By Ed Smith, President, Agile Fleet
July 19, 2022
In over 22 years of working with hundreds of fleets of all types and sizes, we’ve never seen anything more effective at producing savings than by right-sizing a fleet with automated vehicle sharing.
Why? Because idle vehicles cost money… lots of money. Improving how you share vehicles allows you to eliminate vehicles from your fleet while continuing to provide drivers with the access they need.
To put this into perspective, the following example illustrates that for each fleet vehicle that you eliminate, you can save more than $50,000 over ten years. Do the math for your fleet or download the easy-to-use 10-year fleet cost-savings calculator that Agile Fleet, Inc. developed to see how much you can save by right-sizing your fleet!
10-Year Cost-Savings from Eliminating One Vehicle
How much money can a fleet save by eliminating just one vehicle? Take a look:
Each vehicle that you eliminate from your fleet is “a gift that keeps on giving.” As a start, you generate cash from selling the under-utilized vehicle. Then, you eliminate the annual carrying costs for that vehicle each subsequent year. Carrying costs include depreciation/lease expenses, maintenance, insurance, parking, and administrative costs. So, you end up eliminating the carrying costs in the first, second, third year…and on and on.
How Much Can You Save?
The math is straightforward. Just figure out how many vehicles you anticipate eliminating and multiply that by the 10-year cost savings per vehicle. Even though the math is simple, how do you know how many vehicles you can eliminate? Here’s a simple approach:
The example above is for a 100-vehicle fleet. There may be vehicles that you know cannot be shared. For example, emergency vehicles, dedicated special purpose vehicles, and others. In the above example, we first subtract 35 of these from the 100 total to arrive at 65 vehicles that can potentially be shared.
Next, the example estimates the percentage of the fleet that is used daily. In practice, you can estimate this percentage by looking at paper trip logs, telematics data, and other internal sources. At Agile Fleet, we’ve seen that many fleets today are operating at between 40 and 60% utilization, and, in the past 18 months, the utilization rates have even decreased further due to job function changes brought on by remote work or teleconferencing.
By multiplying vehicles to be shared by the utilization rate, the example shows that mathematically, 26 vehicles are essentially “idle.” In reality, this is spread across the entire fleet. So, to be conservative, the example reduces this number by an extra 20% so there are enough vehicles to meet peak demands. The calculation leaves an extra 5 vehicles (~20%) in the fleet to handles these peaks. The result is an estimate of 21 vehicles that could potentially be eliminated.
In this way, once you have estimated the number of vehicles that you propose eliminating (20), you can calculate 10-year savings by doing the math one last time:
That’s it. $1,000,000 saved over ten years without impacting fleet drivers. While that saving seems very large, it likely understates the true potential savings. Other factors that can increase the savings include:
- Reduced costs associated with labor that previously had to manage each of the vehicles eliminated
- Eliminating or reducing outside rental charges since automated vehicle sharing can fulfill the occasional need for vehicles that would otherwise be fulfilled through outside rentals
- Eliminating or reducing reimbursements for the use of personal vehicles. The vehicle sharing initiative would fulfill the need for vehicles that would otherwise be fulfilled with personal vehicles.
This tool is simple by design. Beyond what the tool shows, there are many other benefits and savings that are realized through improved vehicle sharing. We invite you to talk with our team to learn more about additional savings that can be achieved by optimizing existing shared fleets, eliminating assigned vehicles, automating manual fleet processes, and more.