NAFA: Suitability and Utilization

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Mike Camnetar is NAFA’s Board President and Fleet Services Manager for General Mills. Photo NAFA

Choosing the right vehicles for the right jobs is an essential part of effective fleet management.

During the COVID-19 pandemic, many fleet managers were faced with a significant dilemma. They often couldn’t get their hands on the new vehicles they needed and even if they could, their acquisition costs were significantly elevated due to demand and later, rising inflation and higher leasing/finance rates. Additionally, many managers were reviewing maintenance requirements and pushing out replacement intervals, simply because there weren’t enough new vehicles available to replace their older assets.

Better supply, higher costs

Today, we’re in a situation where new vehicle supply has begun to increase, yet at the same time fleets are still having to contend with higher acquisition and operational costs. One challenge that many fleet managers continue to face is obtaining enough units from a single OEM. Larger fleets tend to get the lion’s share of orders and even in an era where inventory is starting to improve, supply still remains below pre-pandemic levels.

While traditionally, many fleets have relied on one OEM and often maybe one, two or three types of vehicles, today, this kind of approach is no longer as effective as it once was. We have seen situations in the last few years where a fleet would put together an RFP and the OEM would decline to supply them vehicles, or if they did, the price would be significantly higher with little in the way of incentives due to high demand from other businesses or retail customers.

Suitability considerations

Savvy fleet managers looked at this situation and began expanding their relationships—courting new OEMs that they perhaps hadn’t worked with in the past. While this can be a very effective approach, it is important to factor in vehicle suitability when selecting new OEM partnerships. It is also essential for fleet managers to have honest and open relationships with these OEMs so they can properly understand the fleet manager’s needs and operating requirements. A good relationship helps to ensure fleets consistently obtain the right vehicles for the right jobs, while at the same time minimizing friction between both parties, as well as mitigating other potential issues such operation inefficiencies, excessive costs and end customer dissatisfaction.

Over the last few years we’ve seen a big push toward electric vehicles, though today, retail demand has leveled off. As a result, more of these vehicles are stockpiling on dealer lots and while it may be tempting to try and negotiate good deals on EVs today, it’s important that your fleet has a clear utilization strategy, otherwise you could end up with vehicles that are not suitable and are not efficiently utilized, costing you more money than they would if you hadn’t acquired them in the first place.

A square peg in a round hole

We’ve actually seen situations like this. A good example was a large corporate fleet, which decided its employees needed to drive extended-range EVs. The aim was to lower emissions and potentially solicit new business by demonstrating to clients that the organization was actively reducing its carbon footprint. In reality however, this proved to be a case of forcing a square peg into a round hole and didn’t prove practical as a fleet wide initiative. Many employees were not able to charge the vehicles at home and consequently relied on the gasoline generator most of the time when driving them. The result? Both fuel costs and emissions actually increased, defeating the original purpose of acquiring these vehicles. This in turn, lead to reduced efficiency and elevated employee dissatisfaction.

That’s why it’s so important as a fleet manager, to properly assess the vehicle needs of your organization, as well as operational use requirements. A big priority is minimizing downtime, so reliability, as well as utility is always a key consideration. And if that translates into durability and longevity, it can be very beneficial. This was a strategy we saw with many government fleets during the pandemic when, faced with a shortage of new vehicles, they chose to invest in, maintain and repair older assets, improving utilization and minimizing cost increases. In this kind of scenario, fleet managers have more options when new vehicle inventory and incentives improve, setting them up for better long-term success and improved OEM relationships.


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