The Strategic Sourceror

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Fleet Management: The Three Year Itch
Tuesday, March 25, 2008
In this day and age, divorce is incredibly prevalent. Why not be like all the other cool kids and take the D-train and get a divorce…from your fleet, that is. Sure, your fleet isn’t cheating on you, but it more than likely is stealing your money. That’s as good a reason as I can think of. Get those papers filed, and here’s why:

There are a number of reasons to get rid of your fleet within a 36-48 month time frame; some of which I mentioned in my first post “Today’s Menu: Fleet, Well-done”. I will expand on some of these points in later posts.

Maintenance/Repairs: The older a vehicle gets, the more you’ll dump money into repairs and maintenance. Sales fleet vehicles, as compared to trucks, will typically last longer and not incur as high a price on maintenance and repair, but you can’t hold onto them forever either. Get rid of them sooner rather than later to avoid this cost.

Down-time: This goes hand-in-hand with maintenance/repairs. The older a vehicle is, the more maintenance and repairs it will need, the longer it is in the shop, the less productive your fleet will be.

Miles-per-gallon: The older a vehicle gets, the less fuel efficient it becomes. This wouldn’t move many people in the 90’s, but it’s a different story now when gas is over $100 a barrel. The larger the fleet, the more this becomes relevant.

Driver Morale: Give an employee a beater and they will beat it. Remember how meticulously you kept clean your first new car? How you wouldn’t dare let anyone eat in it? That’s how most fleet drivers will respect new vehicles. Remember how you could care less about the stains on the upholstery when that car was on its last leg? That’s how fleet drivers feel about having a Flintstone’s vehicle. This type of psychology can further depreciate an already depreciated vehicle. Give your fleet drivers a respectable vehicle and most will respect it.

Corporate Appearance: If you had a sales meeting with the CEO of a large potential client, would you show up wearing a pair of sweatpants with the crotch worn out? That ’97 Crown Vic you got for a steal at a sheriff’s auction is that pair of crotch-less sweatpants. If appearance is a priority to gain business, everything from the shine on your shoes to the car you drive up in is subject to scrutiny.

Unified Fleet: Replenishing the fleet at a regular interval enhances corporate appearance and helps maintain a fleet of the same vehicle. This makes employee transfers more manageable since everyone knows the capabilities of the vehicle they will be driving. It also makes for a unified corporate appearance. A great example is the Best Buy “Geek Squad”. When you see a black and white VW Beatle, without reading the logo on the side of the door, you know who it is. Dorky, but smart. Wouldn’t you want that kind of instant recognition?

Resale Price: In most corporate situations, you’re on an open-ended lease. Depending on the depreciation scale and vehicle usage, you more than likely own the vehicle when you liquidate it. Why not sell the vehicle when it can command a respectable resale price? Holding on to that vehicle for an extra year or two or three is typically not worth it. Think of it this way; you could have sold that vehicle for $3k three years ago, but in the meantime you spent $3k in maintenance, repairs, and despicable gas mileage keeping that vehicle in your fleet. That’s a swing of $6k. You didn’t think about that when you signed the lease papers, but it’s burning a whole in your pocket now.

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posted by Jazzy Sourcer @ 2:19 PM  
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