8 nov 17

Fuel management and TCO control go hand in hand in Turkey

Running a fleet in Turkey is expensive. The cost of fuel alone amounts to 30-40% of the total cost of ownership (TCO) of vehicles. So, fuel management is critically important.


The purchase or rental price for vehicles now ranks lower on the priority list than cost management in a fleet operator’s choice of vehicle. In 2015, 94% of leased cars were diesel powered and only 5.5% petrol. Diesel engines are preferred because of high residual values and lower consumption.


Traffic is busy in and around major cities and urban areas and this has an effect on TCO. Public transport is sketchy and distances vast. Istanbul is the country’s largest city with a population of over 14 million. Ankara, the capital and second largest city, has a population of around 5 million.


Fuel costs in Turkey
A litre of diesel in Turkey can cost as much as 5TL (Turkish Lira) (1.11 Euro). The cost of Petrol is roughly the same. There is no domestic production of Gasoline or diesel so it is all imported.


Savasan Kaplan of fleet management specialist Fleet Logistics, warns that fuel policy must be managed internally given the unique situation in Turkey: “Fuel cannot be bundled into a lease contract. It doesn’t work like that here. Agreements with fuel providers are signed separately and tanking is realized only at the gas station of the fuel provider.”


This could leave it open to abuse by employees if it is not managed through robust, internal fuel policies.


How are fuel costs controlled in Turkey?


It seems there’s a real appetite for fleet technology, especially where it can help to control costs.


Ali Kemal Uluer, general manager of VDF Filo (a Volkswagen Financial Services company) had this to say: “Technology is being used wherever possible to control routes and monitor drivers for behaviour considered uneconomical, such as heavy braking, weighty acceleration and unnecessary idling.


This data is being used to implement better route planning, plus training and reward schemes for better driving.”


Automatic fuel devices have been used for a long time in Turkey. This is where a device is attached to the vehicle’s fuel tank. When a driver enters the fuel station, the system at the pump recognises the vehicle, provides the fuel and issues an invoice directly to the company.


“This is more innovative than in EU markets.” states Ali Kemal Uluer.


Maintenance is another key cost element that can influence TCO, fuel economy and residual values. Operational leasing is popular in Turkey but there are key differences in maintenance provision.


Nevzat Girgin, purchasing manager at Fleetcorp Turkey, explains: “Many operational leasing companies maintain their vehicles using their own service network. No matter which make or model a customer leases, maintenance and repair is carried out this way. The purpose is to lower cost but to do this, they do not use genuine parts or original filters and so on.”


This practice can result in poor fuel economy, performance and compromised RVs. Fleetcorp argues that this strategy is not the best in terms of TCO.


Nevzat Girgin continues: “Turkish and international companies that conduct business properly have all their vehicles maintained at authorised services where the original parts are used. Although this is more expensive for the operational leasing companies, it is necessary to increase quality and driver safety.”


Philippe Chabert, general manager, TEB Arval, says that the value of fleet reporting cannot be overestimated: “The first step of controlling fuel costs is reporting. Reporting and analysing driver behaviours and usage habits are important to prevent extra costs on fuel consumption. Fleet managers should promote eco safety training to change inappropriate habits and appreciate best practices within a motivating and responsible car policy.”


In Turkey, ALD is working in consultation with customers to help build the correct fleet and fuel policy. Timur Kaçar, ALD Automotive Turkey, comments: “At ALD, we offer fuel management via partnership with Shell. Customers can purchase fuel with discounted prices. Monthly reports which give information about fuel consumption, fuel type, consumption cost and the covered mileage is provided. Additionally, we make monthly analysis which illustrates fuel consumption rate of the fleet depending on different make, model, driver, and so on.”


Özlem Can from lease specialist DRD has this to say: “There are several issues to consider when controlling fuel costs: control payment methods and allowances for drivers using cards, keys, rings or limits for each plate. Consider mobile payment solutions as they offer advantages. Consider geographic factors such as where the fuel stations are located and choose widespread brands. Lastly, continually evaluate the service you get from fuel suppliers.”


Total cost of ownership is a complex business demanding robust strategies, sound data and reliable reporting tools. If these are in place, fleet managers should find themselves able to control and avoid unnecessary costs.

Authored by: Alison Pittaway