More efficient car fleet arrangements - FAQs

Overview

The Victorian Government has committed to achieving fleet savings by implementing more efficient car fleet arrangements.


The Victorian Government has committed to achieving fleet savings by implementing more efficient car fleet arrangements. The new arrangements are expected to deliver savings by:

  • centralising core fleet functions such as purchasing, registration, insurance and disposals
  • centralising administration to give greater visibility to the General Government (GG) fleet providing better reporting and opportunities to manage fleet growth and utilisation
  • financing vehicles through the finance lease facility (FLF) providing the cheapest costs of funds through Treasury Corporation Victoria (TCV).

Why is a survey necessary?

As each General Government (GG) fleet is managed locally, there is no visibility of the numbers or types of vehicles in the GG fleet.  The Government requires the Department of Treasury and Finance to conduct a detailed survey of each GG entity to gather this information. This will be conducted by VicFleet.

Results of the survey

VicFleet will provide a report the Minister for Finance detailing the findings of the survey, recommendations on implementing the new arrangements and suggested amendments to the Standard Motor Vehicle Policy (SMVP).

Do I have to complete the survey?

The Minister for Finance has requested that VicFleet conduct the survey and provide him with a report of findings upon completion. Any recommendations regarding implementation and any changes required to the SMVP will be reported and agencies will be fully consulted to ensure there is no adverse impact to operation of services.

What do the new arrangements mean to me?

Initially, there will be little or no change to you. Once the new arrangements have been approved by the Minister for Finance, the transition to these new arrangements will occur progressively as vehicles reach their end on life. VicFleet will consult with you fully prior to transitioning to the new arrangements and entering into a Memorandum of Understanding with VicFleet.

Who is VicFleet?

VicFleet is a business unit operating within Strategic Sourcing, Department of Treasury and Finance, which performs functions including overseeing financing and management of the Victorian Government’s motor vehicle fleet, management of SMVP and development of fleet policy and procedures, managing the government’s motor vehicle FLF and operating VicFleet Management and Leasing.

VicFleet responsibilities for motor vehicles include:

  • Buy
  • Register
  • Insure (optional)
  • Monthly invoice and journal
  • Dispose
  • End of lease reconciliation

What is the SMVP?

The SMVP is issued under the authority of the Minister for Finance and is a whole of Victorian Government framework to optimise the management and use of government vehicle assets. Adherence to this policy is mandatory for all Victorian General Government departments and agencies and should be used as a guide for all other government entities. A copy of the SMVP can be found on the VicFleet website at www.vicfleet.vic.gov.au

Key features of the SMVP include:

  • Support for Australian vehicle manufacturers policy
  • 3 year 60 000 km retention term 

What is a Finance Lease Facility (FLF) and how does it work?

  • VicFleet borrows funds from TCV to finance vehicle purchases and operating costs such as insurance and registration. 
  • TCV charges interest for the funds and VicFleet passes on all costs, including operating costs and interest charges incurred by VicFleet, to the Department. 
  • VicFleet estimates the whole of life costs including purchase, disposal, insurance and pre-paid service charges and applies these costs over the lease term on a monthly basis. VicFleet issues a monthly invoice detailing these charges.
  • All vehicles are sold at public auction and the proceeds of the sale are applied back onto the lease.
  • An end of lease reconciliation is calculated and all actual costs incurred by VicFleet are compared to the lease payments. Any over charges are returned to the agency or any under charges are invoiced to the agency.
  • There are no end of lease penalties for unfair wear and tear, early or late return.
  • The vehicle is recorded as a department owned asset and the residual risk of ownership is borne by the agency.

Who owns the vehicles?

VicFleet uses a FLF which means your agency owns the vehicle. 

What does VicFleet charge?

  • VicFleet charges a lease administration fee of $16.90 per vehicle per month.
  • VicFleet does not charge end of lease penalties.
  • VicFleet is not for profit, there are no other hidden fees or charges.

Who will manage my fleet?

Departmental secretaries and agency chief executive officers, or authorised delegates are responsible and accountable for managing their vehicle fleet according to the SMVP. This is standard practice. 

What vehicles can VicFleet supply and how long can I keep a vehicle?

