Fleets need to be more flexible with the type of vehicles they order in the next couple of new-model year ordering cycles. Here are six vehicle acquisition strategies that can serve as potential work arounds to mitigate some of today's inventory constraints.
The ongoing semiconductor shortages, with the resultant delays on new vehicles, is impacting fleet replacement cycles. As a result, many fleets are now facing lifecycle extensions as shortage of replacement vehicles becomes a pressing issue, which in turn places a premium on Service, Maintenance and Repair (SMR) schedules.
Today’s used-vehicle market is the best it’s been in the history of fleet management and my anecdotal forecast is for it to remain strong through the balance of 2021 and into calendar-year 2022. As a result of these favorable market conditions, some fleets have begun shortcycling some of fleet vehicles.
It’s critical government fleet managers are aware of the impacts this shortage has on their vehicle replacement cycle.
Extending replacement parameters is often counterproductive to the intended goal. Longer service lives increases unscheduled maintenance with longer downtime and increases the number of units operating outside of warranty.
Extended replacement cycles for short-term capital expenditure savings often have the unintended consequence of resulting in greater long-term expenses.
Big Data, tax law changes, new vehicle options, fuel prices, and more, are impacting fleets decisions about when to replace their trucks.
A vehicle’s total cost of ownership is comprised of its fixed costs, operating expenses, and depreciation per year or during the course of its service life, minus its anticipated resale value. During the course of a vehicle’s service life, TCO is subject to change due to a vehicle’s age and numerous external factors, which has a direct bearing on replacement policies.
Extending truck replacement cycling parameters beyond stated fleet policy is typically a short-term tactic used by senior management to solve a budgetary constraint; however, there are long-term fleet consequences to this strategy.
The more expensive the asset, the longer it is kept in service; however, the need for short-term cost savings prompts some fleets to even further extend cycling parameters and defer replacements. But, what are the consequences?
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