August 26, 2011
BEST PRACTICES: VEHICLE SELECTION

So far CAF’s ongoing Best Practices series has focused on fleet management, fuel management and driver behaviour. What must happen before any of these assignments can be contemplated; however, is the matter of vehicle selection. What follows in this installment therefore is the business of fleet vehicle acquisition and selection.

To make vehicle selection work smoothly, a blueprint must be carefully established from which the right vehicles can be confidently chosen. The mix of vehicle types must reflect day-to-day fleet needs including emphasis on the number of vehicles needed to achieve the organization’s objectives effectively.

“Developing effective fleet selector and acquisition strategies takes careful planning, particularly if you’re adhering to best practices,” says Charlie Johns, Truck Sales Manager, ARI. “The first step is determining the optimal fleet size. What were the total kilometres driven over the past 12 months, as well as the average per vehicle? Are there enough vehicles to cover the required business travel and are the current vehicles fully utilized?”

The term ‘right-sizing’ sums up what elements organizations must consider when deciding on vehicles to put on the selector and which are ultimately acquired for the fleet. Obviously, a fleet which delivers large-sized items will require vehicles with large cargo capacities; however, if the fleet’s function is to deliver smaller items or use vehicles to move people to meetings, a fuel efficient vehicle could fit the bill. Ultimately, most companies need a mix of vehicles, and in such cases the selection process will need to be further refined.

“The challenge is that most fleets don’t have one single vehicle application,” said Toni Garofalo, Account Manager for Canada, Wheels Inc. “They have multiple applications within the fleet, and need to ensure that the right vehicle is found to support each and every job type.”

When vehicles that most reflect the needs of the company have been selected, other factors come into play. These may include: fleet incentives offered by OEM manufacturers, specific fuel efficiency of the vehicle, depreciation and resale values, and maintenance costs.

“Utilizing strategic and market trend analysis, PHH New Vehicle Acquisition Consultants will analyze the highest costs associated with fleet management (including fuel cost, depreciation and maintenance) to provide personalized selector recommendations for each customer,” said Pauline Greaves, Manager, New Vehicle Acquisition, PHH.

Once, the selector process is completed, it is important to forecast which vehicles currently in the fleet should be replaced and when the process of replacing them should start.

“Your annual process should begin in the spring”, said Paul Wingate, National Director, Client Services, TLS Fleet Management. “Forecast the number of vehicles that require replacement during the upcoming model year. It is important to note that when discussing potential price assistance with vehicle manufacturers, they appreciate an honest, realistic assessment of the number and types of vehicles that you will require. In addition to giving careful consideration to changes in the models offered by the manufacturers, analyze the net life cycle costs of competitive models as part of your decision process.”

Ideally its best to maximize the delivery period in the fall, as you benefit from the model’s first year of depreciated value.

“Resale market proceeds for the vehicle replaced by the one on order are historically much higher in the fall period compared to any other time in the model year. In addition, you avoid price increases that occur later in the model year,” said Wingate. “Maintenance costs associated with winter driving conditions are also reduced. Postponing order planning increases the risk of being affected by unanticipated manufacturing delays, model build outs and higher costs associated with subsequent dealer stock searches.”

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