Managing the Financial Side of Commercial Fleets

Chubb Takes a Fresh Look at Fleet

May 2008, by Staff

Even though Sheri Bonsall, assistant vice president, corporate travel services, was new to the fleet industry, when she took over fleet operations for Chubb & Son in 2004. She was tasked with finding ways to minimize fleet costs and provide immediate cost savings to the organization. With a background in business management and accounting, as well as some help from her fleet management company, she was able to do just that.

Breaking down fleet cost components into logical categories and determining which expense levers could be addressed for the most immediate savings impact, Bonsall then partnered with her fleet lessor to pull the appropriate levers. Thus, the evaluation of the 800-plus vehicle fleet began.


Tackling Amortization

In light of the existing vehicle type and used-vehicle market conditions at the time, the first fleet component analyzed was the amortization schedule. Bonsall worked with Chubb's strategic budget and planning department to build a business case with best- and worst-case scenarios based on the current amortization schedule.

"Putting a strategy behind the process rather than amortizing all vehicles in the same manner, the findings led us to decide upon an amortization based on the specific useful service life of the vehicle," said Bonsall. Therefore, the overall schedule was shortened from 60 months to 45 months on most vehicles, bringing the residual value at the end of the lease term in line with projected fair market value.

Shortly thereafter, Bonsall performed a thorough assessment of vehicle selectors and manufacturers. She looked closely at each manufacturer's offering based on Chubb's specific application needs, focusing on driver safety and overall lifecycle costs. After considering all options, she switched manufacturers, significantly reducing overall acquisition and depreciation costs, as well as total cost of ownership.


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