3 strategic ways to reduce fleet cost
March 15, 2019
Fleet managers are always under pressure to operate an efficient and cost-effective fleet. As you are managing your vehicle fleet, will you focus on short-term savings, or long-term efficiency and TCO?
Drive down fleet costs with these tips
Here are some tips to help you drive down fleet costs in both the short and long term.
Explore financial alternatives
Evaluate fleet leasing versus ownership or reimbursement arrangements. With no down payment required, you can lease vehicles using less upfront cash, freeing up funds for other investments. Additionally, consider buy-leasebacks. Companies that own vehicles but need access to capital can sell vehicles to Element, then lease them back, freeing up necessary funds.
Manage your assets
Make sure your fleet is the right size for the job. Utilization analysis can help determine the optimal number of necessary vehicles. If you find yourself with surplus vehicles, consider current fleet remarketing trends to determine the best time to sell. Older vehicles may not generate depreciation expenses, but they do experience increased maintenance costs, and lose value in the resale market as they age. Find the optimal point for when each vehicle should be replaced.
When it comes time to order new vehicles, factory ordering through Element, rather than buying from the lot at local dealers, can lead to significant savings. New vehicles offer more safety features, and are less likely to disrupt productivity due to unplanned maintenance events.
Evaluate your fleet policy
There are several policies and solutions you could implement to reduce cost:
- Personal use policy – Consider charging drivers for personal use of company assets based on total cost of ownership and average vehicle utilization.
- Telematics solutions – A telematics program can lower costs by managing driver behavior and optimizing routes while improving productivity and reducing risk.
- Fuel purchasing policy – Restrict your fuel cards to only fuel purchases to save cost and monitor expenses.
- Preventative maintenance policy – Successful preventative fleet maintenance means you’ll have less catastrophes to deal with in the future.
For more information about strategies for reducing fleet cost, download our tip sheet below.
Tip sheet: Navigating fleet costs
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