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Are You Overspending On Depreciation?
The Optimum Replacement Analysis recommends replacement cycles that will allow your fleet to operate at the lowest monthly expense on the lifecycle cost curve. If you are replacing vehicles too early in their lifecycle, you could be overspending on monthly depreciation by 50 percent or more! If you are replacing too late in the lifecycle, you could be overspending on maintenance and other variable operating expenses as your vehicles age.
From an economic perspective, a fleet's variable spend is a combination of capital and operating expense. It is important that a fleet cycles units at a point that considers the current state of both areas in addition to the "soft" factors that play into your decisions surrounding target replacement cycling.
Significant cost savings can be realized through fleet-specific analysis of replacement cycles and “right timing” replacements. Since depreciation and maintenance are often two of the largest line items on a fleet’s budget, a review of replacement cycles is an ideal place to start when looking to cut costs.
Read more about the best time to cycle your vehicles in this Optimum Replacement Analysis.
About the Author
Becky Langmandel was recently promoted to the role of vice president, analytics, consulting & transformation at LeasePlan USA. Becky and her team work to consult with clients on costs savings, policy and process improvement and environmental, health and safety measures for their fleets through analytics, reporting and client reviews.
Becky has been with LeasePlan for nine years. In her previous role as director, strategic modeling & analytics, she designed, managed and developed value added statistical, financial and economic models. These models provided solutions and support during a client's decision making process.