Market Trends

Vehicle Quality is Up, But So is Cost per Repair

October 24, 2008

Vehicle quality has improved dramatically with fleets experiencing a decline in the frequency of vehicle repairs. However, the average cost of repairs has been increasing. The forecast is for the cost of fleet maintenance to increase again in 2009. There are five factors exerting upward pressure on cost per repair.

Tags: Maintenance, Vehicle Quality, Vehicle Repairs

Author: Mike Antich | Posted @ Friday, October 24, 2008 10:23 AM | » Comments(0)

Fleet Operating Costs Increase Again in 2008

October 21, 2008

Although gas prices started to decline in August, the year-to-date cost of fuel in 2008 has increased 30 percent compared to last year. The price for replacement tires rose 5-10 percent in 2008 due to higher oil prices and the shift by manufacturers to larger diameter tires. Also, fleet maintenance and repair costs increased across the board in 2008. The cost for non-warranty maintenance services was up 5 percent for fleets.

Tags: Operating Costs, GE Capital Solutions Fleet Services, Wheels Inc., maintenance costs, ARI, PHH

Author: Mike Antich | Posted @ Tuesday, October 21, 2008 8:32 AM | » Comments(0)

Replacement Tires: A Growing Fleet Expense

October 14, 2008

Replacement tires are the third-largest expense category for fleets. In the past three years, this expense category has grown as a result of multiple price increases from all major tire OEMs. In 2008, year-to-date tire replacement costs have increased 4-10 percent. This follows a 3-4 percent price increase in 2007 and an 8-10 percent price increase in 2006. The consensus is replacement tire prices will increase again in 2009.

Tags: Replacement Tires, Tires

Author: Mike Antich | Posted @ Tuesday, October 14, 2008 7:49 AM | » Comments(2)

Fuel Continues to be the No. 1 Threat to Fleet

October 10, 2008

The number one threat to fleets continues to be the price of fuel, despite the fact that fuel prices have been declining due to the global economic slowdown. Year-to-date, the cost of fuel has increased 30 percent in 2008 compared to 2007. The Energy Information Administration is projecting fuel to average $3.82 per gallon in calendar-year 2009. Fuel is the potential game changer of the fleet industry. Consider two recent examples as harbingers of things to come.

Tags: hyperconnectivity

Author: Mike Antich | Posted @ Friday, October 10, 2008 9:06 AM | » Comments(0)

Federal Reserve Invokes Emergency Powers to Support the Commercial Paper Market

October 7, 2008

Today, Oct. 7, the Federal Reserve Board announced that it is invoking emergency powers to create a special fund to support the U.S. commercial paper market. The announcement by the Federal Reserve allows corporations to bypass the current credit gridlock gripping the nation’s economy. This has an impact on the fleet market since one source of financing for large fleets is the commercial paper market.

Author: Mike Antich | Posted @ Tuesday, October 7, 2008 9:10 AM | » Comments(0)

Anti-Idling Programs: A Quick Way to Reduce Fuel Spend

October 3, 2008

Reducing unnecessary idling is the simplest and easiest way for a fleet to reduce fuel costs. Besides wasting fuel, excess idling also causes unnecessary emissions, noise pollution, and needless engine wear-and-tear. The amount of unnecessary idling varies by fleet, but some fleets have recorded idling as much as 35 percent of the time.

Tags: Fuel Spend, Idling

Author: Mike Antich | Posted @ Friday, October 3, 2008 12:30 PM | » Comments(2)

Credit Gridlock Will Impede Sales of Used Fleet Vehicles

September 29, 2008

The bread-and-butter customers of out-of-service fleet vehicles are buyers with C and D credit, namely subprime buyers. However, funders have tightened underwriting standards to manage these higher risk borrowers. Some lenders have caps on how low a FICO score they are willing to fund, which is often above the threshold of subprime borrowers. If this continues, it will have significant long-term implications for the sale of used fleet vehicles.

Tags: Credit, Used Vehicle Sales

Author: Mike Antich | Posted @ Monday, September 29, 2008 12:25 PM | » Comments(1)

Comprehensive Safety Analysis 2010: A New Way to Reduce Truck-Related Fatalities

September 23, 2008

Due to staffing constraints, the Federal Motor Carrier Safety Administration (FMCSA ) can currently only audit about 2 percent of nation's truck fleets. In response to these resource constraints, FMCSA is developing a Comprehensive Safety Analysis (CSA) 2010 initiative to implement new ways to reduce truck-related accidents. CSA 2010 will measure a fleet's safety performance through data uploaded from fleet compliance activities and accident reports.

Tags: FMCSA, CSA

Author: Mike Antich | Posted @ Tuesday, September 23, 2008 2:14 PM | » Comments(-4)

Branded Fleet Vehicles Puts Drivers in Conflict with Homeowner Associations

September 22, 2008

When a company decides to brand vehicles with either logos or full-vehicle advertising wraps, it may inadvertently create a situation that puts employees in conflict with homeowner association restrictions on the parking of commercial vehicles in common areas. Most homeowner associations allow commercial vehicles as long as they are garaged, but not all fleet vehicles can fit in a garage due to height or length. An estimated 50 million Americans live in homeowner association communities.

