The Car and Truck Fleet and Leasing Management Magazine

Creativity and Consistency Are Key to Managing Executive Fleets

While executive fleets are becoming smaller, they offer unique challenges for fleet managers. Solving them involves creativity and consistency.

October 2011, by Chris Wolski - Also by this author

Executive fleets might not be as big or as common as they used to be, but they are still an integral part of many fleet rosters. However, executive vehicles can offer unique challenges to fleet managers, including a sometimes larger, more eclectic selector; different maintenance needs; and difficulties accounting for their total cost.

Many fleets are solving the challenges caused by executive vehicles in the most straightforward and simplest way: eliminating them and going with an allowance-based system.

Those that are sticking with an executive fleet are finding management success by adopting consistent, black-and-white policies for all drivers and vehicles, better communication with executive drivers, and tighter asset management.

Automotive Fleet recently spoke to several fleet managers about the best practices they use to ensure their executive fleets are running smoothly and efficiently.

Maintaining the Business Standard

  • McDonald’s
  • Susan Miller, CAFS, manager of fleet program service
  • Number of Executive Vehicles in Fleet: 130 (and dwindling)
  • Most Common Makes/Models of Executive Fleet Vehicles: Audi, BMW, Lexus Lincoln, and Mercedes-Benz
  • Total Fleet Vehicles: 3,200

McDonald’s gives its executives the option of having a fleet vehicle or obtaining one on allowance. An increasing number of executives have decided to go with the allowance, according to Susan Miller, CAFS, manager of fleet program service.

While the executives on allowance can essentially obtain any vehicles they want provided it is suitable for business and is considerate of McDonald’s brand image. This has led to a particular challenge for Miller: How to maintain a wide-variety of vehicle types? “We have had to increase our level of communication,” she explained. “I’m fortunate that all of our executives want to follow the rules.”

Helping to maintain consistency throughout the fleet is the requirement that the executive drivers follow and are subject to the same policies and consequences as the rest of the fleet’s drivers. ”The executives clearly have their choice of vehicles, but our operating and safety policy applies to everyone — including our executive team,” Miller said.

Executive Fleet Riding into the Sunset

  • PepsiCo
  • Pete Silva, senior director-fleet
  • Number of Executive Vehicles in Fleet: less than 100
  • Makes/Models in Executive Fleet: “Eclectic mix”
  • Total Fleet Vehicles: 40,000

One of the biggest trends in executive fleet management appears to be moving away from a dedicated executive fleet to an executive allowance program. PepsiCo operates fewer than 100 executive vehicles, down from a couple hundred in 2009, and will dwindle that number down to a handful over the next year.

The reason, explained Pete Silva, senior director - fleet, was that “as the costs of the vehicles climbed, it wasn’t a viable option any longer.”

Executives will now be given an allowance, which they will be free to use in any way they want.

PepsiCo’s executive fleet will still exist after the sunset period, as a small group of hybrid vehicles for the sales executives who continue to accumulate high mileage out in the marketplace. “We had to find economic alternatives for them, which fit with our corporate-wide hybrid automobile program,” he explained. But these executive vehicles will be “the exception to the rule,” Silva added.

Order out of Chaos

  • American Greetings
  • Michelle Thur, fleet manager
  • Number of Executive Vehicles in Fleet: 32
  • Makes/Models in Executive Fleet: BMW, Audi, Lexus, Infiniti, Cadillac, Porsche, Mercedes-Benz
  • Total Fleet Vehicles: 600

American Greetings’ executive fleet presented some unique challenges for Fleet Manager Michelle Thur when she took over its management about five years ago.

While the vehicles were part of the overall fleet, executives were allowed to procure the vehicles on their own from any dealer. This meant that there “was a lot of running around to the various dealers to take care of paperwork,” Thur said.

To solve this problem, Thur hired a local leasing company to work with the executives one-on-one to prepare all of the documentation and financing with Thur simply having to approve the transaction.

Another challenge was maintaining executive vehicle registrations, which used to require Thur physically going to the department of motor vehicles to handle the registration process. To save time, Thur had P-Cards issued to all of the executives’ assistants so they can renew the executive vehicle registrations online. This has streamlined the registration process.

PHH Arval manages American Greetings’ fleet, which now includes the executive vehicles. “Now that the executive vehicles are included in the PHH Arval management plan, we know everything about our executive vehicles, including the total cost of ownership,” Thur said.

Buying American

  • Merck
  • Scott Lauer, North American fleet manager
  • Number of Exec Vehicles (U.S.): 12
  • Most Common Executive Make/Model: Lincoln MKS and MKT
  • Total Fleet Vehicles (U.S.): 8,100

Perhaps the biggest change that Scott Lauer, Merck’s North American fleet manager, made to the pharmaceutical giant’s U.S. executive fleet was to buy American. “We switched out of an import-badged vehicle to Lincoln MKS and MKT vehicles because they were more reasonably priced and they were American products — and fine automobiles,” he explained.

While it would be expected that the move to a new vehicle would have caused enthusiastic buzz amongst company executives, Lauer found quite the opposite. Merck initially resisted the idea of trading in its older import-badged vehicles, even though many of them had logged an excess of 200,000 miles.

Lauer’s solution to this challenge was turning to the numbers and the bottom line. “I showed the executive drivers the maintenance reports. It was costing as much $20,000 per year to maintain each Mercedes. I just built a factual case,” he said.

Black-and-White Fleet Policy

  • Heidelberg USA
  • Kim Brown, manager of fleet and insurance
  • Number of Executive Vehicles: 24 in Fleet/28 on Allowance
  • Most Common Makes/Models: Buick LaCrosse; Chevrolet Equinox; Cadillac CTS; Audi A6 Quattro; and BMW 5-Series
  • Total Fleet Vehicles (U.S.): 340

The only difference between Heidelberg USA’s executive fleet and the rest of its fleet is the selector, said Kim Brown, Heidelberg’s manager of fleet and insurance. “The executives have to follow the same fleet policy,” she noted.

That means, the executives, just as the rest of the fleet’s drivers, are responsible for maintaining their vehicles and adhering to policies, and are subject to the same consequences if they don’t.

The approach has worked, according to Brown, for one simple reason: senior management support. “The executive drivers practice what we preach, and because of that we don’t have issues because the fleet drivers can’t point fingers. That’s why we have a black-and-white policy — there are no gray areas and no exceptions,” she explained.

An executive fleet might not be a large part of a fleet, but have unique requirements and challenges that require that a fleet manager approach them creatively and with some clear ground rules, including:

  • Consistent, black-and-white policies.
  • Better communication with executive drivers.
  • Tighter asset management.

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