Like most important occurrences in life, timing is everything, and deciding on a replacement schedule for your vehicles can prove to be a challenge. For the majority of fleet managers, trying to figure out when to replace a vehicle can be an unpredictable guess of whether it’s a good time or not.
Something to keep in mind when discussing updating your fleet is what steps you are actively taking to accurately track the cost and get out of the vehicles at the right time, and ask yourself if this strategy is lining up with both your financial and operational goals.
According to Mike Albert Fleet Solutions, there are a few factors to keep in mind when thinking about updating your fleet, such as best practices, manufacturer’s model year timing, resale market conditions, maintenance data and incentives.
Take a look at a few things to remember when you begin discussing whether or not it’s time to upgrade your truck fleet.
Inventory replacement strategy
When it comes to reducing operating costs, experts agree that fleet management will typically end up being cut when it comes to operational expenditures.
This, in turn, can create more pressure on your company’s fleet managers, as they are responsible for working to keep these costs as low as possible while still being able to correctly and safely manage their fleet of vehicles.
“It’s tempting to try and extend the lifecycle of fleet vehicles,” Mike Albert Fleet Solutions says online. “However, this strategy will actually end up costing fleet managers more in the long run. The majority of fleet and fleet-related costs are impacted by when a vehicle is replaced. Yet, most fleet managers are unsure of the optimal time to replace a unit.”
When trying to figure out the best time to replace a truck, one strategy to use is to consider the market and how to depreciate and reduce maintenance.
According to Mike Albert Fleet Solutions, effective fleet managers will use a data-driven system, and this approach has proved effective for them due to the following factors:
- Warranty expirations
- Risks
- Aggressive incentives
- Fuel degradation
- Non-budgeted maintenance cost spikes
- Ability to maximize resale market
- Productivity
Playing your cards right
We all know those landscape company owners who will hold onto their vehicles much longer than they should, which results in spending way too much extra money on vehicles that have diminished in value beyond the point of keeping and repairing them.
“Maintenance costs on older vehicles can be astonishing and will add up quickly,” Mike Albert Fleet Solutions says online. “Clearly, it’s not financially prudent to operate extremely high-mileage vehicles. As vehicles age, fleet managers could be spending nearly $70 a month on maintenance costs alone. The challenge is pinpointing precisely when that time occurs.”
By creating an analysis of both indirect and direct costs and combining it with the use of predictive analytics, Mike Albert Fleet Solutions says you should be able to know the right time to begin strategically cycling out your vehicle for replacement.
According to Mike Albert Fleet Solutions, maintenance costs can jump anywhere from two to three times higher after a vehicle has reached 150,000 miles, and generally speaking, during the first 50,000 miles, preventative maintenance like oil changes, tire rotations and wheel alignments will take up the majority of operating expenses. Over the next 30,000 to 50,000 miles, Mike Albert Fleet Solutions says operating expenses increase as items such as brakes and tires need to be replaced.
“From this point forward, costs continue trending upward throughout the life of a vehicle,” Mike Albert Fleet Solutions says online. “Not all maintenance costs are predictable, yet they do tend to be cyclical. Extending replacement beyond this point runs the risk of significantly overpaying for a vehicle. Trying to depreciate vehicles down to $0 is even more costly. A vehicle is never really worth $0, so attempting a straight-line depreciation schedule ensures overpayment as costs won’t be recovered when the vehicle is sold.”
Soft costs
Along with the risk older vehicles run with creating downtime in the field or requiring more maintenance expenses, these vehicles can also have a much greater likelihood of driving up “soft costs.”
As an example, the older a vehicle is, the more wear and tear will be present on seats, which then creates issues in operator comfort. Along those same lines, having increased mileage will also mean that dents and other exterior issues will begin to take a toll on the vehicle.
Mike Albert Fleet Solutions says that while these may only appear to be cosmetic issues, a fleet vehicle also serves as a rolling billboard for your company, which means that appearance is important, as it directly reflects your landscaping company’s image.
“Prolonging vehicle replacement does not reduce costs and, in most cases, actually increases them while proving detrimental to driver productivity,” Mike Albert Fleet Solutions says online. “An effective inventory replacement strategy is critical not only to resale value but also fleet productivity and efficiency.”
