Commercial Fleet Buying Intentions for MY-2013
Although 2013 is shaping up to be comparable to 2012, some commercial fleets are increasing vehicle orders due to improved business or accelerating replacement schedules to take advantage of the strong used-vehicle market.
The 2013 model-year is shaping up to be a carryover year with commercial fleet ordering volume comparable to or slightly above 2012-MY orders, according to a buying inclination survey of 400 corporate fleets conducted by Automotive Fleet. Most fleet managers responding to AF’s survey reported the same amount of dollars are being budgeted as last year, which assures a carryover year for many fleets in terms of ordering volume.
“We are in a status quo year,” said Dean Yerem, purchasing manager for Nestlé Business Services North America.
One side note is that many of the fleet managers participating in the survey cited a longing for a return-to-normal fleet ordering conditions.
“With all the changes the OEMs have made over the past few years, such as early cut-off dates, short notice of cut-off, and early introductions for the upcoming model-year, it has become more difficult to plan ahead, especially when the vehicle you have been using has an uncertain introduction date back into the market and there is little else that meets your requirements of higher mpg plus payload,” said Marion Crow, fleet coordinator for Hilti North America.
Making a similar observation was Theresa Belding, senior manager – fleet services for Forest Pharmaceuticals, Inc. “I am hoping for a more ‘normal’ model-year without too many early build-outs,” Belding added.
Others believe the 2013 model-year will be a buyers’ market. “This is an exciting year to be in the industry as many of the manufacturers have finally begun to produce more fuel-efficient vehicles. Additionally, Chrysler is beginning to hit its stride from a product standpoint and will, along with VW, really challenge others for fleet volume,” said Michael Bieger, senior director of global procurement for ADP. “I feel it will be a buyers’ market and those manufacturers who don’t aggressively work with their current and prospective clients will see market share walk. While not the ‘Wild West,’ it will be close.”
One drag on new-model ordering is the continued economic uncertainty among corporations, which is directly or indirectly impacting the strength of their new model-year fleet ordering.
“With the upcoming fall election and the unfolding economic uncertainty in Europe, the outcome of MY-2013 will be anyone’s guess. Hopefully, fleet managers are in a position to capitalize on today’s robust resale market, while preparing for the uncertain future of FY-2013,” said Mike Butsch, global fleet manager for Joy Global.
But, the overwhelming majority of responses to the buying inclination survey were epitomized by Brett Switzky, fleet services administrator for American Family Mutual Insurance Co. “We are going into this year business as usual,” Switzky said.
Most commercial fleet managers anticipate that 2013 ordering will be similar to 2012. “Our buy will be about the same number of vehicles for MY-2013,” said Paula Bucklad, manager, fleet operations for H. J. Heinz Co.
This sentiment was shared by numerous fleets responding to the AF survey. Another example was OTIS. “Most likely, in 2013, we will acquire about the same number of units we did in 2012,” said Phil Schreiber, fleet manager North America for OTIS Service Center.
Another fleet indicating 2013 will be a carryover year is Valspar. “We turn over roughly one-third of our fleet each year,” said Virginia Kodet, fleet manager for Valspar. “I expect the number of vehicles ordered will be in line with what was acquired last year.”
Many fleets are in the middle of pre-existing multiyear sourcing agreements, which will determine 2013-MY ordering. “We signed a two-year contract for model-years 2012 and 2013, so we do not anticipate any changes this year,” said one fleet manager who wished to remain anonymous.
This is also the case with Merck. “It is not likely we will make any changes in 2013 as we are still within our contract period,” said Joe LaRosa, CPA, MBA, director, global fleet services for Merck.
However, some fleets will be acquiring fewer vehicles in 2013 and a key reason is that many companies have taken advantage of the strong used-vehicle market and have been shortcycling vehicles by accelerating replacement schedules.
“We will acquire fewer vehicles in 2013, because we shortcycled in the 2012-MY,” said one fleet manager who wished to remain anonymous.
Another business segment decreasing its fleet buy are companies relying on federal government defense spending. “We will acquire fewer vehicles for MY-2013 compared to last model-year. Government spending is being cut and we replaced much capital in 2011,” said one fleet manager who wished to remain anonymous.
On the other hand, there are a number of fleets that will be acquiring more vehicles, primarily due to improving business conditions. As business incrementally improves, companies are hiring new employees, which will require adding additional vehicles to the company fleet.
“We will be acquiring more vehicles as we are expanding our sales force and other field groups by about 600 more people, meaning 600 more vehicles,” said Donna Bibbo, manager, fleet and travel for Novo Nordisk.
Another company expanding its sales force is ChemTreat Inc. “We will probably be acquiring more vehicles because we have plans to hire up to 40 new salespeople in the U.S., and are replacing some company-owned vehicles with leases in Mexico,” said Fran Genovese, fleet administrator for ChemTreat, Inc. and ChemTreat International.
Likewise, Konecranes has started hiring, which will influence its fleet buy. “We will be acquiring about the same or slightly more vehicles. We are hiring, which is a positive thing,” said Rachel Johnson, CAFM, fleet specialist, Region Americas for Konecranes, Inc.
Iron Mountain Information Management is also looking to increase its fleet buy. “We will very likely acquire more in MY-2013 than in MY-2012, even though last year was a very busy year, much more so than the previous three years,” said Steve LaPorte, director, business operations for North American Transportation & Shred Operations for Iron Mountain Information Management.
Some vehicle order volume increases will be double-digit, as will be the case with Valero. “We will acquire approximately 20-percent more vehicles in MY-2013,” said Randy Burwell, lead buyer and fleet specialist for Valero.
The list of companies acquiring more vehicles also includes General Mills.
“We are expecting to replace around 700 units this fall, which is 75 percent over our usual 400-unit cycle,” said Shawn Dusosky, manager-fleet financial services for General Mills.
Illinois Tool Works (ITW) is also increasing its fleet buy. “We will be acquiring more vehicles this year than we have in each of the previous two years,” said Keith Scolan, manager, global fleet for ITW. “The past couple of years, our new-vehicle orders were down about 25 percent for various reasons, from extending the lifecycle on some vehicles to the economic situation.”