As fleet managers become accustomed to the usual headaches of managing their fleets these days—pandemic, global parts shortages, and limited inventory of new vehicles—The Great Resignation is something new since the last Personal Use Survey (this writer was a part of it). Instead of locking policies down to hold on to what vehicles and people they have, however, many fleets have found that a more liberal policy—if they didn’t have one already—not only frees up their abilities to do their jobs but empowers their teams to work and live better.
“We continually look to implement best practices and to look at our fleet as a holistic benefit offering for our employees,we strive to lead the healthcare industry in providing all our employees with support services focused on the individual and family first, which breaks down into three key categories: financial, mental, and physical,” says Sean VanSickle, fleet vehicle program manager of Graham Healthcare Group (Troy, MI; 200-vehicle fleet). “We want to provide industry-leading services to our clinical staff and customers to reduce risk, lower cost, and improve the services provided.”
VanSickle cites a “fairly liberal fleet policy” to accommodate Graham’s growing armada of mid-size SUVs and crossovers, projecting growth of over 30% from about 200 now to 275 by the end of 2022.
“We treat our fleet vehicle policy as a living, breathing document and we’ll update and make changes to it as we learn of better reasons and ways to do something. We analyze it all the time, push out updates, and require attestation to the updates. We’re looking to do that every six months to keep up with trends or data.”
Last year, Graham reduced personal use charges by 20% and increased personal mileage allotment by 3,000 as shortages continued to squeeze the market. All of Graham’s vehicles are take-home on 36-month / 65,000-mile replacement policies for both employee and spouse pending MVR checks.
Next, VanSickle hopes to implement more integrated telematics data in the name of safety and provide driving-based incentives and personalized coaching for employees.
Why Not Zero?
“This has been a very interesting topic,” laughs Mike, Camnetar, NAFA senior vice-president and General Mills fleet services manager, “why isn’t one of the personal use charge options zero?”
Camnetar is the rare head-of-fleet whose personal use fees are less than what you need for a gumball. “We charge $0 at General Mills unless you want an upgraded car,” he says. General Mills counts about 1,500 vehicles in its fleet and Camnetar estimates that roughly 99% are SUVs.
At least for now. That may change if and when electrification comes to the forefront of the sizable fleet.
General Mills allows employees and recognized partners to drive; no kids. There’s no annual allotment, and “reasonable personal use” accounts for everything from groceries to cross-country travel for family and vacations. Though the fleet handbook is reviewed annually, Camnetar says he makes tweaks to it constantly.
“The world around us has changed so much,” he reflects, “and I think the next big thing is electrification. For many fleets, it might be a where-and-when decision—when is the right time to buy? When is the infrastructure sufficient? I think many companies are going to rethink who and why they attain and allot vehicles and it will open up opportunities across the board—for companies, for drivers, for third parties—as they figure out their acceptable margins and swap out old inventory for new.”
Flipping Cars and Cycles When Opportunity Knocks
At Allstate Leasing, Rick Sauter, vice president of operations, says they use a hybrid model for personal use dependent upon role and position. “It’s a liberal policy not extended to spouses, but we encourage as much personal use within reason.”
Considered a finance company and thus essential throughout the pandemic, Sauter found opportunities despite low mileage to flip many of his 2,000+ vehicles over into a new cycle. “It was kind of a blessing,” he says, “as we’ve been able to sell many of them at or above what we paid for them years ago.”
Sauter says the company has always been a bit frugal with its vehicles, leading to an easier time when new inventory is low.
“We didn’t have a robust replacement policy, but we generally avoided going over 50 or 60,000 miles, and senior executives flipped out more.” Sauter reports many mid-segment sedans (such as the Hyundai Sonata) have offered great value in today’s market, buying them through fleet incentives several years ago and selling them well above today’s expected value.
Like Camneter, Sauter is excited (though cautious) about electrification.
“Is there an EV out there to meet our teams’ requirements? Many of the answers simply aren’t available and until the industry becomes more transparent—start-up cost, charger cost, MSRP, etc.—it will be hard to recommend the right vehicles and specs. How can we fix them if it’s not a legacy dealership like a Rivian or a Lucid? Who can we call? If I had to put a grade on the knowledge of my fleet customers, it’d be pretty low because they don’t know and it’s hard to embrace something as novel as fleet electrification when the margins are just unforeseeable.”
Sauter notes that an average or smaller fleet of 50-75 vehicles simply can’t afford the risk of switching to EVs until more answers become apparent, and the numbers only skew more hazardous as the size of the fleet scales up.
“Every major leasing company is trying to figure it out,” he says.
“Consumers know what they want and the margin is acceptable; when you scale up to 10, 25, 100+ vehicles, it’s hard to know where to start or if it’ll even be worth it—at least for now.”
Since the last survey, the data hasn’t changed much but the policies and perspectives continue to evolve, pointing to a more driver-oriented, long-term, and flexible approach to who gets a vehicle and how they can use it.