Corporations continue to be uncertain about the strength of the economic recovery. As a result, companies remain cautious about their fleet ordering volumes. Many are right-sizing vehicles and lengthening replacement cycles.
Deferring Vehicle Replacements is Counter-Productive to the Intended Goal
During economic uncertainty, senior management demands expense reductions and limits capital expenditures. Since fleet is usually among the top 10 corporate capital expenditures, there is pressure to defer vehicle replacements. However, this cost-containment strategy misses the point that all fleet-related expenses, both fixed and operating, are influenced by when a vehicle is replaced. Cost reductions in acquisitions are often offset by rising costs elsewhere.