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The Lifeblood of Effective Fleet Management

Accurate mileage is said to be the ‘lifeblood’ of good fleet management. Today, we’ll be looking at how important accurate odometer reading is to a fleet manager and/or fleet management.

Many consider accurate odometer readings to be one of the most important parts of effective fuel management. Accurate mileage gives a fleet manager a much clearer picture for many important aspects of his or her fleet including vehicle repair and replacement, fuel consumption and economy, and much more. If a fleet manager has access to accurate mileage, he can make critical decisions for his fleet. Virtually every function dealing with fleet management requires a decision dependent upon accurate vehicle odometer mileage.

One of the biggest benefits of having accurate mileage is being able to determine accurate kilometres/litre for each vehicle in the fleet. Having accurate kilometre/litre data can help a fleet manager improve the fuel economy for the vehicles in the fleet as well as determine if any vehicle(s) is/are not achieving the desired fuel economy standard. In some cases this can help point out problems with vehicles that need to be repaired.

Key things to be learnt from accurate odometer readings are:

Fuel Consumption

This is possibly the most important piece of information any odometer can offer. While many will know the manufacturers estimate of their vehicles litres per 100km, many more will not know their own personal figure. Using accurate odometer figures, the number of litres in the tank and this simple formula – [(Litres used x 100) / km travelled = Litres per 100km], the fleet manager should be able to work this out easily.

Cheapest Routes

When choosing a route for a long drive a few things need to be considered. Which route is the shortest? Which route option is the cheapest? Experienced drivers will know that the quickest is not always the shortest and seasoned drivers will know that the quickest is not always the cheapest. For these type of problems a trip-meter should tell you the kilometres covered, however if your vehicle does not offer accurate fuel usage you will struggle with the figures for shorter trips. For the fleet managers conscious of fuel usage and trip times, odometer readings are a critical part of a fuel and logistics management policy.

Asset/Vehicle Valuation

As a fleet manager, you need to constantly update your knowledge on the value of each vehicle in your fleet. If you manage automobiles used for business, each vehicle needs to be valued over time so the company has a good and nearly accurate idea of the current value of each vehicle in the fleet. One of the ways you could evaluate a car is through the use of mileage. This method lowers the value of the vehicle based on the actual mileage driven. Actual mileage figures are gotten from accurate odometer readings.

Effective Depreciation

Another very important use of the figures from accurate odometer readings is for effective calculation and management of depreciation rate of the vehicles in your fleet. Depreciation is defined as the expense associated from using an asset. If your company has an automobile used for business, this automobile needs to be depreciated over time so the company has a good idea of what it cost to actually use the asset. One of the ways you could depreciate a car is through the use of mileage. This method lowers the value of the vehicle based on the actual mileage driven.

How to Calculate and Manage Depreciation Using Figures from Odometer Readings

  1. Write down the actual cost of the vehicle. This is the value you will start at for your depreciation.
  2. Determine how long you will be keeping the car. The age of the vehicle will be one of the factors in determining its residual value.
  3. Determine the residual value of the car. If the model has had a long life span, do several calculations to get a better picture of what the value of the car might be.
  4. Based on accurate odometer readings, determine how many kilometres the car will be driven over the course of the life of the vehicle. Now multiply that number by the life span of the car.
  5. Subtract the projected residual value of the vehicle from the cost. Then divide that number by the total kilometres the car will be driven. That is the mileage rate for depreciation. Each year, calculate the total mileage from the odometer and multiply it by that mileage rate.

Servicing/Maintenance Schedule

This is possibly the easiest information to gather from your odometer. For new vehicle buyers, the information on time between vehicle services is very simple. Most vehicle manufacturers will recommend servicing after every 5,000km or a 6-month interval approach, whichever comes first. This is relatively simple as you just need to watch your odometer or calendar to find out when you need to get the vehicle serviced. For those who buy a used vehicle the thing to remember is that the vehicle may have had an inconsistent service record. In this case, you need to base your next service on the odometer reading of the previous service.

Cost Management

Accurate odometer mileage readings provide precise figures useful in determining fleet fuel consumption, maintenance plan and managing fuel economy. Knowing your fuel consumption number can save you money in the short run. Add to this the fact that the odometer reading can help you schedule servicing/maintenance which in turn saves you of the huge costs incurred in getting your vehicles fixed if they get bad due to poor servicing and maintenance. Indeed, you have a very useful number that helps you manage and reduce costs of your company’s fleet operations.

By and large, major fleet tasks, including vehicle replacement/life-cycling, proper vehicle maintenance and repair intervals, and efficiently analysing data all require accurate mileage. Little wonder why it is referred to as the lifeblood of effective fleet management. Odometer readings should be reported regularly—at the very least, on a monthly basis—to ensure the fleet information system is current. With all these in mind, its very likely that in the years to come, these figures will become even more prominent for effective fleet management and control.


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