By Ed Smith, President and CEO, Agile Fleet
Are you thinking about starting a car sharing initiative within your fleet organization? There are lots of good reasons to share vehicles: reduced costs, improved service, unburdening staff, unstaffed dispatching. You probably already know that your organization can save tens of thousands – even hundreds of thousands of dollars — by sharing vehicles, reducing underused vehicles, and automating fleet management processes. But if you’ve put it off, here are some signs you may want to do it sooner than later.
1. Your fleet budget just got cut
Budgets are getting cut everywhere. The single most effective way to reduce fleet costs is to reduce unneeded vehicles and share them efficiently. Sharing vehicles allows organizations to revise budgets to eliminate monthly fixed costs for unused vehicles sitting in a parking lot. You can also eliminate replacement costs for unused vehicles, and reduce costs for things such as maintenance, insurance, depreciation, parking, and staff time to manage them, and more.
2. You are spending too much in personal vehicle usage or outside car rental reimbursement.
Many organizations think it’s cheaper and easier to simply reimburse people for the business use of their personal vehicles or for outside car rentals. Unfortunately, costs related to using personal or rental vehicles can be tricky to manage and track. Inflated expenses can occur when employees overestimate their mileage instead of recording it precisely. Some staff members might even intentionally pad their mileage or make personal detours during business travel.
Another negative aspect of personal vehicle or rental vehicle use is the time it takes for staff to process large volumes of expense reports, which adds to costs. Sometimes fleet managers are not even aware of the POV or rental car budget burden because reimbursements are charged to operational budgets, not fleet budgets. Many of our clients report having spent tens to hundreds of thousands of dollars in personal vehicle use reimbursement – before they started requiring the use of a motor pool. Do you know how much your organization spends annually in reimbursements for personal vehicle usage and rental cars? It might be time to take a look.
3. Your vehicles have dust on the windshields.
Sometimes the most basic measure of lack of vehicle usage can be the most telling. If your vehicles have dust on the windshields, or worse yet, you don’t really know where they are all located, it’s time to get them under control. Our client from the City of Stamford told us: “Even though no one wanted to share, the consensus was that we needed more vehicles. But every time I went to the Government Center, there were always 30-40 cars sitting, some with dust on the windshields. That told me they weren’t being used, but we had no way to know for sure because we didn’t collect utilization data or trip information.”
Tracking all vehicle trips and information in an automated system and using GPS to locate your vehicles will make the difference. Using a system designed to facilitate efficient sharing and metrics collection will take the guesswork out of knowing how many and what types of vehicles you need.
4. You got audited and were told to reduce vehicles.
We estimate that fleets spend $3-$6K per vehicle per year to keep a vehicle in the fleet. These include lease and depreciation costs, maintenance expenses, parking spaces, insurance, tags, and other related costs. Our definition of right-sized fleet is having the right quantities and types of vehicles readily available at the right location at the right time. But how do you know if your fleet is right sized? We recommend you don’t rely solely on mileage. The number of trips a vehicle takes may be a better measure of usage because some organizations’ vehicles don’t travel far, but are well utilized because they take multiple trips per day. Other organizations have far to travel, but are poorly utilized because the number of trips are few and far between.
Tackle data first by looking at vehicles by site. Then, drill down to usage by type of vehicle, then look at the usage of each specific vehicle. Issues should jump out at you. Do your 5-passenger SUVs sit idle all the time because no one is allowed to use them? Your motor pool software should offer a way to track vehicles and drivers online and collect data automatically. In fact, it should offer reporting that shows utilization based on odometer.
If you decide the time is right to launch your motor pool but you need help making a business case for it, download our Making a Business Case for Motor Pool toolkit, offering a step-by-step guide to making your business case and presenting it successfully to decision makers.
Ed Smith is the President and CEO of Agile Fleet. He is a subject matter expert in fleet management and fleet right-sizing, specializing in the analysis of vehicle utilization data for accurate planning and execution of car sharing and right-sizing initiatives.