MANAGING 10-50 COMPANY VEHICLES
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Replacement Cycles

Short-Term Cost-Cutting Strategies Backfire in the Long-Run

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.

The Dangers of Extending Replacement Cycles

Vehicle replacement policy is one of the most critical aspects of fleet management. Nearly all fleet-related expenses, both fixed and operating, are influenced by when a vehicle is replaced. In a recessionary economy, senior management demands expense reductions and there is pressure to defer vehicle replacements. However, such a policy change could actually prove to be counterproductive to the intended goal.

Pros & Cons of Extending Replacement Policy

It has been “common wisdom” to replace fleet vehicles in relatively short cycles. Rising costs, however, have led fleet managers to consider lengthening replacement criteria. There are pros and cons to the practice.

Analyzing Depreciation Trends: 2007 vs. 2006

Depreciation continues to be the largest fleet expense; however, fuel, as a percent of total fleet cost is growing (rapidly). Fuel expense is influencing vehicle acquisition strategies, with a direct bearing on future depreciation.

Analyzing Depreciation Trends: 2007 vs. 2006

Depreciation continues to be the largest fleet expense; however, fuel, as a percent of total fleet cost is growing (rapidly). Fuel expense is influencing vehicle acquisition strategies, with a direct bearing on future depreciation.

Identifying Policy Changes that Reduce Costs

Implementing proactive fleet policies can often produce significant cost savings in the long run. Examine every aspect of fleet operations to uncover expense-cutting opportunities.