The Car and Truck Fleet and Leasing Management Magazine

So You Say To Me, 'Stop Harping!' (It happens all the time.)

May 2005, by Ed Bobit - Also by this author

I'm not the kind of guy to knock at a door and then when the door is open not go in.-William Saroyan

We are confronted with insurmountable opportunities.-Pogo

Opportunities are usually disguised as hard work, so most people don't recognize them.-Ann Landers

Seize the opportunity by the beard, for it is bald behind.-Bulgarian proverb

 

For most of the last 40-some years, I've crusaded for every fleet manager to learn about remarketing. This, of course, embraces depreciation and ultimately, resale values. Simply put, it's the biggest piece of the fleet cost pie.

Incredibly, our readers have finally come to the realization that they need to carry this flag, to learn the mysteries of reselling. In numbers, they are also really promoting employee sales and using any available channel (electronic or not) for more end monies.

Some say that it's only working now because senior management insists on scrutinizing budgets like never before. Whatever the reason, I say "Yeah!"

Similarly, 10 years ago, only a handful of fleets had installed a formal fuel program. We championed this cause as well. Our editors and research people brought an awareness and, during the last three to five years, we now see the majority of fleets with a program. "Yeah!" again.

A funny thing happened to me last week when I had a chance to view/drive/evaluate the new Impala. I ran into an old friend, Charlie Loveless, from Frito Lay's huge fleet. We had some time to kill, so we had a Diet Pepsi (yes, I know that's a trademarked name by his company) and jawed some. Now here's a guy who's been doing this for more than 20 years and now has more than a little responsibility for about 23,000 vehicles. And he's worried (and I've got to know why).

It seems that corporate management has been noticing the soaring fuel costs, and they want Charlie to do something about it. Poor guy, he's way ahead of them, but can't figure out how to stabilize the escalating costs as the pump prices jump every week.

He's at wit's end. He's succeeded in negotiating a terrific deal in his bulk fuel purchases. He makes sure that everyone is using regular where applicable and choosing the cheapest-priced stations. His fuel program is excellent. He's established new policies on idling times and the logistics of best route schedules with software. He's got 'em checking tire pressures regularly. He's investigating fuel cells and "Displacement-on-Demand" engine technology. What more can he do?

Well, his company recently had a national sales meeting (and he had a part of the presentations). So, he was going to wheel out a Toyota Hybrid Prius for them to look over with management's blessing, in spite of the premium price and low/slow availability for fleet purchase. (EPA says it's 60/51 mpg, and a buyer is allowed a $2,000 credit which translates into about a $600 saving, so your initial investment is substantially more.)

Charlie had to go out and buy a Prius retail. (He also planned to surprise the meeting with a replica of the "hi-boy" Pepsi truck you may have seen in commercials; it's really cool.)

Charlie's also seriously studying the new 6-speed transmissions, diesel, bio-diesel, hydrogen, methanol, and whatever else is on the horizon. (Most of these are not commercially available now.)

All commercial and other accounts face this basic economic fact of business life. It may be lime to redefine "perks" for our drivers. Most of us know how much one can save just by spec'ing a 4- versus 6-cylinder vehicle.

Oh, but wait. Today's 4-cylinder engines aren't the same as your dad's. They used to give you 90-120 hp; today it's usually 140-160. And the National Association Fleet Resale Dealers tells us you just about get your initial extra dollars back at resale (the 6- versus the 4-cylinder). So, that leaves "mpg" in focus.

Here's reality: if you have drivers in SUVs getting 18 mpg and traveling 65,000 over three years, and gas is selling for $2.10/gallon, it's about $6,500 per year, or $ 19,800 for three years. Now take a 4-cylinder (if you can keep the driver happy in it) with 28 mpg and figure the difference. Yes, and not only for one vehicle, but for your 100- or 1,000-unit fleet.

It's shocking! It's also your possible opportunity. Maybe we should have Charlie negotiate with OPEC.

 

 

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