8 May 19

Fleet Management in South Africa: focus on allowances and services

The South African fleet management industry started in the 80s, from a car rental background, with Full Maintenance Leasing as its core product. Since then this has developed to provide the full suite of fleet management services that an international customer would expect to see: operating leases, maintenance, fuel, accident and traffic fines management services, telematics, vehicle procurement and remarketing.

Today there are seven major suppliers of fleet management services. Three of these are independents focusing mainly on operating lease products and four are bank-based, offering a full range of financial services, including both operating leases and traditional asset-based finance products. Both groups of service providers offer customers, who elect not to use finance based products, a comprehensive range of stand-alone fleet management services to manage their fleet.

The non-banking fleet sector has approximately 100,000 vehicles on operating leases with a further 250,000 vehicles utilising a range of fleet management services. A substantial part is maintenance services in support of OEMs who provide service and maintenance plans with new vehicles.

South African banks, in additional to asset-based financing, provide a card system that facilitates the procurement of fuel, maintenance and toll services from all suppliers country wide. Generally on a post-paid basis with detailed information downloads that facilitate analysis and integration with specialist fuel management suppliers.

The corporate sector is responsible for the majority of vehicle purchases either through ownership or employee car allowances. A recently published survey by Eqstra Fleet Management indicates that 28% of fleets utilise cash as their preferred finance method, with the balance using leases and instalment sales for fleet vehicles.

Car allowances

Car allowances are offered to employees by in excess of 80% of companies. They are used to acquire and operate vehicles for both business and private usage. Car allowances gained traction over company cars because of tax benefits but today they have equalised and car allowances are driven by employee choice and the wish of companies to have less fleet management responsibility. Tax exposure for the employee is calculated from tables published by the tax authorities and is largely based on the quantum of private usage.

In a subdued business environment with inflation at 4.5% and a volatile ZAR/USD exchange rate the fleet management industry is giving focus to the management of operating costs, which they can provide as a stand-alone service. They use their established resource, skills structure and buying power for the customer’s benefit. There are significant future opportunities to reduce fleet costs and achieve efficiency gains.


Fleet consultancy services are available which focus on operating cost management and fleet policy development; including finance methods, replacement planning and cost forecasting models. This is of benefit to multinational companies as they seek to harmonise fleet policies across global structures. 

However, there can be difficulties in applying international fleet policies. They need detailed evaluation and comparison to local policies which have been developed to accommodate local employment legislation, vehicle pricing, vehicle availability, taxation and to create an attractive employment proposal.

Fleet policies

There are many beneficial opportunities for multinationals to harmonise funding and insurance. Something that is of great value to these companies is knowing fleet costs. This is relatively simple and certainly plays a role in procurement activity.

The future of fleet management in South Africa is supporting the need to reduce future fleet costs through direct cost savings or increased efficiency/utilisation gains. This is not simply restricted to fleet management but will be achieved in conjunction with technology gains in service delivery and supply chain management activities. 

Fleet management and vehicle financing is developing within Africa and the independent South African leasing companies have established offices or local partnerships, in 8 Southern African countries.

Leasing Companies – Major independents

  • Avis Fleet
  • Eqstra Fleet Management
  • Fleet Africa

Leasing Companies – Major Banking

  • Absa Vehicle Management Solution
  • Bidvest Bank
  • NedFleet
  • Standard Bank Fleet Management
  • WesBank

Author: Nigel Webb

Image: Gateway business district, Cape Town