The Car and Truck Fleet and Leasing Management Magazine

Fleet Operating Costs Increase Again in 2008

November 2008, by Mike Antich - Also by this author

Although fuel prices have been declining since August, the price of unleaded gasoline is still 30 percent higher than same time last year. Not only is the price of fuel higher, but in some areas of the country, such as the Southeastern U.S., the availability of fuel was scarce following Hurricanes Gustav and Ike. "Fuel availability has become an issue in certain markets. While this is currently a result of stormy weather in the Gulf, it makes clear the vulnerability of the supply chain," said Greg Corrigan, vice president, business analytics for PHH Arval.

Higher fuel prices have prompted many fleets to change the model mix on their selectors to increase overall miles per gallon for their fleets as a whole.

"Fleets are reviewing the types of vehicles they use and are making changes. Usually, we see more six-cylinder vehicles ordered than four-cylinders. In 2008, we saw a significant increase in four-cylinder vehicles going into fleets," said John Bauer, manager, fleet analytics for Wheels.

This observation is seconded by Joe McDonald, director of account management for Wheels. "We see a lot of movement on vehicle selector choices — higher mpg is the buzz, and rightfully so."

In addition to four-cylinder models, another change evident in 2008 and 2009 selectors is the growing number of hybrids. "More companies are putting hybrids and four-cylinder vehicles on their selector lists. Those companies with fleets made up of six-cylinder vehicles, or SUVs and vans, have had to convert to more fuel-efficient vehicles without having the vehicle’s function compromised," said Tony Blezien, vice president of operations for LeasePlan USA.

The transition from six- to four-cylinder models is viewed by some as a long-term shift in buying patterns versus a near-term reaction to higher fuel prices.

"We have seen a ‘cultural’ shift to the mindset that four-cylinder vehicles are smart and economical, rather than being small and slow," said Scott Singsank, senior account manager for Wheels.

Another reaction to higher fuel prices by some truck fleets has been increased consideration of spec’ing gasoline engines in lieu of diesels. "With the higher expense of a diesel engine and the current cost of diesel fuel, we have seen fleets leaning more toward gasoline engines on light-duty trucks," said Dave Decker, manager of truck engineering for Wheels.

Fleet fuel reduction strategies are extending beyond spec’ing smaller engines. "Overall, fleets are trying to become more fuel efficient. The cost of fuel has caused a massive increase in methods to reduce fuel consumption. Many fleets are examining right-sizing, driver policy reviews, using the right vehicle for the job, proper vehicle cycling, and alternative-fuel vehicles in the quest to reduce consumption," said Bob White, vice president of operations for Automotive Resources International (ARI).

Many fleets are incorporating a more versatile strategy to maximize fleet-wide fuel efficiency. "Fleet managers now are more interested in a multipronged approach that combines price awareness, controlling driver behavior, and looking at vehicle selection and maintenance as ways to control fuel consumption. Only through a coordinated effort can fleet managers hope to make an impact on their fuel budgets going forward," said Kate Wesley, fuel product manager for GE Capital Solutions Fleet Services.

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