By Mike Antich

The ongoing volatility of gasoline prices has prompted a growing number of fleets to transition to four-cylinder engines. This transition started in the 2008-MY and accelerated with 2009-MY ordering, when gas prices surpassed $4 per gallon in the summer of 2008. Examples of companies that shifted more vehicles to four-cylinders in MY2009 are Bausch & Lomb, Owens Corning, Kraft Foods, Valspar, Johnson & Johnson, Merck, Abbott, Infinity Insurance, etc.

Early indications are that the migration to four-cylinder engines will continue with 2010-MY ordering. We have already seen glimpses of this trend in the 2010 RFPs submitted to major OEMs in which many fleets stated their intentions to continue ordering four-cylinder models. "This year, we have already started replacing all six-cylinder vehicles with four-cylinders, even if that means taking some out early," said Julie Bergs, senior fleet operations specialist for Solvay Pharmaceuticals. This was echoed by PPG Industries. "Beginning with MY2009, we introduced the four-cylinder engine to our base fleet car to achieve higher gas mileage. This will continue for MY2010," said Charles Szymanski, manager, Global Property Casualty Insurance & Auto Fleet for PPG Industries in Pittsburgh.

One fleet starting the switch to four-cylinder engines with 2010 ordering is Henkel of America. "The challenge will be combining maximum fuel economy with maximum cargo room in a four-cylinder vehicle," said Vinnie Fugaro, purchasing agent for Henkel of America in Rocky Hill, Conn.

Some fleets that tested four-cylinder engines in 2009 have decided, based on the results of these tests, to switch to four-cylinder models. "We tested four-cylinders last year, ordering about 20, and will do all four-cylinder models this year," said Nancy Barlage, CAFM, fleet administrator for Regis Corp. in Minneapolis. Other fleets have added four-cylinder models as an option on their 2010 fleet selectors, but are not mandating use.

A few companies started the transition to four-cylinder models much earlier. Johnson & Johnson is one company that has made the transition. Johnson & Johnson has a U.S. fleet of more than 11,000 vehicles, now primarily comprised of four-cylinder models and hybrids.

The volatility of gasoline prices is just one reason why companies are switching to four-cylinder models. The other reason is to reduce vehicle emissions as part of a green fleet initiative to conform to corporate-wide sustainability programs or fuel spend/GHG reduction programs. For example, the Merck global fleet is following a corporate initiative to reduce GHG emissions by 12 percent in 2012 from base-year 2005. One prong of this multiprong strategy is to increase the number of four-cylinder models in the U.S. fleet.

Other fleets have adopted a minimum fuel economy target for new models entering their fleets, such as Red Bull North America, Inc., headquartered in Plano, Texas. "We have downsized our vehicles and put a minimum 23 mpg combined restriction," said David McCauley, fleet manager for Red Bull North America.

Trend to Downsize Vehicles

Concern about ballooning corporate fuel budgets is a primary reason for downsizing to smaller vehicles. "We are definitely considering fuel economy a major driving force in our purchasing decisions for 2010," said Frank Felicetta, director - fleet operations for Cablevision, headquartered in Bethpage, N.Y. "Our business practices have evolved over the years to the point where we can use smaller and lighter vehicles for our field service technicians."

Another fleet in the midst of a multiyear downsizing initiative is OTIS. "We started the vehicle downsizing process two years ago. This process will continue and no opportunity will be ignored to downsize vehicles," said Phil Schreiber, fleet manager, North America for OTIS Service Center in Bloomfield, Conn.

Similarly, Brown-Forman is downsizing its fleet vehicles. "Two years ago, the SUV was the major vehicle in our fleet. Last year, we started to downsize to the crossover - large, mid, and small size," said Mary Pat Crabtree, fleet & relocation manager for Brown-Forman in Louisville, Ky. "After months of discussion with management, it was concluded a mid-size sedan is the most appropriate vehicle. Starting with 2010 models, we will be adding more sedans to our fleet selector. We are also looking at the possibility of including a four-cylinder model."

Another factor facilitating the migration to smaller engines is the incremental horsepower improvements and the introduction of powerful new fuel-efficient powerplants, such as the Ford four-cylinder EcoBoost engine. Also, some high-volume fleet models are only equipped with four-cylinders, without a V-6 option.

The Shift is a Long-Term Trend

Switching to four-cylinder engines allows fleets (that are primarily automobiles) to maintain the same-size vehicles necessary to meet fleet applications without downsizing to smaller models. The extent to which the migration to four-cylinder engines will continue in future model-years will be dependent on the cost of gasoline. Some senior-level managers have already reached the point of frustration with volatile fuel prices and are pressuring their fleet managers to migrate to the most fuel-efficient vehicle option. Also, four-cylinder engine technology is becoming increasingly sophisticated by simultaneously offering more power and higher fuel economy in a single package. Today's four-cylinder engines provide better performance than the six-cylinder engines of yesteryear, and many automotive engineers believe they can wring more fuel economy and incrementally boost horsepower ratings even higher.

Many fleets have made the commitment to transition to more four-cylinder models, and there is no reason to believe this will change in future model-year ordering.

Let me know what you think.

mike.antich@bobit.com