Supply is Down, Prices Up

This supply chain issue has been a concern for quite some time. We all know of the vehicle shortage, however, the cost to acquire a vehicle has soared. I am not sure how many companies with outsourced services even realize the costs. Since we provide the service of spec’ing vehicles, pricing them, and ordering them  for small to medium-size clients, we discuss pricing at length before placing orders.

Here’s a good example of what we’re experiencing now with some smaller truck fleets (about 50 vehicles or so). Prior to COVID, we could acquire a Chevrolet Silverado or Ford F-150 work truck in the $35,000 range. A few months later that same truck cost over $40,000 due to the price increase by manufacturers as well as coping with decreased incentives. Larger fleet clients may not be as concerned as they may have the resources to adjust  for the increase. For a smaller fleet account, however, the impact can cause an unplanned for budget crunch, especially when orders for six or eight units are requested. I just experienced this issue yesterday with a client ordering five units. Previously, we collectively had no issues with spec’ing and pricing the vehicle sand placing the orders. With the increases, the VP of fleet had to get ownership approval. 

Large fleet gets all the attention and pricing flexibility; however, rarely does a smaller fleet client ever get a platform to voice their concerns. I am hopeful this explanation draws proper attention.

Bob Martines

CEO, CCM

Ivyland, Penn. 

 

Apologies to REM

I watched the March 14, 2022 edition of the State of the Fleet Industry video series. As always, Mike Antich hit the nail on the head. The issues touched on are all alive and well here in the Great White North (Canada), perhaps even writ large due to some of our ongoing product allocation issues even prior to the end of the world as we knew it ( apologies REM) back in 2019.  

Well done young sir!

Keith McLaughlin

Publisher, Canadian Automotive Fleet Magazine

Burlington, Ontario, Canada

 

Longer Cycling Strategies

Given the lack of inventory and budget constraints, many fleets have moved towards longer cycle strategies. Maintaining proper vehicle health is an important factor in achieving this. We have tools available for clients to remain proactive from a maintenance perspective and lengthen the life of a vehicle. 

One of the main ways we see our clients lengthen the lifecycle of their vehicles is through telematics. Not only are you able to track your asset, but you also have the ability to understand driver behavior and pull engine error codes. In fact, we have seen a number of clients implement our proprietary telematics program called Albert IQ due to the fact that it marries the telematics with our maintenance program. What’s unique about it is that we can give real-time vehicle health status. Our 100% cloud-based platform consumes, processes, and interprets all the data that’s been gathered. It extracts the actionable insights that matter most by using machine learning to crunch the data and score it in terms of importance. It also cross-references information to discover underlying, root sources of vehicle problems. Then it creates a real-time report on each vehicle’s health and any recalls that are due and generates tickets for issues that need attention immediately (red alert) or soon (yellow alert). Our ASE-certified maintenance team reviews the tickets and ensures the issues truly deserve attention. It then sends notifications of the issues to the appropriate drivers and fleet administrators via our portal.

Lars Nielsen

Business Development Manager, Mike Albert Fleet Solutions

Jacksonville, Fla. 

 

In Memoriam: Joseph Basile 

It was very sad to hear about Joe Basile’s passing. As a long-time fixture in the industry, Joe will definitely be missed. 

Richard Battersby

Assistant Director, City of Oakland Public Works

Oakland, Calif.

Joseph Angelo Basile, the former vice president – hardware solutions for AssetWorks LLC, died Jan. 30, 2022. Basile had worked for AssetWorks for 24-plus years. He was 61 years old.                   

- Editor

         
Don’t Forget Engine Hours

I read the March 2022 AF article entitled, “Inflationary Price Pressures Increase Maintenance Costs” and it provides a tremendous overview of today’s trends in fleet maintenance! Let’s not forget what millions and millions of added engine hours from idling in park is doing to maintenance costs.

Ron Zima

CEO for GoGreen Communications, Halifax, Canada

 

Adding Value is the Solution

The March 21, 2022 State of the Fleet Industry video entitled, “Market Forces Exerting Pressures on Fleet Business Model” was a great report. Experience has taught me over the past 40-plus years that this industry is excellent at adapting to change. Many of the items you discussed have been present before (reimbursement consideration; after-tax law changes; higher gas costs and inflation due to economic disruptions; OEM production limits or changes; etc.) and we have evolved to answer the problems solution we all face. How do we help our clients’ sales and service reps be more productive? The solution is to add value the most cost-effective way we can as suppliers to our customers. This will never change.

