Or you can craft fleet cost reduction opportunities right from your vehicle life cycle
Call it what you may – sleight of hand, wizardry, magic… With the challenges and concerns your fleet is facing today as a result of the pandemic, you may feel like you’re going to need some impressive tricks to rebound.
Don’t worry, no illusions required. Just some solid, short-term strategic maneuvers to reduce your operating costs.
You can easily use the vehicle life cycle as a guide to organize your strategy. Think in terms of buying the vehicle, driving the vehicle, servicing the vehicle, and finally selling the vehicle at the end of its useful life. If you create a goal to materialize two or more opportunities in each phase, you’ll end up with more than a half-dozen new strategies – without any hocus pocus.
Here are some idea starters:
BUY – The OEM factory closures has thrown a wrench into your vehicle replacement schedule as well as your budget plans,too. Depending on your company’s position and status:
• You may elect to move that allocated capital into reserve instead of ordering new vehicles. But be prepared for a rise in longer-term operating expenses as your average fleet age increases.
• You could use some of the funds originally earmarked for new vehicles to offset those expenses.
• You can opt to lease instead of purchase, and place orders when factories reopen while still reducing your upfront capital expenditure.
DRIVE – It’s likely the driving patterns of your vehicles have changed drastically. Depending on your market, you could be trying to keep up with increased demand for your vehicles, or the need may have dropped significantly. In either case, balancing utilization will help prolong your vehicles’ useful life while replacement cycling is on hold.
• You can lessen the impact of increased wear and tear by rotating out some older or high-mileage vehicles. You don’t want to push them so hard that maintenance and downtime become problematic.
• You can lean more on the newer, lower mileage vehicles. They’ll give you reliability and efficiency at a time when every penny counts.
SERVICE – Preventive maintenance is more important than ever, but you may have to adjust your schedules to preserve uptime and cash.
• If vehicle demand is high, it’s critical to stick to your PM schedule. It’s the best way to deter component failures that will prematurely take your vehicles out of service. This is especially important while replacement vehicles will be hard to acquire.
• If your analytics show utilization is below normal , you can temporarily extend your PM intervals as a strategy to route money back into your company’s stretched budget. Proceed with caution to avoid any increases in repairs and operating costs, and reinstate your regular schedule as soon as business picks back up
SELL – Your vehicles are company assets, and there’s value in them beyond the job needs they support.
• If conditions warrant it, you may sell them as part of a short-term strategy to reduce fixed expenses or increase cash flow. Work with your provider to understand the impact of temporary market changes.
• Consider how and why your vehicles are used before getting rid of them. If you get rid of underutilized assets, remain mindful of the returning demand for those vehicles as conditions begin to turn around. You don’t want to be caught shorthanded.
You don’t need any fleet magic hidden up your sleeve to create a short-term strategy amid the COVID-19 challenges. With innovative thinking and adaptability, you can develop viable solutions for allocating your capital and making the smartest use of your vehicles. Then using that flexibility, you’ll need to pivot your strategy again as life slowly returns to something that looks familiar.
For fleet and auto industry updates during the pandemic, you can refer to ARI’s COVID-19 SUPPORT resource center for information to help guide your short-term decision making.
In this unprecedented time, you’re likely facing much more than the ordinary fleet challenges. We’re here to support you; ask us anything.