  • CheerThe Government currently has a panel contract with 17 motor vehicle manufacturers.VicFleet can provide a full range of passenger, SUV, and light commercial vehicles - subject to the requirements of the SMVP.
  • VicFleet can supply executive vehicles.
  • Lease terms are generally 3 years or 60,000 km whichever occurs first.
  • VicFleet provides variable lease terms up to five years – subject to a cost benefit analysis.

Summary of included VicFleet Services

  • Vehicle quoting
  • Vehicle order and delivery management
  • Finance lease
  • Registration (initial and ongoing)
  • Roadside assist (first 3 years)
  • Vehicle disposal
  • Comprehensive reporting

Optional Services

  • Insurance
  • Pre paid maintenance
  • Fuel and fuel card management (subject to an additional fee)

Supporting Australian vehicle manufacturers policy 2017

There are no changes in the short term. We have obtained an exemption that allows you to continue to purchase vehicles as you currently do on a fit for purpose basis. We are developing a new policy for 2018 & beyond, which will require approval by the Minister for Finance.

We have been able to obtain better than contract pricing on a range of vehicles, will VicFleet negotiate this on our behalf or will agencies seek their own price?

The maximum you pay is the contract price. We will adopt any discounts you already have, or you can take advantage of the discounts we also have. At the end of 2017, we intend to generate some competition between suppliers, aggregating our spend and establishing an approved list of vehicles based on whole of life costs. We anticipate this process should provide better discounts to everyone.

How will orders for vehicles be allocated to dealers?

You choose your own dealer.

What sort of reporting does VicFleet provide?

We provide a full suite of reports on our website. We can tailor reports to suit your needs, provided we have the data. Our end of month invoice is broken down by rego and cost centre. We also provide the journals to allow you to take up the data into your finance management system.

Vehicles that travel over 55 000 km pa, what lease term would be suitable for these vehicles?

The lease term is 3 years or 60 000km whichever comes first. In this instance, we would provide a 12 month lease, or we could look at the usage to see if it’s cost effective to extend the lease term to e.g. 3 years 90 000 km.

Low mileage vehicles. Do lease repayments take this into consideration?

No we always assume 60 000km, however vehicles with low ODO readings will sell for more than estimated at auction & you will get his back in the end of lease reconciliation.

How does VicFleet calculate the residual value?

To be conservative, the residual value is calculated using the lower of Glass’s guide & Redbook future value calculators based on distance and age.

Are there contracts in place for special fit out of vehicles?

We have some existing contracts already in place for departments that you could tap into.

Can I lease trucks through VicFleet?

As a general rule we do not lease trucks, however we do have some trucks on lease so this is a possibility.

How is the end of lease reconciliation done ?

Our lease charges are a budgeted amount. At the end of the lease, a full reconciliation of all costs incurred over the life of the lease is calculated. Any shortfall is charged to your agency and any overpaid amount is credited back to you. There are no hidden costs or end of lease penalties. As our budgets are fairly conservative, we generally credit back amounts to clients.

Can I terminate a lease early?

If there is no longer a requirement for a vehicle, you may return it for disposal. There are no early termination penalties or other hidden costs. If you terminate early, there may be a budget shortfall.

At the end of the lease, VicFleet review all actual costs against cost you have paid & we either pay back any overpaid amounts or charge you the difference.

What are the disposal arrangements?

You log your vehicle for collection by Pickles through our disposal portal. We inspect, clean up the car for sale, set the reserve, sell by public auction, pay the sale proceeds back into the lease, reconcile the lease costs & terminate the lease. Pickles remove the plates & return to VicRoads for refund of registration.

Is prepaid servicing mandatory?

We currently do not have a contract for servicing & prepaid servicing is not mandatory. If prepaid servicing is not included, you would be required to manage all servicing costs locally.

You can use local suppliers to service your vehicles e.g. Kmart Tyre & Auto as long as the manufacturers service requirements are met. 

If required we could manage the servicing costs & recharge back through the lease, however this is not our normal model.

Is roadside assistance included?

We could add roadside assistance to the lease if not already provided by the manufacturer.

Will we be required to insure through VicFleet & use VicFleet repairers?

There would be no requirement to change & we could add the cost of insurance/repairs to the lease.

Who is responsible for calculating the cost of executive vehicles?

The spreadsheet used to calculate executive officer costs belongs to the Victorian Public Sector Commission. VicFleet is not responsible for this & we cannot alter it.

Does VicFleet provide novate leasing?

We do not provide novate leasing so any current internal arrangements would remain in place.