Managing a grey fleet can significantly cut business costs, but due to various ‘grey areas’ care needs to be taken to mitigate certain risks. Learn more.

Owning, operating and maintaining a fleet of company vehicles can be expensive, especially for smaller businesses. However, running a ‘grey fleet’ can be a much more cost-effective way of ensuring employees have the transport they need.

That said, managing a grey fleet comes with its own set of challenges.

Grey Fleet

What exactly is a grey fleet?

The term ‘grey fleet’ refers to vehicles that are privately owned by employees, but which also are used in the pursuit of a company’s business.

Since the employee already owns (or is in the process of paying for) a vehicle, the practice can significantly reduce costs for the company.

Examples of grey fleet use:

  • An employee runs company errands using their own vehicle.
  • A construction worker uses their own vehicle to reach a job site.
  • A sales representative uses their own car to visit potential clients.

Why is it called a ‘grey fleet’?

Managing grey fleet vehicles can be far more ambiguous in terms of what constitutes business and personal use, accountability, maintenance, and insurance coverage, meaning there are a lot of ‘grey areas’ - which wouldn’t exist if a company owned its own vehicles.

What are the costs associated with a grey fleet?

it’s important to note that the company must still make contributions towards the running of ‘grey fleet’ vehicles - particularly when it comes to fuel/charging costs, maintenance and insurance.

Grey fleet - Pros:

  • As a company, you don’t have to worry about buying or leasing vehicles, because the employees already own said vehicles.
  • The employee should already be familiar with how to operate the vehicle safely and efficiently.
  • The company doesn’t have to worry about the security of the vehicle, since it is being looked after by the employee (e.g. the firm does not need to provide somewhere safe to store the vehicle overnight).

Grey fleet - Cons:

  • As a business you should make contributions towards running costs, including fuel/charging; maintenance and repairs, and insurance (in case they have an accident while working for you).
  • If an accident occurs, there may be some confusion as regards insurance coverage, since the vehicle is used for both personal and work activities.
  • Some unscrupulous employees may exaggerate mileage claims.
  • Since the vehicle is owned by the employee, it makes it more difficult to ‘track’, or know where it is at any given time.
  • It’s difficult to ensure a grey fleet vehicle is being properly looked after/maintained etc.
  • Environmental impact: Some privately-owned grey fleet vehicles may not be as environmentally friendly as they could be, thereby potentially increasing a company’s carbon footprint.


Car accident

Grey fleet management - top tips:

While ‘grey fleets’ offer big advantages for companies, care needs to be taken to mitigate the various associated risks.

These tips should help…

  • Establish when and under what circumstances the company is responsible for a grey fleet vehicle’s usage (including any accidents).
  • Establish clear guidelines in relation to mileage, maintenance and repair reimbursement.
  • Set up regular inspections and maintenance schedules for grey fleet vehicles.
  • Provide drivers with sufficient training for safe and efficient usage.
  • Ensure drivers have the right licence and insurance in place.
  • Ensure vehicles have valid MOTs and the correct road tax (Vehicle Excise Duty).
  • Ensure vehicles have adequate breakdown cover.

Grey fleet/occasional business use cover

In some cases there may be an ‘insurance gap’ between the insurance the employee has taken out for their vehicle, and the coverage required for business use. In these circumstances, it may be appropriate to take out specialised ‘grey fleet/occasional business’ use cover.