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December 2008:
Vehicle Service Life, Residual Trends and
Disposal Strategies
Fleet survey shows resale market and values holding up well
The average residual/resale value for a “typical” fleet vehicle is between 21% and 37% of the vehicle’s original cost, according to our latest survey of U.S. and Canadian fleet managers. This range is substantially higher than five years ago and reflects two factors. First, fleet managers are making better vehicle remarketing and reconditioning choices. Second, a tightening economy has many consumers looking at clean used cars and trucks instead of higher-priced new models.
Among most fleets, remarketing decisions begin with the vehicle selection process. The need to choose popular models and colors is obvious, but other choices may seem counterintuitive to some. For example, are options like satellite radio and onboard navigation frivolous expenses, or are they key to quicker, top-dollar resales? And today, with the fate of Detroit’s automakers up in the air, is it wise to load up on makes and models that may become industry orphans before resale time comes around?
For most fleets, resale time occurs after vehicles have been in service at least three years, often quite longer for government and utility fleets. As the vehicle marketplace has shown . . .
(excerpts from the December 2008 issue)
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November 2008:
Cellphone Use and Employer Liability
Every fleet policy should address cellphone use and texting
Over the past six years, states have been instituting laws addressing the problem of driver cellphone use and traffic safety. Many states have defined hands-free laws and produced legislation that bans cellphone use completely. Although employer responsibility isn't specifically defined in the cellphone legislation, there have been an increasing number of lawsuits relating to employer responsibility regarding mobile cellphone use for employees.
Hands-free laws have done little to protect employers from liability and as the trend of cellphone legislation increases, employers should be prepared to address their mobile workforce and advise them of the cellular phone laws that are in effect in your state or locality.
Employers that have personnel driving company-owned vehicles during the course of business could be held liable if the employee is involved in an accident while using a cellphone. Implementing a mobile phone policy and creating a general vehicle use policy is the first step to reducing employer liability. Although a mobile phone and a hands-free policy doesn't completely remove the employer from being held responsible for accidents or injuries that could occur while using a company owned vehicle, it does show some forethought and responsibility on behalf of the employer . . .
(excerpts from the November 2008 issue)
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October 2008:
Big Shift: Fleet Salaries Soar in 2008
Fuel costs and global warming issues shine a spotlight on fleets
You might think a tumbling economy and skyrocketing fuel costs would put fleet managers on the spot, particularly among organizations where fleet is begrudgingly viewed as little more than a necessary expense. But something very beneficial is happening to fleet managers: fleet administration is evolving into a rather complicated discipline. If this year’s salary survey is any indicator, today’s fleet managers are reaping higher salaries because their job is becoming more technical and more difficult.
. . . a combination of factors has brought fleet to the forefront in many respects. When someone questions the carbon footprint of a company or government agency, “fleet” immediately comes to mind. When the subject turns to fuel costs and AFVs, the go-to person is—or at least should be—the fleet manager. And amid talk of “global auto industry collapse,” fleet managers are increasingly relied upon by upper management to provide intelligent analysis. For today’s fleet managers this stepped-up visibility is a great career booster, provided they stay on top of their game.
For the most part they are on top, and they are being rewarded with higher pay. According to our latest salary survey, U.S. fleet managers are now earning an average of $70,275 a year, up 6.1% compared to one year ago. This year-over-year jump in pay is . . . .
(excerpts from the October 2008 issue)
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September 2008:
Ford Regains Lead Among Fleets
Ford and GM rule fleet market, but Asian makes gaining fast
The primary vehicle manufacturer selected by most North American fleet managers is Ford Motor Company, according to our latest survey. This represents a revival for Ford, which has consistently been ranked the primary vehicle choice among our surveyed fleets but slipped to second place last year. Currently, Ford is the primary make of fleet vehicle among 41% of surveyed fleet managers, up four percentage points over last year. General Motors nameplates are the top choice for 37% of our survey base, down two percentage points compared to one year ago.
Chrysler LLC ranks third among selected primary makes, and year-over-year survey results indicate Chrysler’s share of the non-rental fleet market is weakening. Currently, Chrysler is the primary choice among 11% of surveyed fleet managers, down five percentage points from last year.