Mike Slevin

Manager of Commercial Sales, Hyundai Motor America

Harrison, Ohio

 

Challenge to Electrification

The April 2022 AF article entitled, “The Challenge with Fleet Electrification is the Execution,” in particular the many  comments from fleet managers, certainly reinforced the statement that “the devil is in the details.”

Rather than presuming that a transition to EVs will “solve” corporate sustainability in both appearance and in reality, perhaps a step-back might be an appropriate alternative. Corporations may be better served by defining their total carbon footprint and exploring other strategies, such as solar panels on buildings, reducing miles, downsizing vehicles, conversion to LEED certification in buildings, remote work to reduce commuting, along with other more proven and available strategies. There are many ways to get there and unfortunately, many corporations are placing the responsibilities solely on the fleet manager, probably because EVs are viewed as the easiest pathway. Your article clearly illustrates that it’s not. 

I agree the issue of home chargers is thorny but manageable in my view. If the employer allows personal use of the company vehicle as most do, and treats the vehicle as income for tax purposes, they’re certainly within their rights to treat the charger as a part of the company vehicle (can’t have one without the other) and figure a way to amortize the charger and installation in such a way as to add it to the employee’s income equation, even if the IRS has no such rules. A company vehicle is a tool, and the charger is part of that tool. If the employee is unwilling, then perhaps the car can be staged at a company office location and picked up by the employee or the employee gets the option of using their POV instead. Regardless, in my view, the charger is a necessary part of the vehicle, should/if the employee goes away, both the car and the charger - as part of the car - go away too. Perhaps employers should supply company cars that allow longer 110-volt charging if the cars are take-home units. A more thorny issue in my view is the segregation of the cost of the electric power to charge the company car from the employee’s electric bill. Thanks for all you do in our industry.

Bob Stanton, CPM, CPFP

Fleet Management Consultant

Roswell, Ga.

 

Fleet Business Model

Thanks again for another informative State of the Fleet Industry video, “Market Forces Exerting Pressures on Fleet Business Model.” The work-from-home business model surely is changing things. As you alluded to in your video, drivers may not be meeting eligibility mileage thresholds for assigned vehicles. First of all, I would suggest that no fleet manager should just ignore any policy and write off the missed threshold to “COVID.” If you must temporarily ignore or change eligibility thresholds, put that in writing. For example, “From January 1 - June 30, the mileage eligibility threshold has been adjusted to 200 miles per month.” Second, you referenced a sales model. If sales staff or others with assigned vehicles typically report to a central location yet do not need to travel as often due to the increasing number of virtual meetings, motor pool (or shared vehicle) vehicles are often the lowest-cost option. Motor pools are a great way to provide a vehicle on demand rather than have a dedicated vehicle always being paid for even if it is not used. Pre-COVID, motor pool vehicles were generally considered 35% cheaper per mile than mileage reimbursement. I would assume it still remains a cost-effective alternative although government mileage reimbursement rates have not caught up with the high price of gas. As a fleet manager, you can’t just eliminate a vehicle because it doesn’t meet a mileage threshold. You must provide that driver with an alternative. Motor pools!

Ed Smith

President & CEO, Agile Fleet

Chantilly, Va.

 

The Challenge is Execution

I read the article, “The Challenge with Fleet Electrification is the Execution” that was published in the April 2022 issue of Automotive Fleet magazine. There are similar problems here in New Zealand. Sourcing stock of anything is such a drag and people are buying whatever is in stock for fear of losing access to anything down the track. Globalization is now showing its weakness. BMW’s wiring harnesses come from Ukraine, for example, and nickel for EVs comes from Russia. Too many components coming from too many places. All it takes is a single point of failure to occur and we have no backup to take up the slack. 

Brian Gavin

Business Development Manager - Fleet Services, Toyota Finance New Zealand Ltd.

Auckland, New Zealand

 

Fleet Right-Sizing Challenge

During the height of COVID most departments shifted their work plans to remote working from home. This drastically changed the vehicle usage model we have had for years. 

Now that we are finally coming out of this situation, how are the vehicles going to be used? Are we going back to normal? Are we going to continue working remotely from home? Do we need this many vehicles now? Can we reduce the fleet? Can we reassign vehicles? All this sounds really basic to fleet analysis and it should be, but we are still being told to wait and see how things pan out. How long do we wait? Each department doesn’t want to give up their vehicles, saying “we might need them,” but they’re not using them, so my staff keeps jump-starting them and bringing them back for repairs due to sitting unused for so long. This is so frustrating; we continue to waste resources on unused vehicles. COVID really will have a much longer impact than anyone expected.

Charlotte Ashcroft

Director of Fleet Management, Franklin County Commissioners

Columbus, Ohio

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