The majority of fleets operating in the U.S. report their vehicle acquisition strategies are being stimulated by strong business growth. The forecast for the 2019 model-year indicates it will be a strong asset acquisition year for the commercial fleet segment, which is comprised of 6.3 million light-duty vehicles in operation.
The strong economic indicators in the U.S. are causing the overwhelming majority of companies to keep acquisition volumes at that same level as the 2018 model-year, which was a strong year for commercial fleet orders.
The buying dynamics of MY-2019 are very similar to those experienced in MY-2018, but appear stronger due to the more robust economic conditions. Bullish economic forecasts call for ongoing increased business activity through late 2018 and early 2019, which offers the potential of further order increases later in the second half of the model-year. The majority of fleets report that their new-vehicle ordering volume will be either larger or comparable to the prior model-year, which was a strong fleet ordering year. A key difference to this year is that more companies are forecasting increased order volume for next year, attributing the increase to improved business conditions.
The U.S. fleet segment where this was a recurrent reply was the energy sector, which is experiencing increased business activity. After a long period of depressed fleet purchases due to low crude oil prices, the energy sector continues to ramp up its orders in 2019, which started in 2017.
Another key segment of the U.S. economy that is a large purchaser of fleet vehicles is the new-construction market. All industry indicators, such as the issuance of building permits and starts for new-home and commercial construction are increasing, which bodes well for commercial sales of pickups and full-size vans, which are the primary vehicles acquired by construction companies. Another beneficiary of the increase in new commercial construction is the additional demand for elevators, which is positively impacting elevator manufacturers, such as Otis Elevator Co., ThyssenKrupp Elevator Americas, Kone, and Schindler Elevator Corp., all of which operate large fleets and place sizeable annual new-vehicle orders.
In addition to business growth, another recurring theme by many fleets is the need to replace aging units that have been kept in service for longer-than-normal mileage guidelines. For instance, another reason for the forecasted increase in order volume in the oil and energy sector is due to pent-up demand for replacement vehicles caused by low order volumes in the preceding model-years.
Vehicle Acquisition Trends
The top factors influencing the types of vehicles to be acquired in the 2019 model-year are corporate initiatives to acquire the most fuel-efficient models available for the specific fleet application and the incorporation of additional safety features and equipment options into company-provided vehicles.
Selecting models with higher mpg than the predecessor model continues to drive many acquisition strategies. Some fleets have elected to expand on this fleet initiative by acquiring additional hybrid vehicles; however interest in full-electric vehicles continues to be limited.
Similarly, most fleet will be spec’ing greater safety options in their 2019-MY fleet buys. The availability and composition of safety packages will have a direct bearing on what will be ordered for 2019-MY.
OEMs are responding to fleet manager concerns by migrating more safety technology that previously was only available on upscale models to vehicles typically ordered by fleets. However, getting advanced safety technology in work trucks and vans continues to be difficult, since they are often ordered with the lowest base trim level package.
The top five OEMs with the largest commercial fleet sales in the U.S. are GM, Ford, FCA, Toyota, and Nissan. The top five fleet management companies are Element, ARI, Wheels, LeasePlan, and Enterprise Fleet Management.
Most fleets do not anticipate changes to vehicle types, as choices of vehicle type are driven by business requirements. However, there is a growing number of fleets considering and choosing crossovers instead of midsize sedans, which is causing a shift in the type of vehicles found on corporate selectors. Today, there is a growing acceptance of crossovers in fleets.
All key economic and industry indicators point to strong fleet vehicle order volume in 2019 stimulated by robust business conditions and pent-up demand.
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