Tags: AFLA, Commercial Fleets

Author: Mike Antich | Posted @ Monday, September 22, 2008 3:23 PM | » Comments(5)

Confronting Non-Compliance & Fraudulent Personal Use Reporting

September 19, 2008

The high cost of fuel is causing more employees to use fleet vehicles for personal use since many companies pays for gasoline. Although overall fleet mileage has increased, there has not been a corresponding increase in reported personal use miles. Companies that allow drivers to take vehicles home, but do not allow personal use, report a growing problem of policing unauthorized personal use by employees looking to reduce their "personal" fuel costs. This is a broad-based industry issue.

Tags: Personal Use

Author: Mike Antich | Posted @ Friday, September 19, 2008 9:37 AM | » Comments(3)

Mixed 2008 OTD Performance: Some Models Up, Some Down

September 12, 2008

The 2008 model-year produced mixed results in order-to-delivery (OTD) perfromance. A protracted UAW strike and flooding in the Midwest delayed some models, while other models posted improved OTD due to reduced retail sales, which expedited fleet production. In addition, there was sufficient rail car availability due to soft retail sales and a decrease in quality holds.

Tags: GE Capital Solutions Fleet Services, Wheels Inc., Order-to-Delivery Times, Donlen, ARI, PHH, UAW, LeasePlan

Author: Mike Antich | Posted @ Friday, September 12, 2008 2:33 PM | » Comments(1)

Import-Badged Models Increase Market Penetration with 2009 Fleet Buy

September 9, 2008

When fuel prices crossed the $3.25 per gallon threshold, fleets began looking for ways to downsize vehicles or opt to four-cylinder engines.This trend is reinforced by corporate sustainability initiatives and/or fuel spend/GHG reduction programs. The shift to four-cylinder engines is broad-based and includes many of the nation’s largest fleets. One consequence to this increased demand for four-cylinder models is that fleets have increased their purchases of import-badged vehicles.

Tags: Downsizing, new vehicle sales

Author: Mike Antich | Posted @ Tuesday, September 9, 2008 11:19 AM | » Comments(0)

Impact of Plant Shutdowns on Ship-Thru Deliveries

September 8, 2008

With a dramatic decrease in retail truck sales, some fleets are concerned that assembly plant closures and production slowdowns may delay truck deliveries and ship-thru upfits. In addition, there are further concerns about potential fleet allocation issues, availability of transportation, extended lead times caused by shift eliminations, and reduced special equipment runs. One challenge is moving completed upfit vehicles back into "traffic" when an assembly plant is shutdown.

Tags: Assembly Plant

Author: Mike Antich | Posted @ Monday, September 8, 2008 1:29 PM | » Comments(1)

SEC Proposal to Allow Early Adoption of International Accounting Standards

September 5, 2008

On Aug. 27, the Securities and Exchange Commission raised the possibility that approximately 110 U.S. publicly traded companies will be able to use international accounting standards (IAS) next year and may require all U.S. companies to switch to IAS between 2014-2016. There is a 60-day comment period about the SEC proposal. Fleet leasing will be impacted by the adoption of IAS. It is probable that all fleet leases in the U.S. will need to be capitalized sometime in the 2011-2016 timeframe.

Tags: SEC, FASB, Leasing

Author: Mike Antich | Posted @ Friday, September 5, 2008 10:33 AM | » Comments(0)

The Hidden Cost of Personal Use

September 2, 2008

With fuel prices remaining elevated, many companies are wondering whether they are charging enough for personal use. At some companies, this discussion is long overdue. When re-evaluating personal use charges, a common mistake is to focus solely on the cost of fuel, which is understandable because, after all, fuel is the catalyst for these discussions. However, doing so ignores the other “hidden” costs of personal use, which have also risen.

Tags: vehicle depreciation, Company Vehicle

Author: Mike Antich | Posted @ Tuesday, September 2, 2008 9:25 AM | » Comments(3)

Fleet Becomes an Epicenter for Interdepartmental Encroachment

August 28, 2008

Interdepartmental conflicts are common in the medical and IT industries, and at most companies between sales and operations. However, for many years, fleet existed as a realm of its own. Management in other departments often didn’t fully understand the nuances of fleet management other than they got a new vehicle every 36 months. Fleet managers of that era (not that long ago) were the “kings” and “queens” of their own realms. However, that reality is rapidly changing.

Author: Mike Antich | Posted @ Thursday, August 28, 2008 1:27 PM | » Comments(4)

Strategic Fleet Management Focuses on Management by Objective

August 25, 2008

The greatest challenge facing the future of fleet management is how we see ourselves as a profession. Are we administrators of a fleet or are we managers? Do we manage from a tactical level – putting out day-to-day fires – or from a strategic level focusing on specific long-term objectives using metrics to benchmark progress? In the future, you will need a strategic focus to succeed in fleet management; otherwise you run the risk of fading into irrelevancy.

