Roadmap: Plan and Build Your Fleet
Hans Bodine, CEO - June 25, 2019
"Fleet" is a somewhat nebulous term.
Back in the day, it conjured images of rows and rows of powerful big rigs, lined-up and ready to haul merchandise. Or a sea of sedans for the weary road warriors, same make, model, and color. But with the ever-changing technological landscape of today's businesses - and more flexibility and choice than ever before - fleets are looking a lot different! Gone are the traditional notions of what it means to own and operate a fleet, and Carlease is leading the charge in shaping the future of fleet leasing and management.
But while companies like Carlease are defining change, dealerships can often be stuck in the past. In many cases, to reap the benefits of a "fleet discount" - a bulk purchase discount - a business needs to lease or purchase at minimum 10 vehicles. What if you only need four? Should you be penalized for building a manageable, scalable fleet?
And thanks to Carlease's partnerships with dealers across all makes and models, fleet discounts are built into each vehicle we lease for our clients. Amazon is a great example. After launching their Delivery Service Partner initiative, local drivers have partnered with Carlease to get their businesses off the ground, with fleets ranging in size and vehicle type. Without having to worry if they're getting the best deal available, and without having to set foot in a dealership, their new fleets are delivered right to their door.
But our small business fleet leasing specialists do more than negotiate the best deals for our clients, we help them plan and build their fleets from the ground up, offering expert advice and support to get their businesses where they're going. And we'd like to share some of the questions we get most often in an article series called Roadmap. This article will focus on planning and building a fleet from the ground up.
How do you do that?
To all but an experienced fleet manager, the process can be overwhelming - building and managing a fleet from the ground up is no easy feat. But years of experience have taught our experts how to navigate this tricky subject and help our clients build the best fleet for their business.
Vehicle Selection and Rightsizing
There are a lot of factors to consider when building out a fleet. But perhaps the most important, and the place to start, is with vehicle selection. Before the quantity of vehicles you need is determined, it's important to thoroughly plan and record how these vehicles will be used, and by whom. Here are some questions to ask yourself:
How will your fleet vehicles be used?
Will you be hauling HVAC equipment to on-site jobs? Contractor equipment? Will you be transporting passengers? A combination of the two? What type of carrying capacity are you looking for? Is passenger space or cargo space more important? Will you be towing any additional equipment? Are these vehicles for your sales team or C-Suite executives? How much mileage do you foresee your team needing? What customization do you need and how much will they cost? Different answers require different vehicles, different financing, different specifications, and different levels of up-fitting. Take the 2020 Ford Transit for example. Their most recent redesign allows for 92 customized configuration options, it can be overwhelming to choose!
Thankfully, Carlease can help. Not only are our leasing specialists knowledgeable across all makes and models, our extensive client base utilizes custom up-fitting solutions designed by specialists. On Carlease's business leasing page, you'll find different workforce segments and frequently leased fleet options for you to browse through. If you have additional questions about vehicles, up-fitting or specifications, reach out to our specialists at 847-714-1414 or visit Carlease.com.
Where will these vehicles be driven?
Are they vehicles for a city fleet? Or will extended, multi-city travel be required on the job? These two scenarios require different vehicles to maximize fuel efficiency and mileage. Mileage is a big consideration when leasing a vehicle, and it's important to have an idea of the overall mileage that will be put on each vehicle to help you budget accurately. If you're looking to mitigate costs and are confident that your drivers can keep mileage under 10,000 - 15,000 miles a year, a close-ended lease may be right for you. If you're interested in greater flexibility and fewer mileage restrictions, an open-ended TRAC lease will better benefit your business but can be more complicated to navigate. If you decide to purchase your vehicles, it's important to monitor mileage and understand the potential increase in complexity to managing your corporate finances.
Are you taking fuel type and fuel efficiency into consideration?
Are you looking to acquire diesel or gasoline powered vehicles? Hybrid or electric vehicles? There's often a difference in availability, price and efficiency to consider with each vehicle type. For example, while diesel typically deliver 25% to 30% better fuel economy than similar gasoline engines, availability is slightly limited and price is more apt to fluctuate as demand rises. Are you in the market for a hybrid or a purely electric vehicle? It's important to research charging station access and additional costs associated with equipping your home or business to accommodate the power source.
What's your budget?
