Fleets Reap Benefits of Employee Sales
This upstream remarketing channel, which offers out-of-service fleet vehicles not only to drivers, but also to the broader purchasing pool of other company workers, saves money and provides a valuable employee benefit.
April 2009, Automotive Fleet - Feature
The bottom-line value of employee sales as part of a fleet vehicle remarketing program has long been recognized. Selling end-of lease vehicles to drivers and other company employees minimizes days-to-sell, thereby reducing depreciation; eliminates downstream expenses such as auction fees and costs; and offers company workers a valued benefit.
Typically, the window of employee sales opportunity is open from the moment the replacement vehicle is ordered until the out-of-service vehicle is picked up for resale.
The development of electronic remarketing tools, particularly Web-based technologies, over the past decade has helped facilitate employee sales programs. In particular, technology now provides easy access to maintenance history, condition reports, and vehicle photos, as well as online purchasing processes. In addition, most major remarketers now offer customizable employee sales programs, including online purchasing.
Mission Foods Employee Sales Program Notable Success
Mission Foods' employee sales program has achieved remarkable success. Chris Syed, fleet facilities administrator of the Dallas-based tortilla manufacturer and supplier, reported at least 45 percent of the company's remarketed vehicles are disposed through employee sales. "The percentage has remained steady over the past several years," Syed said.
Mission Foods operates a 300-vehicle fleet in the U.S. The vehicles, leased through LeasePlan USA, are primarily SUVs, including the Chevrolet Equinox and Dodge Grand Caravan, and sedans. Ninety percent of the vehicles are used by sales and merchandising personnel at offices throughout the country. Company employees number 5,000.
According to Syed, fleet vehicles are replaced every four years or 80,000 miles. She generally replaces one-third of fleet each year.
A 10-year veteran with the company, Syed developed the employee sales program when she moved to the fleet position eight years ago. "I handled the entire process by myself, but it got to be too much," she said. "In October 2006, we contracted with Flexco Fleet Services, a fleet remarketing services company headquartered in Ohio."
Chris Syed, fleet facilities administrator for Mission Foods, headquartered in Dallas,
manages an employee sales program that disposes a notable 45 percent of out-of-service vehicles for a 300-unit fleet.
The employee sales process begins with the vehicle reorder, Syed said.
The driver is offered first purchasing rights.
"When I have ordered the driver a new vehicle, I notify Flexco that day. They usually notify the driver in 24 hours with a price, and the driver has five days to decide if they want to purchase their vehicle," Syed explained.
If the driver declines the purchase, the sale is open to all company employees. At that point, Flexco arranges for a third-party vehicle inspection. With inspections performed at the driver's office or local job site, "there is no inconvenience to the driver," Syed noted.
On the 15th of every month, a new vehicle sale starts. Syed sends out a monthly e-mail to all employees announcing a car sale scheduled on a particular date. The sales program is now so well known throughout the company, no other marketing or publicity is necessary, she said. "I begin to get phone calls right about the time the sale is scheduled."
The e-mailed sales notice contains a link to an online bidding site managed by Flexco. The site provides vehicle photos and condition reports, and offers financing arrangements. Purchasing employees arrange vehicle transport.
Occasionally an employee who knows a particular driver's vehicle is due for replacement requests to purchase that specific vehicle. "I notify Flexco that I have approved the sale," Syed explained. "The employee still goes through Flexco for pricing and paperwork."
The bidding process lasts 10 days. Vehicles not sold to employees are purchased by Flexco or returned to LeasePlan. When the new vehicle arrives, Syed or the driver notifies Flexco and pickup of the unsold vehicle is arranged.
"If there's a safety issue with the vehicle, I won't offer it for sale to the employees. It goes directly to Flexco," according to Syed.
Vehicles are offered to drivers at the wholesale price, "as a kind of reward for taking care of the vehicle," Syed noted. Other employees pay "somewhere between wholesale and the Kelley Blue Book private party price."
"I'm not out to make the most amount of money" from the sale, Syed said. "Employees love this program. They view it as a bonus."