The Car and Truck Fleet and Leasing Management Magazine

Why the High Cost of Fuel Will Have Minimal Impact on 2006 Fleet Selectors

May 2005, by Mike Antich - Also by this author

“Fuel prices will play no greater role in our selector decisions in 2006 than it has in previous years. Like most fleets, we use a total cost-of-ownership scheme to develop selectors recommendations for our clients. And since fuel is an integral part of this formula, yes it has a role, but only as a part of the overall lifecycle cost analysis,” said Jim McCarthy, director, vehicle management services for Siemens Shared Services. Another reason why high fuel costs promise to have little impact is that most vehicles on today’s selectors are already the most fuel-efficient models available to fulfill the required fleet application. “The high cost of fuel will not have much impact on the types of vehicles we acquire for 2006 since the majority of our fleet is already very fuel-efficient due to our use of four-and six-cylinder engines,” said Charles Bowen, director of fleet for Rollins, Inc. Fleet application also limits vehicle choices. “I can’t change my selector and still get the right vehicle for the job,” said Frank Felicetta, director, fleet operations for Cablevision. Although selectors may remain unchanged, this is not to minimize the impact of fuel costs. “We are locked into the type of vehicle needed to run a service business,” said Kathy Kent, global fleet manager for Avaya. “We use mini cargo vans and will probably continue to do so. But our fuel cost is running 13.3 percent more than the same time last year with 260 fewer units.” The Downside of Vehicle Downsizing
To decrease fuel costs significantly, fleets have three options: switch to a smaller vehicle, specify a smaller engine or both. The concern with downsizing is that it will negatively impact the performance, safety, and morale of drivers. For instance: Smaller Vehicles Don’t Meet Business Needs: “Keeping fuel cost to a minimum is desired, but not at the expense of our drivers in not being able to attain their performance goals,” said Sue Miller, senior manager – domestic fleet for McDonald’s Corp. Reduced Cargo Capacity: “One drawback to downsizing is the reduced room to carry samples and materials,” said Stephen Levine, fleet manager, operations for Pfizer Inc. “The current cost of fuel is an issue, but our reps have to perform their jobs.” Driver Safety: Vehicle downsizing raises driver safety concerns. “The higher cost of fuel is definitely a factor in vehicle selection,” said Gerald Cumby, manager, transportation/materials for Lockheed Martin. “However, we will continue to purchase the larger vehicles for safety, as well as for comfort. We have to weigh the alternatives of purchasing smaller vehicles versus larger vehicles. Safety always wins out.” Limited Savings: The savings in switching to four-cylinder engines will not be significant since the mpg difference from a fuel-efficient V-6 is nominal. “We’re considering four-cylinder sedans, but don’t believe there will be much difference in cost,” said Karen Cook, fleet manager for Schindler Elevator. Fewer SUVs and More Crossovers
However, the higher fuel costs is causing fleet managers to reevaluate the placement of SUVs on company selectors. “SUVs will no longer be offered at Labcorp. AWD and 4x4 will only be allowed in very limited instances,” said Lynda Dinwiddie, director, national fleet operations. Some fleets are encouraging substitution of other vehicles for SUVs. “We encourage drivers who order SUVs, due to capacity issues, to consider the hatchback we have on the selector,” said Sheri Bonsall, assistant VP of administrative services for Chubb & Sons. Other fleets are transitioning from cargo vans to station wagons to reduce fuel expenditures. “Driver acceptance of smaller, efficient drivetrains will continue to be one of the fleet manager’s greatest challenges in the near future,” said J.J. Keig, CAFM, fleet manager for RentWay Inc. The Cost of Doing Business
Well-run fleets already have in place effective fuel management programs that optimize the cent-per-mile fuel efficiency of their vehicles. What fleets cannot control is the price of fuel. “The high cost of fuel is simply the ‘cost of doing business’ these days,” said Lisa Kneggs, fleet manager of Yum! Brands. Pat Turner, fleet manager for Alcon Laboratories, feels like-wise: “At the present time, fuel costs are viewed as just a part of doing business. We have adjusted budgets to reflect the increase in cost, but do not plan to alter the type of vehicles used.” Jackie Barrett, corporate services manager for Valspar, sums it up best – “Fuel is a necessary evil.” Let me know what you think.
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