May 2008, Fleet Financials - Feature

Executive Vehicles: Options in Dealing with End-of-Term Issues

By Staff

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Surplus vehicles have always been a thorn in the side of the fleet manager. Drivers leave the company for one reason or another, and fleet managers must decide what to do with their vehicles.

Fortunately, regular fleet policy can provide a process by which vehicle use or disposal is handled. But what about executive vehicles? Executives are almost always provided a vehicle as part of an overall compensation package, and therefore, a company-assigned vehicle involves issues far more personal than that of a sales or service representative. It is a challenge, but there are options fleet managers can explore.

Most companies have written fleet policy documents in which the assignment and use of vehicles is covered in detail. Sales, service, or delivery vehicles are usually provided via a vehicle selector, from which a driver chooses among two or more make/model combinations. The key point is that the overall mission of the driver and the vehicle is generally the same no matter what choice is made.

For example, the company may have sales representatives whose job is to visit customers, sign up new business, deliver marketing materials, and occasionally entertain clients. The selector might offer three models, all four-door sedans, the differences between them merely style and trim.

Fleet policy permits the driver to choose from the approved selector, and a vehicle is assigned to each individual. Because the missions of both the driver and vehicle are the same, a number of options are available to the fleet manager to handle vehicles that become surplus when the driver leaves the company.

Executives are also covered in the policy. However the circumstances are entirely different. The only "mission" executive vehicles normally fulfill is providing an incentive in recruiting, hiring, and retaining scarce executive talent. Executive vehicles are most often strictly compensatory in nature. For that reason, options for fleet managers in handling surplus fleet vehicles are usually not available for their executive counterparts.

CONTINUED:  Executive Vehicles: Options in Dealing with End-of-Term Issues

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Tags: closed-end leases, end of term, executive vehicles, surplus