Minivans Out, SUVs In at Brown-Forman
When Jack Daniel recently needed a lift, a minivan just wouldn’t do. It was simply a five-foot statute of the whiskey icon, but still, he got where he was going in the back of a new SUV.
Brown-Forman Corp., the Louisville, Ky.-based company that produces and markets products such as Southern Comfort, Jack Daniel’s Tennessee Whiskey, and Early Times, recently stopped offering minivans to its fleet drivers. They’re still available on a “must-have” basis, but about a year ago, the company’s online vehicle selector offered small and mid-sized SUVs instead.
“We have to offer larger vehicles, because so often, our drivers are carrying point-of-sale items to events,” said Mary Pat Crabtree, relocation/fleet specialist at Brown-Forman. “When we openly offered minivans on our selector, they were ‘soccer-mom vans,’ and weren’t exactly used 100 percent for business. We do allow personal use of vehicles and didn’t want to deny them that privilege, but when these vehicles went to auction, we were losing money.”
Minivan Resale Values Down
The used-vehicle market is simply saturated with minivans, she said. “At the auction houses, buyers weren’t going to pay high prices for them, which resulted in our minivans going for lower than what remained on the lease. As a result, we owed a balance to our leasing company.”
At the height of the company’s minivan use, about 120 were on the road; the fleet includes about 500 domestic vehicles overall. In the past few years, however, that number has dwindled significantly. Out of the 128 vehicles Crabtree replaced last fall, only three were minivans at the drivers’ insistence. Beyond that, 25-30 will likely be replaced in the next cycle.
“We’ve learned that minivans were not necessarily needed as business tools,” Crabtree said. “The three drivers who kept the minivans were definitely using them for hauling items and very seldom even had passengers.”
Through the years, she said, the company had learned to offer minivans with flip-down seats, because drivers were in the habit of removing the seats all together and then misplacing them.
Fleet Offers ‘Bells and Whistles’
Brown-Forman offers its drivers a few more “bells and whistles” than the average fleet. Again, great for the employees, but not so great for the minivan resale market, according to Crabtree.
“When we ordered these minivans, we didn’t take the lowest-cost vehicles out there,” she said. “We have an image at Brown-Forman, and we’ve been told that our vehicles are extremely nice. We put options on them that other fleets do not. Safety is our number-one consideration. We offer side-impact airbags, overhead air curtains, ABS, and OnStar. Other companies may use very stripped-down, basic models, but we don’t. And that’s probably where we’ve gotten in trouble. We put creature comforts in the vehicles because our people are in them many hours out of their days and weeks. We want them to be comfortable, and when there’s a client in the vehicle, we want that client to be comfortable, too.”
Crabtree said she was fortunate in that the organization was able to secure the SUVs at “excellent” prices from the manufacturers and has worked “very hard” with the leasing company to control depreciation rates and stay within budget. “So far, we’ve seen an increase of about 7 percent in fuel prices from last year,” she said. “This doesn’t necessarily mean the mid-sized SUV is not getting us good gas mileage. It’s hard to tell with gasoline prices fluctuating nationwide daily.”
But the way the drivers were driving the minivans, she said, “it was foot-to-the-floor. They weren’t getting the gas mileage they could have. They’d put too much stuff in them and didn’t watch the tire pressure. But with the SUVs, they seem to be taking better care of them.”
Employee Sales Rise
In addition, she said, once the SUVs go off cycle, employees have been much more likely to purchase them for their own use.
“We’ve been very impressed,” she said. “They wouldn’t purchase the minvans. But with offering the new SUVs, they can’t wait. They gobble them up for themselves, their neighbors, and their children. They very seldom go through auction.”
The SUVs are a great draw for young new hires, as well, Crabtree has discovered.
“We found that when people left and a new person would come in, it would invariably be a young single person, stuck in a minivan,” she said. “They seem to be getting a lot more use out of these SUVs, knowing they can take them on personal trips, and that they’re comfortable and elegant enough for when they have clients with them, too. Brown-Forman has a reputation to uphold. The Brown family wants employees to feel good about themselves and what they do, and my job is to offer them something that makes them feel good, too, as long as we can make it work within the budget. And this does.”
Are Minivans Right for Your Fleet?
To help determine if minivans are right for your fleet, Mary Pat Crabtree, relocation/fleet specialist at Brown-Forman Corp., recommends the following steps.
Carefully consider your business needs. If your company allows personal use of vehicles, that may be part of their appeal. But that doesn’t necessarily mean they’re best for your bottom line.
Explore all the alternative vehicles available. Other models may offer plenty of room, but will bring a better return at resale. Brown-Forman, for example, has offered the Ford Escape and the Chevrolet Equinox and Trailblazer on its selector.
Negotiate for the lowest acquisition price on the vehicle model you choose.
If you lease, work with the leasing company to choose the best depreciation rate to fit your company’s budget.
“But even when you have done everything by the book, with the current resale market, minivans might still be a loss for you,” Crabtree said. “If image is not a priority for your business, I would run the minivan until the wheels fall off.”