Overcoming fleet vehicle allocation restrictions
March 17, 2022
Fleet vehicle ordering case study
As the fleet industry continues to experience original equipment manufacturers (OEMs) vehicle production setbacks, Element Fleet experts focus on delivering valuable and tangible recommendations to clients navigating OEM controlled ordering allocations.
Like many fleets in 2021, an Element client planned to place factory vehicle orders for their fall order cycle only to find out soon after that the OEM cut-off ordering due to the client’s vehicle needs exceeding OEM allocation. The fall order exceeded allocation by 50 units. With an additional, 50-unit order planned for 2022, the client looked to Element to help find a solution for the 100 units needing replacement.
Through close collaboration with the client and OEM, we learned of another client cancelling a 100-unit order. Element’s Strategic Consulting experts identified an opportunity to reallocate the vehicles. Timing was critical to secure the units and the client needed to advance the order of 50 units they planned to place over the next 12 months to meet all their 100-unit replacement needs.
The reallocation of 100 units avoided dealer markup and increased maintenance costs, resulting in approximately $500,000 in total savings based on average dealer stock price of $5,000 over MSRP.
As supply chain restraints remain fluid and you begin planning for the upcoming ordering cycle, Element recommends the following.
- Validate your OEM allocation commitment and order rollover to next model year by building these steps into the MY planning/OEM negotiation sessions as both actions require OEM approval.
- If you’re considering alternate OEMs, this and allocation pre-negotiation should be done early in the year where applicable – not all models require allocation.
We are making a difference for our clients navigating OEM controlled ordering allocations, and we can do the same for you and your fleet. Contact Element Fleet Management today.
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