The New South Wales government says it will save as much as $2.3 million each year by changing the way it sells its used fleet vehicles to the private and wholesale markets, a shift that means it will use only one auction house to liquidate thousands of cars a year.

The savings measure was announced as part of a big reform to the government’s management of state fleet vehicles that went to competitive tender in November 2013 with established player Pickles Auctions picking up the gavel.

The deal is a substantial win for Pickles that has already carved out a sizable proportion of the market for used vehicle clearances from federal government, state and local governments across Australia.

StateFleet manages the leases and contracts of around 20,000 fleet vehicles used by NSW public servants.

The agency had previously used multiple auctioneers to offload government vehicles, however a deflationary market for new cars has put substantial downward pressure on used fleet car prices resulting in thinner margins and increased volume.

The NSW government subsequently identified the splitting business across auctioneers to perform essentially the same duty as spending that needed to be trimmed to help consolidate and minimiser fees and charges and as well as getting rid of inconsistencies in administration and reporting.

Minister for Finance and Services Dominic Perrottet said the public “should not have to be burdened with excessive costs” of providing public servants with cars.

Mr Perrottet said the new savings came on top of savings that had already been made by StateFleet.

“Since 2011, the NSW Government has made annual savings of up to $14 million by removing surplus vehicles from StateFleet and better managing the retention of fleet vehicles,” he said.

With the new annual savings of $2.3 million, the government expects that the $14 million saving will be increased to $16 million each ear.

“This is money that can be reinvested back into providing essential services like health, education and transport,” Mr Perrottet said.

He said the government is committed to making greater savings for taxpayers and is achieving this by “reducing duplication and removing the red tape across government”.