5 key fleet expenses—and how to manage them

November 20, 2017 -  By

Don Duckworth

A landscape business’ annual fleet management expenses are as much about the management as they are about the fleet, says Don Duckworth of Enterprise Fleet Management, who provides customized fleet recommendations for businesses on the west coast of Florida.

Presenting at the 2017 Irrigation Show Education Conference, Duckworth shared his practical tips for fleet management success.

Expense #1: Fuel

Small businesses have an average vehicle age of three or more years, yet even though their maintenance costs are increasing, fuel is still the largest line item under fleet expenses, Duckworth says. If you don’t have a fuel program, you don’t need to spend a lot of money to join; some are free. Signing up will help a manager identify the costs in addition to take advantage of savings.

“That way you can see on an individual vehicle basis which ones are your dogs,” Duckworth says.

Nobody feels good about paying more for a vehicle. But that’s exactly what will happen as your trucks get older. For example, Duckworth compared Ford F150 specs over the last 20 years; average fuel mileage has increased by more than 50%.

“Your older vehicles are continuing to decline in fuel efficiency while new vehicles are improving in efficiency. So you’re getting a broadening gap not just between what your truck was originally, but what your truck’s at now. This is a huge argument for replacement,” he says. “Sure, I’ve got to go back to having a car payment, but half my payment I’m getting back in fuel efficiency.”

Expense #2: New vehicle purchases

Introductory pricing at the beginning of the model year—July or August—is typically $1,200 less than later in the model year, Duckworth says.

“You may not need to even have to take delivery of the vehicle at that time,” of ordering, Duckworth says. “Dealerships can place a factory order and time delay delivery to come in during the spring.”

There are also incentives for buying new, like Loyalty or Conquest Programs, where the manufacturer will reward the buyer for either repeat business (loyalty) and for taking away business from the competition (conquest). Sometimes the trick to getting the deal is simply using that terminology, Duckworth says.

While the order time is when the price is locked in, fleet incentives are based on the delivery timeframe. With an additional $800 in potential incentives on average, a business owner can see a total $2,000 in savings from buying a new pickup truck at the right time, according to Duckworth.

When buying new, odds are that you might require some immediate upgrades. For a flatbed truck where you add a dovetail, for example, that’s an additional $1,000. Many dealerships have an aftermarket incentive that, in some cases, can even be a dollar for dollar credit up to a certain amount.

Buying more than one vehicle at once or proving you meet fleet standards will also lead to more purchase incentives.

“Nissan and Isuzu are a little more liberal with what you need to qualify for a fleet incentive. They may extend you a fleet incentive even if you don’t have 15 vehicles. It can never hurt to ask,” Duckworth says.

VIP orders—those with 25 or more vehicles—can qualify for incentives of $4,000 per vehicle.

“Most companies aren’t going to order 25 vehicles at once, but if you’re a member of associations, you may be able to piggyback off of VIP programs that your association has,” Duckworth says. “The best thing I can advise is any associations you pay to join and be members of, get in touch with the executive director and ask them what kind of programs are set up, since it is a significant difference in price.”

Regardless of how many vehicles you’re purchasing, to get the best deals, Duckworth recommends going to a dealership with a dedicated commercial sales department.

Expense #3: Depreciation of older vehicles

The lowest resale values are from December through February, because a dealer won’t want to hold inventory at end of calendar year. A proper resale strategy can save you $1,500 per vehicle.

“If you have a vehicle sitting there growing weeds up around the tires in this timeframe, don’t sell it. Wait. It will be worth more in April than it would have in January,” Duckworth says.

If you are debating selling in the summer, “go ahead and get rid of it” before the late-summer months, says Duckworth. By August, a car will be considered a full year older based on the model year.

“A lot of owners don’t recognize how much their vehicles are worth at 100,000 miles,” he says.

Expense #4: Maintenance

Not a lot of people are timing their vehicle resales around the lows, says Duckworth. He recommends owners sit down and create an expense history for each truck to see how the maintenance cycles happen, based on the specific model. When you identify the lows—those periods “before you dump a lot more money into it,” you’ve identified when you should sell in the future.

“You want to maximize your investment, and minimize your downtime, as simple as that,” Duckworth says.

To keep maintenance costs in check, track your expenses monthly.

“Most companies cannot define their average monthly cost on maintenance for each vehicle,” Duckworth says. “Look at your P&L, pull out the fleet line item, divide it by the number of vehicles and then divide it by 12. Then go back and look at the last three years.”

Expense #5: Accidents

If your crews have been accident-free, this should be a place where your business qualifies for insurance company discounts. Just don’t ignore the potential for future accidents, Duckworth warns.

“Trucks that are over 10 years old aren’t taking advantage of standard safety improvements,” Duckworth says. “The biggest of these is the electronic stability control.”

Some key new features that could save you money by making your crews safer: blind-spot warning, rear-video (one of the most inexpensive factory options) and adaptive headlights, which turn with the wheel as you turn on a dark road, “pretty significant in deer crossing territory,” Duckworth says.

Other new features that are improving and are worth looking into for future fleet purchases, Duckworth notes: Tire pressure monitoring and lane departure warnings.

Finally, Duckworth also recommends telematics and fleet tracking programs as tools to make owners and managers more educated and drivers safer.

“Typically what we see is people getting more than what they need and only using 50 percent of what they’re paying for. So listen to more than a single sales spiel; do your own research and talk to a couple of references to see if they’re really using it.”

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