Tags: AFLA, Fleet Management

Author: Mike Antich | Posted @ Monday, August 25, 2008 3:13 PM | » Comments(2)

When Fleet Collides With HR

August 22, 2008

The Health Insurance Portability and Accountability Act of 1996 (also known as HIPAA) makes it a criminal act to divulge medical information to a third-party without the employee’s permission. Many fleet managers believe HIPAA non-disclosure requirements are counter-productive to fleet safety. One fleet manager lamented to me that “HIPAA is the worst thing that has ever happened to fleet.”

Tags: HR

Author: Mike Antich | Posted @ Friday, August 22, 2008 8:41 AM | » Comments(1)

Fleet Safety Must be Your No. 1 Job Priority

August 18, 2008

In two decades of chronicling the history of fleet management, I have seen interest in fleet safety ebb and flow. In an annual survey I conduct of fleet managers, they rated fleet safety as their No. 2 concern, right behind the cost of fuel. Why the renewed interest in fleet safety? More and more fleet managers are reporting an uptick in preventable accidents. In addition, fleet managers are feeling pressure from other corporate departments to increase fleet driver safety.

Tags: Operating Costs, Accidents, OSHA, Fleet Safety

Author: Mike Antich | Posted @ Monday, August 18, 2008 12:57 PM | » Comments(1)

Upfitters Increase Prices 3%-8% Due to Higher Commodity Prices

August 14, 2008

The high cost of materials has caused price increases for truck bodies, trailers, van interiors, liftgates, and other upfit equipment. Prices have increased, on average, 3-8 percent. Upfitting prices have risen multiple times and some truck equipment manufacturers are guaranteeing current prices for only 90 days. Worldwide, prices have soared for commodities used in upfitting, such as steel and aluminum.

Tags: Pricing, Trailers, Idle Reduction

Author: Mike Antich | Posted @ Thursday, August 14, 2008 1:44 PM | » Comments(3)

Real World Strategies: 60 Ways to Reduce Your Fuel Spend

August 12, 2008

Fleets are adopting compensatory strategies to offset high fuel costs. These include selector modification, revised vehicle specs, increased personal use charges, streamlined fleet operations, and modification of driver behavior.

Tags: fuel expense

Author: Mike Antich | Posted @ Tuesday, August 12, 2008 10:19 AM | » Comments(5)

More Factors Point to an Impending Used-Vehicle Shortage

August 7, 2008

The past two weeks have produced a dizzying string of announcements ranging from Chrysler Financial stopping lease financing, Chase Auto Finance no longer providing lease financing for Chrysler brands, Wells Fargo ending lease financing, all major OEMs decreasing truck production volumes, and HSBC Financial Corp.’s decision to stop funding auto loans. All of which may be good news for fleets remarketing vehicles two to three years from now.

Tags: Remarketing, Chrysler Financial

Author: Mike Antich | Posted @ Thursday, August 7, 2008 8:46 AM | » Comments(3)

How to Develop a Corporate Culture of Fleet Policy Compliance

August 5, 2008

The best time to control cost is before it occurs and the way to do this is by establishing policies and procedures that inhibit unnecessary spending and protect corporate assets. Adherence to fleet policy is crucial and it should be part of each company’s overall business strategy. The best managed fleets tend to be those whose drivers adhere to a written fleet policy. Does your corporate culture encourage compliance with fleet policy?

Tags: fleet policies, Compliance

Author: Mike Antich | Posted @ Tuesday, August 5, 2008 8:41 AM | » Comments(1)

Will You Need Fewer Fleet Vehicles in an Era of Hyperconnectivity?

July 31, 2008

In Tuesday’s blog, I likened predicting the future to a billiard game to illustrate that seemingly unrelated events can influence the future direction of the fleet market – events we may never see coming. With this in mind, let’s rack up our hypothetical balls, placing the “fleet ball” in the center of the rack. Let’s whack the cue ball to see what new fleet scenario may unfold from this catalyst. In this new analogy, the cue ball catalyst is a relatively recent concept called hyperconnectivity.

Tags: Web tools, hyperconnectivity

Author: Mike Antich | Posted @ Thursday, July 31, 2008 4:00 PM | » Comments(3)

Is the U.S. Destined to Follow the U.K. Fleet Model?

July 28, 2008

Predicting the future has been likened to a billiard game. The cue ball is the catalyst – representing a seminal event – that upon crashing into a racked set of balls triggers not only the initial reaction, but numerous unanticipated secondary and tertiary reactions. When the cue ball strikes its target, it unleashes unanticipated dynamics of balls deflecting off other careening balls, ultimately changing all of their trajectories. Let’s expand the analogy by making “fleet” one of the balls.

Tags: Taxes, budget deficit

Author: Mike Antich | Posted @ Monday, July 28, 2008 11:21 AM | » Comments(2)

Author Bio

Mike Antich

Editor and Associate Publisher

Mike Antich has been covering the fleet management and vehicle remarketing markets for more than 20 years. During this period, Mike has written or edited more than 4,600 articles on the subjects of fleet management, manufacturer fleet activities, the fleet leasing industry, and vehicle remarketing. He was inducted in the Fleet Hall of Fame in 2010.

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