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3 myths busted about switching to a fleet management company

Thursday, September 28, 2017

By: John Meiklejohn, National Account Manager, Element Fleet Management

Are you considering partnering with a fleet management company (FMC)? As a fleet manager, you might be wondering how your job will change. Does making the switch mean giving up control of your fleet, budget and goals?

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The truth is, for a forward-thinking, budget-conscious fleet manager, a fleet management company is an ally, not a replacement. Successful partnerships involve readily shared information and collective decisions, which are both benefits to working with an FMC. Let’s bust three myths about partnering with an FMC:

Myth #1: You can get better deals by negotiating with your suppliers directly.

The sheer volume of supplies and services purchased by your FMC provides unmatched leverage with vendors. By compiling data from fleets around the country, FMCs bring vast quantities of hard numbers to the negotiating table.

Example: Your FMC has access to the concessions or new vehicle discounts offered to other customers which means they know if you received fair quotes or if there is room to negotiate. Some companies try to negotiate their own maintenance shop rates with local suppliers, but lose those savings when they don’t monitor the hours charged.

Myth #2: You can control expenses by keeping all fleet operations in-house.

Knowing your expenses is not the same as controlling them. Switching to an FMC can help reduce costs by outsourcing expenses like brick-and-mortar maintenance facilities, equipment and parts inventories. Even trying to manage license renewals in house can be a challenge due to timing, complexity and geography. Most importantly your FMC takes a holistic approach by monitoring all aspects of your fleet.

Example: If vehicle is set to be replaced by a new unit in six weeks, the maintenance authorized by your FMC will focus only on meeting the manufacturer’s warranty and keeping the vehicle safe. Additionally, the FMC would not order a license renewal if the unit will be out of service before the sticker arrives.

Myth #3: It’s too late or too difficult to switch from vehicle ownership to leasing.

It’s never too late to switch to leasing, and partnering with an FMC eases the transition from vehicle ownership. You will work together to create a workable, cost effective plan for switching models to realize the maximum benefit. In fact, the timing of switching to leasing often takes advantage of the vehicle’s equity in a strong resale marketplace.

Example: Two years ago, a large telecommunications provider partnered with Element with two objectives in mind: update its aging fleet and reduce the cost of maintenance. Element’s strategic consulting team developed a new acquisition plan and the company switched from a vehicle ownership model to a leasing model. They began remarketing old vehicles and cycling in new units. The new plan was projected to deliver $22.8 million in savings over five years. Two years in, the telecom provider is operating a newer (and nicer-looking) fleet and has already enjoyed an estimated savings of $19 million!

Many fleet managers are reluctant to release control of their budgets to an FMC, fearing that, since it’s not their money, the FMC won’t spend it as carefully as you would. But no significant budget decision can be made without your input, and one of your FMC’s chief directives is to find efficiencies and reduce your operational costs. Learn more at elementfleet.com.

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