Managing the Financial Side of Commercial Fleets

Nobody Asked Me, But...

Adapting to a Changing Tide

March 1, 2018, by - Also by this author

This will come as no surprise to most of the fleet audience but we do a lot of surveys here at Automotive Fleet. We do a salary survey, we do maintenance surveys, and we do some interesting surveys regarding vehicle selection. Over the years we have seen salaries increase (a little), we have seen maintenance costs go up (and down), but in the area of vehicle selection, we have seen some real eye-opening trends.

The fleet market was once upon a time very neatly divided between cars and trucks. Today the split is closer to 80% in favor of trucks. Even the traditional passenger car fleets are using CUVs and SUVs in place of sedans. The CUV/SUV category is growing faster than any other segment and they outsold cars last year again. One of the driving forces behind the growth of that segment is the fleet market, and the people who make the decisions about what vehicles get placed onto a selector list or into service in a fleet.

Several large U.S. based fleets have made the switch from compact cars to midsize sedans or even CUVs. Those decisions, for the first time that I can remember, weren’t driven by economics. They were driven by concerns for driver safety and driver well-being. It’s probably a sign of our somewhat stable market conditions rather than a representation of any sea change in the fleet market, but whatever the cause, it’s probably a welcome change for the drivers of those vehicles. It’s also a welcome change for the manufacturers and the upfitters who now get to flex their creative muscles to develop great new products rather than just racing to bottom to design the cheapest, just-good-enough product designed to make a purchasing manager happy.

Those surveys that we do on vehicle selection have always made one thing clear: economics are important. Acquisition cost or lifecycle cost have always been the top consideration. Job suitability was right up there too but more than one fleet manager has been willing to sacrifice a little suitability for a little larger CAP incentive. They’ve been willing to trade a little ergonomic comfort for a little more off the invoice too.

The first clue we had that things were changing was when a group of big time fleet managers met with a few vehicle makers for a focus group we had. The question of options came up, specifically those related to safety. For the first time in my professional career, I heard a group of fleet managers all say they didn’t care about the cost. Normally when you ask a group of fleet decision makers if they like the idea of a new product or service, their initial reaction is always positive. But that’s because their initial assumption is that you are going to provide that product or service at no additional cost. But this is different. Those safety and ergonomic features are wanted and needed by everyone, and the market is willing to pay for it.

Fleets are often the beta testers of the vehicle market. This is one of those blessed times when fleets are out front of a growing trend. That shift away from compact sedans we saw in the fleet market a few years ago is playing out in real time in the retail market right now. That shift to CUVs and SUVs, same thing. It’s a great thing for your career, for your lifecycle costs, and for your drivers. So pat yourself on the back for being ahead of your time.

If you disagree, let me know.

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Author Bio

Sherb Brown

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Vice President and Group Publisher

Sherb Brown is the vice president and group publisher for BBM's AutoGroup. Sherb has covered the auto industry for more than 12 years in various positions with Bobit Business Media.

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