Managing the Financial Side of Commercial Fleets

Slow Recovery Requires Fleet Managers to Adapt to the 'New Normal'

With the economy in a continued slow-motion recovery, fleet managers have had to be resilient and creative in doing more with less. The result: Budgets may have shrunk, but the bottom line has increased.

January 2012, by Grace Suizo & Chris Wolski

The Best Vehicle for the Job

Best Buy is also in the process of replacing 636 full-size cargo vans with smaller vehicles, such as the Ford Transit Connect. It has replaced 772 V-8 engine cargo vans with smaller six-cylinder vehicles that produce better fuel economy.

Likewise, ThyssenKrupp Elevator has transitioned to the four-cylinder Ford Transit Connect, increasing its fuel economy by 8 mpg. The company has also introduced propane autogas pickup trucks into its fleet, for lower fuel costs and an unexpected time savings, since these vehicles are eligible for high occupancy vehicle (HOV) lane access reducing fleet drivers' time on the road.

Fuel producer Valero saw the immediate economic benefits of rightsizing when it transitioned its car fleet from the V-6 Ford Taurus to the four-cylinder Ford Fusion. The result has been a 6.5-cents-per-mile savings for each vehicle - a lifetime savings over 47 months of almost $575,000.

Leaning on FMCs

Ongoing pressure to cut costs has prompted some fleets to rely more heavily on services from fleet management company (FMC) partners.
Pharmaceutical company Pfizer said it is increasing its reliance on FMCs as the ability to perform the basic functions (e.g., good customer service and acquiring market-competitive vehicles) while also striving to improve operations and cut costs has become more challenging.

Best Buy has worked with its FMC to manage fleet and DOT operations. In addition to the 19-percent decrease in cost per vehicle per month and a 15-percent reduction in total carbon emissions since 2009, the company has also worked closely with its FMC on major projects that include quantifying the optimal lifecycle and protocols for vehicle branding, participation in annual vehicle reviews and analytics to understand the appropriate vehicle for each job function, establishment of a vehicle retirement policy and retirement planning, and management of major ancillary Best Buy fleets.

FMCs have also been working with fleets to develop mobile applications as a way to help lower fleet costs, increase driver efficiency, and improve fleet management control.

Best Buy, for example, uses its FMC's telematics application to monitor and report to field teams how well it is managing vehicle expenses.

Making Do

Keeping vehicles in service longer is another approach fleets have been taking to reduce costs. While not a one-size-fits-all solution, it has been effective for several fleets.   

American Family Mutual Insurance Co. stretched out its existing models an extra six months and 15,000 miles, going from a replacement cycle of 36 months/60,000 miles to 42 months/75,000 miles.

PPG Industries has been gradually extending its vehicles 10,000 miles each year (from its original 65,000-mile cycle), and currently has a standard 95,000-mile replacement schedule. The fleet has experienced significant cost savings, with only minimal maintenance cost increases.   
Advance Auto Parts has also been able to go an extra year keeping the same vehicles and without growing its fleet unnecessarily. To avoid spending money on purchasing more units, it has successfully managed to shift several hundred underutilized vehicles across its U.S. operations to fill in where needed.

In addition to stretching the service lives of vehicles, more fleets have also adopted longer oil change intervals, by using, for example, synthetic products to help save costs on oil changes. Keeping up with service intervals that match vehicle usage is another way fleets have explored to minimize oil drain charges.

The Bottom Line

These are only a few examples of how savvy, cost-conscious fleet managers are conducting fleet business in today's "new normal" of tight budgets and ever-shrinking resources.

What these fleets show is that, instead of being a detriment, necessity has become the "mother of invention," pushing fleets to operate at peak performance for the benefit of drivers, the company, and customers. FF


« Previous  |  1  2  |  Next »
Twitter Facebook Google+

Comments

Please note that comments may be moderated. 
Leave this field empty:
 
 

Fleet Incentives

Determine the actual cost of owning and running a vehicle in your fleet. Compare vehicles by class and model.

Blog

Market Trends

Mike Antich
10 Ways Fleet Managers Can Avoid Being Under-Rated by Senior Management

By Mike Antich
There is an ongoing perception by senior management that fleet management is not a complicated and sophisticated profession. As a result, one of the biggest challenges facing fleet managers is getting management to recognize and acknowledge their contribution to the company. Here are 10 ways to ensure management recognizes your contribution to the company’s bottom line.

Finding the Right Balance: Over-Spec’ing vs. Under-Spec’ing Trucks

By Mike Antich

View All

Driving Notes

Mike Antich
First-Ever Mazda Ice Academy Showcases i-ACTIV AWD System

By Mike Antich
The Mazda Ice Academy was designed to demonstrate Madza’s i-ACTIV all-wheel drive (AWD) on a dedicated ice course in Crested Butte, Colo. It was a very convincing demonstration of reactive vs. predictive on-demand AWD.

2016 BMW 340i xDrive

By Paul Clinton

View All

Nobody Asked Me, But...

Sherb Brown
Preparing Your Fleet to Meet Rising Market Trends

By Sherb Brown
Plan ahead for the future and have discussions with your senior management about costs and what the future has in store for your fleet. While it looks like the cost of a gallon of gasoline may be going down, the cost of everything else is going to go up.

Analyzing the Future of Fleet

By Sherb Brown

View All

In Memoriam: Coach's Insights

Ed Bobit
Thinking of the Newbies of the Future

By Ed Bobit
A lot has changed in the past 10-15 years, so we can only imagine this momentum will continue into the next decade-plus. How will this change impact the fleet manager of tomorrow?

Managing a Car vs. Work Truck Fleet

By Ed Bobit

View All

STORE

Fleet Financials Magazine - January/February 2016
$12.95

Featured Articles Include: * 30 Years of Fleet Financials History * Milestones in the Vehicle Leasing Industry * Celebrating 14 Years of Fleet Executive Recognition

Up Next

More From The World's Largest Fleet Publisher