Fleet ordering in the 2015-MY is being fueled by ongoing improvements in the national economy. Among the key factors driving 2015 fleet buying decisions are corporate initiatives to acquire the most fuel-efficient models available for the fleet application, downsizing to smaller displacement engines, and the spec’ing of additional safety equipment into company-provided vehicles. When broken out by trucks and cars, total commercial fleet sales in 2015-MY are skewed sharply toward trucks and vans.
Factors Driving Commercial Fleet Sales
There are a variety of factors driving commercial fleet sales, but 10 stand out:
- Improving business conditions and company expansions are the No. 1 factors for increased fleet orders. One example is corporate fleets in the energy sector, which are experiencing robust growth. There is sharp demand for pickups to work in the oil patch of North Dakota and Montana.
- The onslaught of all-new, full-size “Euro-style” vans is driving 2015 sales at many fleets. Likewise, the upcoming discontinuation of the Ford Econoline is prompting fleets to investigate substitute models. Based on feedback from commercial fleet managers, this sourcing decision is impacting a number of commercial fleets, which are moving to the new style full-size vans. Some fleets are testing Euro-style vans to potentially replace trucks to take advantage of their increased fuel economy.
- New safety equipment options and accident avoidance technology are influencing 2015-MY ordering. For example, fleets are upgrading pickups to include more safety features, such as back-up cameras and larger mirrors.
- Engine downsizing continues to be an ongoing acquisition trend as companies move to smaller displacement, more fuel-efficient engines. Where, in the past, the decision was to downsize from six-cylinder to four-cylinder engines, many fleets are now deliberating whether to downsize from a larger displacement four-cylinder engines to a smaller displacement four-cylinder engines.
- Vehicle segment downsizing to the next smallest class of vehicles, when the fleet application allows it, such as moving to crossovers from SUVs, is another ongoing acquisition trend.
- Class 3-6 truck fleets are increasingly looking at gasoline engines when spec’ing new models and transitioning away from diesel-powered selective catalytic reduction (SCR) trucks. Historically, the price of diesel fuel has been lower than gasoline; however, since 2010, the average per-gallon price of diesel has been more expensive than the average per-gallon price of gasoline. Since 2010, retail pump prices for diesel have averaged 30 cents more than regular gasoline. With diesel fuel more expensive than gasoline, the additional cost to purchase a diesel cannot be recouped in fuel savings. A corollary factor has been issues with diesel particulate filters, requiring education of drivers about the regeneration process.
- Since 2010, many companies have accelerated their replacement schedules to take advantage of the strong used-vehicle market. Some companies “flipped” their entire fleets multiple times during the 2010 to 2013 ordering cycles to take advantage of the strong resale market. Those fleets that shortcycled in prior model-years will find themselves with vehicles that will reach their scheduled replacement cycles en masse.
- Fleets are looking to standardize fleet specifications to have consistency for transferring units from one product line to another, including standardized upfitting.
- The lion’s share of commercial fleet orders continue to go to the Detroit 3; however, some fleets are looking at expanding the number of OEMs from which they source and the use of non-traditional fleet OEMs. A growing number of fleets have stated they are looking at other OEMs, but most have yet to pull the trigger.
- An interesting contrarian trend has been on the part of some fleets to upshift to larger models to develop a “motivational” fleet, such as Teva Pharmaceutical Industries. As part of its recognition of the work-life balance needs of its sales employees, Teva offer SUVs and minivans, which runs contrary to what competitive pharma companies offer. Teva views a “motivational” fleet as key to attracting and retaining talent. At a few other companies, sales drivers who spend several days per week away from home receive larger vehicles, so long as total cost of ownership is not compromised.
Upbeat Forecast for Future Fleet Sales
The majority of companies place new model-year orders according to set vehicle replacement parameters; however, projected improvements in economic conditions across almost all business segments bode well for 2015- and 2016-MY commercial fleet sales. New-vehicle orders from large fleets are somewhat predictable, but, since the majority of economic growth will occur among small and mid-size businesses, there will invariably be a lockstep connection between increased fleet vehicle orders and an uptick in economic activity and business expansions.
Let me know what you think.