On the import side, Asian nameplates are finally cracking the North American fleet industry’s “Buy American” tradition. According to recent data, Asian nameplates are now the top vehicle choice among 7.5% of surveyed fleet managers, representing a giant statistical jump from. . .
(excerpts from the September 2008 issue)
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August 2008:
Small Pickup Safety: Mostly Dismal
Latest testing reveals risks of downsized pickup truck models
Full-size pickup trucks are the mainstay of many fleets, but they are also undisputed gas hogs. So with gas prices setting record highs many fleets are looking into the viability of downsizing to compact pickup models. But the tradeoff for better fuel economy might be driver safety as well.
Small pickup trucks aren’t providing as much protection in side crashes as many new cars and SUVs. In recent side crash tests conducted by the Insurance Institute for Highway Safety, only one out of five small pickups earned the highest test rating for side crash protection. All were 2008 models.
"More people may be looking at small pickups because of rising gas prices," says Institute president Adrian Lund. "Unfortunately, they won't find many that afford state-of-the-art crash protection. Most earn dismal ratings for protecting people in side crashes, and all but the Tacoma and Frontier lack electronic stability control, which is a key feature in preventing crashes. Until they improve, most small pickups aren't good choices for people looking for safe transportation.". . .
(excerpts from the August 2008 issue)
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June/July 2008:
Survey Tracks In-House, Outsourced Fleet Maintenance Trends
PM intervals, repair technician pay, vehicle-to-mechanic ratios
Key considerations for any type of vehicle maintenance program include choosing when and where vehicles are serviced. In that regard, a pivotal decision involves whether to establish an in-house repair facility or outsource every repair.
The vast majority of government and private utility fleets operate their own in-house vehicle repair facility because they typically own their vehicles outright, and they operate a sufficient number to justify an in-house repair operation. On the other hand, most business/corporate fleets outsource their vehicle service because, generally speaking, their service needs are met by factory warranty coverage, making an in-house repair facility often unnecessary. The percentage of business/corporate fleets with in-house repair facilities has fallen steadily over the past decade.
Experience has shown that regular and thorough preventive maintenance not only assures vehicle safety and reliability, it is the key to higher residual values . . .
(excerpts from the June/July 2008 issue)
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May 2008:
New Fuel Economy Rule Poses Key Questions for DOT, NHTSA
Historic energy legislation flawed by dated assumptions
The Bush administration's new proposal for vehicle model years 2011 through 2015 would significantly boost fuel economy for the first three years, but then require only meager improvements for the remaining two, setting a pace that could undermine efforts to reach the goal of a 35 miles-per-gallon fleetwide average by 2020, according to the Union of Concerned Scientists.
The proposal represents the first phase of standards required by Congress in a groundbreaking energy bill passed and signed into law last December.
"This rule is the first substantial improvement in fuel economy for both cars and trucks since 1985. That said, the proposal starts off at full speed, but then puts on the brakes," said Jim Kliesch, a senior engineer with UCS's Clean Vehicles Program. "The administration should finalize the proposal's first three years and go back and fix the flawed assumptions that undercut the last two years."
The energy bill requires the DOT, through its National Highway Traffic Safety Administration (NHTSA), to set "maximum feasible" standards above the 35 mpg minimum if they are deemed achievable. However, according to UCS, NHTSA's analysis underlying today's proposal makes several flawed assumptions that undermine potential fuel economy gains. Those include . . . (excerpts from the May 2008 issue)
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April 2008:
Fleet Managers Embracing AFVs, Stymied by Limited Selection
Fleets seek broader selection of large AFV cars and trucks
The percentage of fleets operating alternative fuel vehicles has never been greater, and most fleet managers surveyed for this report are expanding their AFV programs in reaction to high fuel prices and growing environmental awareness.
After years of false starts and watered down governmental initiatives, the movement toward AFVs appears to have reached critical mass. But right now a big problem for fleets is finding vehicles that have enough space and power to meet commercial needs.
The major obstacle to AFVs is no longer consumer reluctance, but rather lack of product. Carmakers have yet to offer a satisfactory range of AFVs, in terms of vehicle size and innovative AFV technologies. For now, carmakers are taking a shotgun approach to AFV development, favoring electrics one day and biofuels the next, dabbling with hydrogen while clinging to the traditional internal combustion engine.
