Fleet Market Nigeria Market Intelligence

Industry Outlook & Drivers

Regional Market Outlook on Fleet Market

Outsourcing fleet management vs In-house fleet management

Organizations can typically achieve cost savings of 8-10 percent by outsourcing the fleet management services and this is the preferred model in Nigeria.

In-house management of fleet vehicles involves a higher manpower (15-20) as compared to outsourcing the services. Initial setup cost for in-house fleet management is high and streamlining the internal operations will require additional time.

In-house

Ratio of Staff

• Typical size of an internal team is 15–20
• A minimum of 10-12 for fleets in the range of 150-200
• 100% internal staff
• No external staff managing fleet

Role of Internal and External Staffs

Role of internal staff includes contract management, supplier relations, financial analysis and budgeting, accounting and billing, performance and audit, fuel, insurance/claims, vehicle safety, tracking, roadside/accident assistance, driver safety, training, licensing, maintenance, servicing, vehicle utilization/performance, supplies, parts and disposal

Outsource

Ratio of Staff

• Internal staffs include a fleet manager and 5-7 department heads, who report to him
• A minimum of 4-5 employees for fleets in the range on 150-200

Role of Internal and External Staffs

• 90% of the activities are outsourced
• Typical departments under fleet manager are acquisition, disposal, maintenance, training and safety
• Internal team is responsible for coordinating the entire activities between leasing company and the organisation
• Leasing company/fleet management company manages the daily operations

Key Cost Saving Opportunities

Multi-bidding

• The best rates and discounts can be identified by running an RFP to multiple suppliers in the market.
• In some cases, depending on the fleet size, buyers can choose the supplier with the best quote and try negotiating further

Fleet Mix

• Reducing the number of car manufacturers and concentrating fleet mix to a limited number of OEMs can result in additional discounts, and this can lead to cost savings

Purchase through FMC

• In some cases, depending on the discount, fleet management companies also facilitate car purchase with higher discounts but with a marginal fee per car

Lease Term

• Increasing the lease term/rental term by one year (maximum five year lease) can be a quick win and can result in cost savings initially. However, the road conditions and maintenance related issues need to be considered before increasing the lease term

Car Upgrades

• Buyer organizations can also negotiate on different upgrades for the cars that they purchase or lease

Cost Structure of Fleet and Cost Saving Opportunities

In Nigeria, organizations can save 10-12% of their spend over unmanaged fleet vehicles.

Organizations in Nigeria use company cars for a period of 3 years, since, cost structure components like depreciation and maintenance increase after this period

Cost saving opportunities

• Depreciation: As depreciation rate increases exponentially Y-o-Y, FM companies provide discounts on depreciation rates based on the volume of purchase
• Insurance: Insurance cost can be negotiated as the fleet management company will be in  direct contact with the insurance provider
• Maintenance and Service: Maintenance costs can be reduced as the FMC will have a centralized maintenance contract for all of their vehicles
• Fueling: Discounts on fuel rate will be given by the FMC and centralized monitoring and tracking of the vehicles also results in cost savings