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9 Mistakes to Avoid When Playing "Musical Cars"

March 10, 2009, by Mike Antich - Also by this author

By Mike Antich

Since the recession's start at the beginning of 2008, 4.4 million jobs have been lost due to corporate downsizings and layoffs, with more than half of the employment losses occurring in the November-February timeframe. February was the third straight month in which more than 650,000 employees lost their jobs, according to U.S. Department of Labor data. Many of these terminated employees were assigned company vehicles. In today's politically correct HR environment, the term "reverse expansion" is being used to describe the retrieval of company-provided vehicles from terminated employees. The reassignment of vehicles retrieved from terminated employees to other drivers is referred to by some fleet managers as playing "musical cars."

"We have been involved in a growing number of reverse expansions - especially in the pharmaceutical industry. These projects can include thousands of vehicles at one time," said Matthew Betz, VP National Account Sales for AmeriFleet Transportation.

A fleet manager suddenly thrust into a reverse expansion will find it is very easy to make mistakes. Here are 9 common mistakes to avoid when conducting a reverse expansion.

The Right and Wrong Things to Do

1. Lack of Planning. When fleets go through a downsizing, the fleet office (often not their fault) does not give the logistics company or fleet management company enough advance notice for adequate planning. "As you can imagine, getting 1,000 vehicles picked up in various locations around the country, often on a tight time frame, is a daunting task. It takes planning, logistics skills, and resources. The chance for success is greater with more advance notice," said Betz.

Terry Langness, VP, national sales for PARS, cites similar advice. "Give the transportation company as much notice as possible when moving a vehicle. Most can react quickly to an emergency situation, but if there is an option to give them additional notice, everything goes much more smoothly."

Another problem is the failure to coordinate the pickup of the vehicle with other activities that need to take place. "For instance, many pharma fleets also have to manage the pickup of drug samples, which are often controlled substances. Without proper coordination, the outgoing driver can be inconvenienced by appointments with a field manager picking up a laptop, phone, fuel card, etc., the compliance company picking up drug samples, and the logistics company picking up the vehicle. Using the right logistics company can reduce all of that activity into one phone call and one 'touch' of the departing company car driver," added Betz.

One area of vigilance is the retrieval of other company assets such as fax machines, laptop computers, photocopies, or company samples. This task is sometimes delegated to the fleet department, and the equipment is often loaded into the trunk of the vehicle being retrieved. Sometimes an unscrupulous employee will not return the company-provided laptop and instead return a less expensive model in hopes the switch will not be detected.

In addition, fleet managers sometimes underestimate the exposure reverse expansions get within their organization. "Often, officers as high as the CEO are getting updates on each phase of the downsizing effort. Appropriate planning and partnering with the right logistics company can be the difference between a successful project and looking bad in front of the entire organization," said Betz.

2. Accurate Information is Crucial. It is important to provide the transportation company correct contact information for pickup and delivery locations, such as names, phone numbers, e-mail addresses, physical addresses, vehicle information, etc. "A significant amount of time and effort is involved when this information is not accurately given to the transportation company. It is helpful to include the manager's contact information as another way to communicate with the pickup location," said Langness.

3. Communication with Terminated Drivers. Be sure to inform your drivers the transportation company will be contact them to arrange pickup and delivery.

What fleet managers want to avoid having the driveaway company call the driver before he or she knows they are being terminated. The HR department must provide fleet operations with a confirmation that a termination notification has been issued prior to giving the driveaway company the go-ahead to contact the employee to set up a time for vehicle pickup.

"Occasionally, the transportation company is the first to contact a terminated employee. If you can put a 'do not contact the pickup contact before' notation on the move, that would help avoid an embarrassing contact with the driver," said Langness.

4. Failure to Coordinate Insurance Coverage. Companies sometimes fail to coordinate insurance coverage or plan for the contingency of a company driver not turning in a vehicle as planned. "If a company cancels insurance on May 1 because that was the planned turn-in day and, for some reason, the driver holds the vehicle until May 15, the company has huge exposure of an uninsured vehicle being in service," said Betz.

"A simple call to the driver indicating that the company's insurance coverage on the vehicle will be cancelled on a specific date will help you make sure that the vehicle is not driven without insurance," said Langness.

5. Allow Adequate Time for an Employee to Purchase Their Company Vehicle. When fleets offer a vehicle to the driver for purchase, they often don't allow sufficient time for the driver to make a purchase decision before scheduling vehicle pickup by the logistics company. "Delays and costs are increased when the company car driver refuses to relinquish the vehicle because he or she hasn't decided whether to buy it. This can cause penalties and delays in the entire project as resources need to be reallocated," said Betz.

6. Use Short-Term Storage Facilities. Fleet managers should consider moving some vehicles to a short-term storage facility until reassigned to other drivers. "This allows the vehicle to be properly prepared for the next driver. This preparation would include service issues, such as detailing and current driver materials," said Langness.

Betz also cites the importance of vehicle condition when reassigned to another employee. "Fleets often don't consider the condition of the vehicle and the impact it has on driver productivity and satisfaction. We are often transporting vehicles with 50,000 miles on them. If a fleet doesn't have the transport company check for maintenance issues, get the vehicle detailed, or handle outstanding warranty issues, the company driver will end up getting all of these things fixed at a cost to productivity," said Betz.

By not properly reconditioning a vehicle, you risk demoralizing long-term employees, who are used to getting new vehicles, not used ones. In addition, the condition of the reassigned used vehicle will have a direct bearing on the future care provided by the second driver. For instance, most companies have a no-smoking policy in fleet vehicles, but the reality is drivers will surreptitiously smoke in their vehicles when they are alone. If such a vehicle isn't reconditioned and is assigned to another employee who is sensitive to tobacco odor, it is not uncommon for the employee to refuse the vehicle. Another common complaint about some reassigned vehicles is pet odor and pet hairs tangled in the upholstery and carpeting.

7. Reassignment of Vehicles. Work with your transportation company to help reassign the right vehicle to the right driver. "Utilizing the 'first in/first out' theory may save you substantial storage fees if accepted by the driver or reassigning the oldest model-year first. Your transportation company can provide valuable input to help with these reassignments," said Langness.

8. Multiple-Phase Turn-in. Depending on the number of vehicles involved in the downsizing, it can be a mistake to try to schedule the pickup of all vehicles on the same day. "Multiple-phase turn-ins can be much easier for the fleet manager to manage and increases the chance of success. This is primarily true with larger reverse expansions," said Betz.

9. Avoiding In-Transit Issues. Set up parameters with your transportation company so staff knows what they can and cannot do if you are unreachable. "Situations, such as dirty vehicles, breakdowns after hours, etc., need to be addressed immediately so you do not incur driver downtime charges," said Langness.


A Thought for the Future

Although pharmaceutical fleets will continue to upfleet and downfleet based on their product pipeline, let's hope that in the not-too-distant future, the term "reverse expansion" becomes an anachronism of a bygone era as the national economy once again begins to grow.

Let me know what you think.


  1. 1. Phil Schreiber [ March 10, 2009 @ 01:17PM ]

    This can serve as a chance to go Green or help fleet managers and their companies towrds that goal. In most cases the vehicles to be sold first in a "reverse Expansion" should be the larger, and older vehicles. It will save on operating costs, by reducing fuel consumption, and maintenance. It will also reduce exposure to differences between book value and market value, thus minimizing losses resulting from vehicle sale in a soft market. Phil

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Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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