Business Fleet – Market Trends

August 20, 2010

Do you really know who is driving your company-provided vehicles? Often the "at-work" persona of an employee is not the true indicator of their behavior when no one is watching. Recently, someone forwarded me a link to a chat room for pharmaceutical reps. I did a search of posts that included the phrase "company car" and, in short order, I was shocked at some of the comments written about their use of company cars and how drivers play "the system" to their advantage.

Tags: company-provided vehicle, Driver Safety, personal use, reimbursement, scheme

August 13, 2010

First-year 50-percent depreciation, known as bonus depreciation, expired Jan. 1, 2010. An amendment to retroactively extend bonus depreciation through the end of calendar-year 2010 has been added as an amendment to H.R. 5297. Bonus depreciation has been benefical to commercial fleets, especially those with long-life assets. As an industry, we need to urge members of Congress to pass H.R. 5297. But this is easier said than done due to the many other contentious issues in the bill.

Tags: bill, bonus depreciation, depreciation, legislation

July 27, 2010

The EPA mandated the use of ULSD, effective June 1, 2006. Since then, there has been an uptick in reports of fuel-related problems, such as corrosion in storage tanks and dispensing systems, onboard vehicle fuel tank corrosion, clogged filters, and seal and gasket deterioration. What has the industry scratching its "collective head" is the chronological correlation between the uptick in fuel-related problems and the introduction of ULSD. Is there a connection between the two?

Tags: Corrosion, Gasket Deterioration, Storage Tank, Ultra Low Sulfur Diesel

July 13, 2010

I asked a number of long-time fleet managers, who have the perspective of history, their thoughts about the future of the fleet manager position. In particular, I asked who they thought would succeed them when they retire or move on to other opportunities. A surprising number felt the future for in-house fleet managers is bleak. Others cited no "new blood" being infused into the ranks of the fleet management profession.

Tags: apprentice, Baby Boomer, fleet manager, successor

June 28, 2010

Many companies continue to be uncertain as to whether the economic recovery is sustainable and are hesitant to recommence hiring. Most companies anticipate 2011-MY fleet orders will be comparable to 2010-MY ordering, but this is still below 2008-MY levels. Delayed 2011 introductions are prompting fleets to shift some of their orders from fall fleet buys to spring fleet orders. In an exclusive market survey, 300 major corporate fleets reveal their 2011-MY buying inclinations.

Tags: 2011-MY, fleet manager, Top 300 Commercial Fleets, vehicle order

June 15, 2010

In the "good old days," the overwhelming majority of new models would be "officially" introduced Oct. 1 of the preceding calendar-year. Little by little, this practice has migrated to the realm of nostalgia as OEMs introduce new models throughout the calendar-year. Year-round new-model introductions have complicated fleet planning and purchasing. Some fleet managers wonder why the U.S. doesn't convert to a calendar-year cycle as used by the majority of the global auto industry.

Tags: calendar-year, model-year, product launch, production

June 4, 2010

Truck fleets were among the earliest adopters of GPS technology. GPS is used to reduce fuel spend by optimizing routing, increase driver accountability by deterring speeding and excessive idling, track hours of service and overtime, and prevent unauthorized usage of assets. A new generation of more powerful and sophisticated satellites are being deployed, which promise to take the GPS to the next level.

Tags: asset, GPS technology, truck fleet

May 27, 2010

A new study shows automotive software is as vulnerable to malicious hackers as the average PC. Most people don't realize a typical fleet vehicle contains 70-100 megabytes of binary code in 50-70 onboard microprocessors, and the amount of internal software code promises to grow in the future. The research paper demonstrated how a sophisticated hacker could wreak havoc on a vehicle by manipulating the in-vehicle computer network.

Tags: automotive software, computer hacker, vehicle theft

May 10, 2010

It will become more expensive to operate a fleet in the coming years. Vehicle acquisition costs will increase. Fuel prices, in all likelihood, will trend upward and maintenance costs will ratchet higher due to more companies adopting extended replacement schedules. In addition, vehicle-related taxes will increase. Let's examine the dynamics that will force fleet expenses to escalate.

Tags: Budget, fleet maintenance, operating cost, PHH Arval, Tire, Wheels

May 3, 2010

Most major corporations reserve bonuses and other money incentives for senior management. Few make financial incentives available to middle management. Should the fleet manager position be an exception? I argue yes, and here's why.

Tags: compensation, incentive, job performance, salary

April 12, 2010

Increasingly, drivers are relying on personal GPS devices for route directions; however, this can be potentially dangerous and expensive for truck fleets. A car GPS device maps out the quickest and shortest routes, but doesn't identify truck-restricted routes or roads with weight, height, and hazardous cargo restrictions.

Tags: Driver Safety, GPS, truck fleet

April 5, 2010

Personal use administration is a headache for most fleet managers. Oftentimes, this headache is self-induced and avoidable. Here are five common mistakes committed by fleets in administrating a personal use program.