Finally, it's important to go into this stage of planning with a solid budget in mind for your overall fleet spend. This should be balanced with your fleet size in mind. How many vehicles does your business need to meet its goals? Can routes/jobs be optimized to reduce this number? How many drivers do you have? Will they each need a vehicle? Knowing the answer to these questions will help you determine exactly how many vehicles your business needs to get the job done.
With your overall budget and the number of vehicles you need determined, you can breakdown what your business is reasonably looking to spend per-month on each vehicle. Keep in mind that a typical lease payment is slightly to significantly less than an auto loan payment over a shorter time commitment, without the need to provide a hefty down-payment towards the vehicle - great for your cash flow and balance sheet!
The best part is, you don't have to answers these questions alone! Carlease's small business fleet leasing experts have years of experience managing vehicle acquisition strategy and can assist you in this process, maximizing your savings and building the best fleet for your business. Not only do we work with dealers and manufacturers across all makes and models, we work with multiple finance partners as well. This gives Carlease a unique advantage in the industry, and allows our leasing specialists to work between multiple institutions to find you the best lease payment possible.
Vehicle Transition and Replacement
Vehicle transition and replacement is a frequently overlooked component in a business's acquisition strategy - and oftentimes a costly one. As vehicles age, they're more expensive to maintain - warranties expire, maintenance costs rise, and newer more fuel efficient models overtake the old. It's important to know when to replace a vehicle in its lifecycle to maximize its value to your business. With leased vehicles, this is typically not an issue, as leases are finite in length (usually 12-48 months). But when purchasing vehicles for a fleet or selecting an TRAC/open-ended lease, it's important to know when to sell to maximize your resale value and minimize fleet refresh time and expense.
One critical factor to look at is the vehicle's warranties. When leasing or purchasing new vehicles, they come to market with a slue of warranties that protect the vehicle for up to three years. This means that maintenance costs are greatly reduced during this period of time. If something goes wrong mechanically - you're covered! After the warranties expire, if your vehicle has an electrical issue or a problem with the engine, you could be out $1,500+ dollars per incident and countless hours/days the vehicle isn't working for your business.
Additionally, newer vehicles are more fuel efficient than their older counterparts. And the safety features offered on each new make/model are improved upon with each iteration, making newer vehicles safer and less expensive in the long run. These are two big reasons that fleet leasing is on the rise: warranty coverage and fuel efficiency. A typical lease, open-ended or close-ended, lasts 36 months - as does the length of a common warranty. And when the lease is up, you trade in the old model for the newest one on the market. The one with higher fuel efficiency, better safety ratings, improved technology, and a new warranty.
Something to note: Leasing or purchasing used vehicles come at a cost. Expired warranties, reported (or unreported) wear and tear, customization limitations, the list goes on. Your business could wind up buying/leasing someone else's problem, so consider this option carefully before your proceed. If you have questions or concerns, don't hesitate to reach out to our leasing specialists at 847-714-1414.
Putting It All Together - Why Lease
It's no secret that, as the small business leasing experts, we're big proponents of leasing.
But why? And does it make sense for your business?
When building out a fleet, chances are your business is in a period of expansion. Capital expenses need to be considered carefully. When purchasing vehicles, the initial outlay of cash can be significant, limiting future plans in the short and long term, and negatively affecting your balance sheet. When leasing vehicles, there are no traditional down-payments required (nor do we recommend them), and the typical lease payments are less expensive than finance payments. When your vehicles come off of lease and it's time to rotate your fleet, Carlease can seamlessly transition your business into the latest model or help you reevaluate your needs and scale your fleet.
Selling purchased vehicles takes exponentially more time to "offload" than leased vehicles and can tie up finances and resources for an unknown amount of time. And keeping fleet vehicles in service over five years can rack up unforeseen maintenance costs. Either way, it's a losing situation.
In an age where people want the latest technology on demand, the allure of leasing a new vehicle every few years is strong, especially for fleet vehicles. When you work with Carlease, we're partners in building and rightsizing your fleet, and there are no leasing minimums to qualify for a fleet discount - you already get one! With our custom built fleet management software, tracking and monitoring the health and productivity of your fleet has never been easier. And when you're ready to scale your fleet, Carlease can help you find the solutions that fit your needs and your budget. When you're ready to start planning and building out your fleet, our leasing specialists are here to help, call 847-714-1414 or visit Carlease.com today.
Your business is going places, let Carlease help you get there!