The Canadian economy is slowing, battered by global and national challenges to growth. CAF asked Jim Pattison Lease’s Ryan D’Souza to share some ways fleets can weather the storm.
The main recommendation is to ensure that you operate a nimble fleet so you can make quick adjustments as needs change, both operationally and economically. Some areas to consider include:
Fit for purpose/use determination
- What are the business needs in terms of vehicle type? Is a pickup needed for the cargo/towing capacity? Is 4x4 needed for operating areas? Ensure that the vehicle type fits business needs so unnecessary vehicle types are eliminated.
- What options are needed for the vehicle? Do we need to have Bluetooth since it is a sales vehicle? Can we take advantage of safety technology such as blind spot monitoring or adaptive cruise control? Often times, many of these safety features add value as they have more mass appeal to the retail market at time of sale
- When considering half ton pickup trucks, is a full size cab with 4x4 suitable for business use instead of a regular cab 4x2 option? Historically speaking, full size cab 4x4 models typically have more appeal to buyers at time of resale, resulting in higher resale value
- Fuel economy is also an important consideration when selecting vehicle types. When the economy softens, buyers usually pay more attention to how much it costs to operate a vehicle
- Consider telematics programs to determine usage patterns for vehicles. If vehicles are not being used regularly, it may be a good time to right size the fleet.
- Acquire vehicle at the most optimum price at the optimum time in the model year. Factory order as opposed to locating from dealer stock. To minimize depreciation
- Depreciate to align future market value, based on utilization, with anticipated end value
- If vehicles are being leased, consider shorter lease terms to help keep the fleet more nimble and allow the opportunity to cycle the vehicle sooner
- If you are a fleet that owns your vehicles, consider seeking the assistance of a fleet management company to help evaluate your vehicles and offer a potential right sizing and/or lease back plan
- Continue to properly maintain vehicles as well maintained vehicles will always yield a higher return at time of sale and will help avoid unforeseen repairs.
Should you be in a negative financial position at time of disposal, or should a recession make the vehicle surplus prior to its anticipated replacement cycle, consider the following:
- Continue to utilize the vehicle past its original service timeframe
- Consider vehicle sharing options
- Look for a market, outside of the one you are in, to seek disposal opportunities
- Consider working with a fleet management company to help evaluate your fleet and offer recommendations including assistance with disposing vehicle or leaseback options