Tags: company vehicle, personal use

March 29, 2010

A growing number of investors, state officials, and environmental groups are lobbying the U.S. Congress to mandate climate change disclosures in Securities and Exchange Commission (SEC) filings. A recent SEC interpretive release caught the attention of the corporate fleet community, especially in the wake of a record number of global warming resolutions filed with 58 U.S. companies during the 2009 proxy season. Will fleet managers have to deal with carbon disclosure in the not-too-distant future

Tags: carbon, climate change, SEC

March 16, 2010

Reimbursement has re-emerged as a fleet issue. One reason is that Runzheimer has a rival, which means two competitive sales forces are aggressively selling vehicle reimbursement programs. Also, the recession, corporate downsizing, funding/credit constraints, OEM viability, and economic uncertainty have renewed senior management's desire to re-examine reimbursement.

Tags: reimbursement, Runzheimer

March 9, 2010

In the commercial fleet industry, the most common amortization rate used for establishing a depreciation reserve is 50 months. Recently, some major fleets extended amortization rates on new-vehicle orders.

Tags: Amortization, Depreciation Reserve, PHH Arval, resale

March 2, 2010

Maintenance costs increased in 2009 due to higher cost of replacement tires, PM oil changes, and labor rates. However, the biggest factor was widespread deferment of vehicle replacement, resulting in the operation of older units.

Tags: GE Capital Fleet Services, maintenance costs

February 18, 2010

The new reality of a tighter corporate operating environment has forced fleet managers to pursue two different types of cost-cutting goals - cost deferral and cost elimination. However, many cost-cutting decisions for fleet are made for the short-term, with very little consideration for total cost of ownership. Sometimes senior management is more interested in the fiscal, rather than economic, consequences of their decisions.

Tags: cost-cutting, operating costs, replacement cycle

February 2, 2010

Goldman Sachs was the first to forecast a $100-plus-per-barrel crude oil price when the bank issued a research report last November, which called for a $110-per-barrel average price for West Texas Intermediate (WTI) crude in 2011. Morgan Stanley released a similar report in January and targets $95-per-barrel of WTI futures by December 2010, with an average price of $100 per barrel in 2011.

Tags: crude oil, Goldman Sachs, Morgan Stanley, OPIS

January 25, 2010

In 2009, of every $100 spent on fleet, $5 was consumed by taxes. This compares to $4.10 in 2006 and $3 in 1983. The recession has caused sales and property tax revenues to plummet creating widespread shortfalls in government budget funding. States and other governmental jurisdictions are scrambling to find new ways to generate new tax revenues. Again, commercial fleets are in their cross-hairs.

Tags: Budget, property tax, revenue, taxes

January 8, 2010

There continues to be economic uncertainty among fleets manifested by extended cycling, right-sizing initiatives, and intense pressure to control costs. The consensus is the worst is behind us, but 2010 will be a tough road.

Tags: challenges, commercial fleets, fleet industry

January 4, 2010

Barring the occurrence of unforeseen calamities beyond our control, here are my predictions as to how current fleet industry trend lines will play out in the next 12 months.

Tags: 2010 predictions, depreciation, fuel, maintenance, replacement tires, state of the industry

December 22, 2009

The global economic downturn created havoc in the fleet markets in Europe, Australia, Latin America, Asia, and Africa. Here's a summary of each of these regional markets and a forecast of what to expect fro 2010 based on a recent meeting in Barcelona with lessor representatives from each of these regions.

Tags: fleet industry, fleet leasing, global fleet, overseas

December 1, 2009

Turnover in diesel fleets happens slowly. The average service life for a medium-duty truck is 5-10 years, while a short-haul owner-operator heavy-duty truck typically has the lifespan of 18-20 years. Despite the 2007 and 2010 diesel emission standards, tens of thousands of older, dirtier trucks will remain on the road into the next decade. Is there a way to accelerate the turnover of pre-2007 diesel trucks? One way is a Cash for Clunkers program specifically for work trucks.

Tags: CARS program, Cash for Clunkers, Port of Los Angeles Clean Truck Program, replacement vehicles, vehicle lifecycle

November 16, 2009

During economic uncertainty, senior management demands expense reductions and limits capital expenditures. Since fleet is usually among the top 10 corporate capital expenditures, there is pressure to defer vehicle replacements. However, this cost-containment strategy misses the point that all fleet-related expenses, both fixed and operating, are influenced by when a vehicle is replaced. Cost reductions in acquisitions are often offset by rising costs elsewhere.

Tags: budget constraints, downsizing, vehicle lifecycle, vehicle replacements

October 30, 2009

A record number of resolutions were filed during the 2009 proxy season by investor groups to get companies to voluntarily disclose data about their "carbon footprints," which includes the greenhouse gas (GHG) emissions caused directly and indirectly by their operations. These investors argue companies that disclose and mitigate GHG emissions will be rewarded with higher valuations and a lower cost of capital. At many companies, fleet represents a sizeable percent of their carbon footprint.

Tags: carbon footprint, emission tracking, Green, shareholder