP 7: Take in the wider picture, particularly if you’re part of a large organisation. “Our health & safety team are interested in what we are doing on this matter and our HQ is interested in how the pilot goes. This seems to be quite a good compromise,” says Thomas.

*Research by the AA shows the average monthly cost of car ownership in urban areas breaks down as follows: £250, vehicle payment and depreciation; £30, insurance; £175, parking; £100, petrol; £15, maintenance — for a monthly total of £570. By comparison, a typical monthly Zipcar member bill for 25 hours of driving during three separate reservations is £100-£180. Zipcar members state that on average they save £350 per month by using Zipcar, with Londoners saving a further £100 on congestion charges. (Note: These are average numbers. Ownership costs can be much higher in some urban cities.)

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