Nevertheless, fleet managers are expanding into AFVs however they can. Today, 82% of corporate fleets have at least one AFV—an all-time high. Among those corporate fleets, roughly 6% of their vehicle inventory is classified as an AFV of one type or another. By far, the number one choice of AFV . . .
(excerpts from the April 2008 issue)
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March 2008:
Latest Survey: Non-Fuel Vehicle Operating Costs Jump 4.2%
Annual survey shows fleet managers excel in tough times
Non-fuel vehicle operating costs jumped 4.26% during the past 12 months and currently average 4.40 cents per mile, up from 4.22 cents per mile one year ago when averaged across all vehicles represented in our latest fleet analysis. Operating costs vary significantly according to vehicle size, as illustrated later in this report.
Fleet managers are reporting higher vehicle operating costs across the board. For the first time this decade, fleet administrators surveyed for this report say their non-fuel vehicle operating costs have increased faster that the nation’s rate of inflation, which in 2007 averaged 2.85%. Whether fleet managers can rein in costs in 2008 remains to be seen because inflationary pressures are soaring.
Non-Fuel Vehicle Operating Costs
year-over-year change by cost category
Preventive Maintenance Costs Up 3.49%
Non-Warranty Repair Costs Up 0.93%
Tire Replacement Costs Up 4.23%
Oil Consumption/Replenishment Costs Up 37.6%
All Non-Fuel Operating Costs Combined Up 4.26%
The full-year inflation rate for 2008 is predicted to exceed 4% and this prediction may prove optimistic. On an annualized basis, U.S. inflation has exceeded 4% for the past four months, with November 2007 appearing to be the tipping point. In November inflation hit 4.31%, the first month above 4% in over a decade. Since November, inflation has ranged from 4.03% to 4.28%.
(excerpts from our March 2008 issue)
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February 2008:
New Energy Laws Will Have Little Near-Term Impact on Fleets
Weak legislation is a huge relief to vehicle manufacturers
If you haven’t read the cover-to-cover version of the recently enacted energy bill, news reports may have given you the impression that Washington’s lawmakers hammered out a tough, aggressive and comprehensive plan to solve the nation’s energy woes. Not exactly.
Just reading the title of the legislation tells you Congress was delirious with expectation: The Energy Independence and Security Act of 2007 (EISAct). But the legislation as passed won’t come close to delivering independence nor security. It is destined to fail on both counts, something lawmakers understood when they included a dozen or so loopholes allowing for the extension or modification or key deadlines and benchmarks.
The most glaring loophole of EISAct is the giveaway lawmakers handed to vehicle manufacturers. Executives representing Toyota and the Detroit 3 broke their backs all summer warning lawmakers that tougher fuel economy rules would cripple the auto industry while adding thousands of dollars to the price of every new car. But when the legislation passed these same executives lined up to praise EISAct as an exciting challenge they could really sink their teeth into.
What happened? Congress caved in and expanded the provision of CAFE that allows carmakers to inflate their fleetwide average fuel economy by producing more and more flex-fuel vehicles. This provision began years ago as a misguided attempt to promote the production of ethanol-powered vehicles, but carmakers quickly capitalized on the fact that they get the credit regardless of whether their flex-fuel vehicles are fueled with conventional gasoline or E85 ethanol. Various studies show that a mere 1% of flex-fuel vehicles on U.S. roadways actually are fueled with E85.
(excerpts from our February 2008 issue)
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January 2008:
Safety Experts: Higher CAFE May Compromise Vehicle Safety
Old story gains new life: Small cars lack crash resistance
Now that Washington’s lawmakers have set the stage for a 40% increase in Corporate Average Fuel Economy by 2020, vehicle engineers face the considerable task of achieving the new fuel economy goals without compromising vehicle safety. Safety experts warn that automakers must resist the temptation to reduce vehicle weight and structural integrity in order to boost fuel efficiency . . .
In the current issue of Status Report, researchers at the Insurance Institute for Highway Safety point out that promoting fuel economy and enhancing safety are important goals that historically have been at odds, but they don't have to be. Today's passenger vehicles are doing a much better job of protecting people in crashes . . .
It will be important to keep these safety benefits in mind as Congress looks to toughen federal fuel economy standards. Otherwise, the new fuel economy requirements could compromise the safety of vehicles we drive in the future . . .
(excerpts from our January 2008 issue)
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