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Small Fleet Right-Sizes Lease Program

July 2010, by - Also by this author

Robert Crawford, corporate risk manager for Roller Bearing Co. of America Inc., better known as RBC Bearings, remembers what prompted him to change leasing companies when he assumed the company's fleet duties some eight years ago.

"Under our last lease program, cars stayed in fleet until someone complained," says Crawford, regarding some sales fleet cars that had 150,000 miles and were in need of major repairs. "I said, 'This is nuts.'"

"It's great that the car gets depreciated down to zero, but what kind of an image are you portraying?" he asks. "Taking someone out to lunch in a junker is a bad idea."

Some of the cars were so beat up they were taking as much as a $6,000 hit in residual value when it was time to turn them in. To Crawford's disappointment, his leasing company at the time was not helpful in figuring out a solution. He switched to Farmington, Conn.-based Motorlease Corp., which specializes in small- and midsize-fleet leasing and management.

For RBC, Motorlease structured a modified closed-end lease in which cars are turned in at three years or 60,000 miles, whichever comes first. Motorlease handles registration, tax, title and licensing in all states as well as fleet transfers and maintenance.

Save for routine oil and filter changes, maintenance expense is all but eliminated. Moreover, the new leases cut $40,000 in lease expenses. And Crawford says his lease includes primary liability for less than what he could do himself.

An Expansive Fleet

Headquartered in Oxford, Conn., the RBC fleet is divided among 25 facilities across the United States as well as international locations. The fleet consists of 57 vehicles, including 45 sales cars that service different regions in the U.S., a pool vehicle at headquarters as well as pickup trucks, vans and a 22-foot straight truck that supports the factories.

For the field sales cars, Crawford runs primarily Toyota Camrys and Honda Accords along with a few Ford Fusions, Tauruses and high-end SUVs for executives. Though Honda does not offer a fleet rebate on the Accord, Crawford says its high residual value keeps lease costs in line with the other models, and his drivers love the car.

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