Fleet managers have to deal with strictly set budgets. What are some of the ways that LeasePlan helps control these pledges?
I think fleet managers today really have to approach it from a “macro” perspective, taking a look at their major cost drivers. Obviously depreciation, fuel, maintenance and accidents would be the four top cost drivers.
There are a number of ways to approach each of those. For example, with depreciation, one of the first things you would want to do is look at your fleet and make sure everybody that is in a vehicle should be in a vehicle.
Another step you can take is to “right size” those vehicles, making sure you are not providing a larger or more expensive vehicle than is necessary for the application.
As far as fuel is concerned, that would also tie into the next step of perhaps downsizing vehicles to more fuel efficient and economical vehicles, moving from six cylinder engines to four cylinder engines. Not only does this improve fuel economy but also cuts back on your CO2 emissions as well. From a maintenance perspective, making sure the vehicles are maintained on a regular basis and that all of your drivers are utilizing the maintenance program.
And then finally, from an accident management perspective, take it beyond the standpoint of just fixing vehicles. Instead, focus on expanding it into an overall safety program where you are doing motor vehicle records checks, assigning points, providing driver training, and really trying to reduce the number of accidents, rather than just focusing on the repair costs.
How specifically can a fleet manager control maintenance and depreciation?
LeasePlan has a very innovative risk mitigation product that we offer to our clients. It allows them to not only fix their monthly costs for the vehicle but also fix the maintenance expenses as well. Right now, we are in a situation where interest rates are very low and resale values are very high. We don’t know how long that circumstance is going to last. With a risk mitigation product, fleet managers are now able to lock in those low interest rates and take advantage of the high residual values that we are currently seeing.
Give me some more specifics on the risk mitigation product.
The product that we offer is called PartnerPlan. It is what we call an open calculation product. All of the cost drivers to the lease are fully disclosed to the client before the inception of the lease. The client knows what the interest rate is, what the admin fees are, what the residual value is targeted toward and then they are also given a fixed monthly maintenance budget.
There are a number of benefits to this. They have the ability to recalculate the lease throughout the course of the lease. So if they set that term and mileage at a particular level and they happen to be well over or under that, they can recalculate it and bring those costs more in line with the actual use of the vehicle.
Then there is also mileage pooling, so if they are over mileage on some units, that can be offset by the fact that they might be under mileage on other units. It really enables them to set up a term in mileage that is going to meet their needs right at the inception of the lease. If things change throughout the course of the lease, they have the ability to adjust that.
What size fleet would be most interested in a product like this?
I think it is a very, very viable product for any fleet size. It would be more “fleet make-up” that you would want to look at. For heavy duty construction type vehicles, pick-ups, cargo vans that put on a lot of miles or are kept in service for long periods of time, it would not be an optimal solution. For a sales fleet made up of predominately sedans, SUVs, or similar type of vehicle, it is a fantastic solution.
What would you say contributes to the best managed fleets? Is there a common factor?
I think the best managed fleets that I deal with are the fleets where they do reviews on a regular basis. The best managed fleets don’t make assumptions; they let the facts speak for themselves and then once the facts are known, make adjustments.
Typically, the best fleets I see have a strategic plan in place at the beginning of each year, whether it is calendar year or fiscal year. And the fleet managers are ready and able to implement those plans. In some cases, it might be evaluating who is in a vehicle and whether they need that vehicle. If not, it gives them an opportunity to reduce their fleet size to a certain extent.
Well-managed fleets also take a consistent look at lifecycle cost analysis. Vehicles are changing all of the time, fuel economies are improving; safety standards are improving, so doing a lifecycle analysis also needs to be done on a consistent basis.
You have had a long career in fleet. What are some of the things that you feel have made you successful?
I think from my perspective, I like to think that I have credibility. I try to look at the client’s fleet as if it were my own fleet. I try to make a determination as to what steps would be best served for them rather than for me. What I’ve found is that if I bring ideas and strategic thinking to the table, then the clients develop a trust in me and we are able to maintain that relationship going forward.
What do you think are some of the most significant changes over the last couple of years that have made a big difference internally or externally with your clients’ fleets?
I see a lot more strategic sourcing groups getting involved in fleet. That is very important because fleet tends to be a very significant expense in any organization. The sourcing groups are looking for the least expensive way to provide a fleet to their drivers. Often times, the fleet manager is not given as much of an opportunity to contribute to those discussions and that process as we feel they should be. They are the ones that are bringing the knowledge, the expertise and really the feel for what their company needs from a fleet perspective.
I think the other thing that we have seen changing over the years very, very rapidly is technology. We see the use of technology in forms of telematics through the use of online fleet management programs.
As National Vice President, Client Relations, Tom Casey is an individual contributor for his strategic account assignments as well as a team manager responsibility. Tom works with LeasePlan’s client relations team in order to continue implementing strategic best practices and cost-saving initiatives for all clients. He also collaborates with the team to evaluate each client’s fleet to identify additional opportunities for improvement.
Tom, an industry veteran of more than 20 years, has helped deliver millions of dollars in cost savings to clients through consultative recommendations. His fleet industry experience includes several roles in sales management, business development and client relations. Tom also served in the U.S. Navy for more than five years before he went on to earn his bachelor’s degree from the University of New Hampshire.