A fleet renewal it is much more complex than simply changing the vehicle when it is “old”. Renovation should be a meticulous process that considers dozens of factors.
This is because, many times, the fleet is one of the company's highest cost assets and must be treated with the importance it has. Unlike an individual with the desire to change vehicles for the simple satisfaction of being able to buy a new one, in companies, profit is not synonymous with unjustifiable expenses.
At the same time, when it is necessary, postponing it can entail serious risks.
Knowing how strategic and delicate this process is, this content will address the main questions on the subject. Check out:
When is the time to renew the fleet?
What is the vehicle life cycle
Is defining a fleet renewal strategy necessary?
Lifecycle costs to consider
Fleet renewal checklist
A fleet management system can make all the difference
The best choice for managing your fleet
When is the time to renew the fleet?
Replacing a fleet of vehicles is a significant investment that requires a careful decision-making process. Many companies decide to take advantage of vehicles for as long as possible, this decision may seem economical, but it is not.
Old vehicles consume more fuel, require more frequent maintenance and can let the company and the driver down at any time. The costs of dealing with these side effects are usually greater than replacement.
However, to define what is an old car or not, there is no formula, its condition will depend on how it was used and not just for how long. That's why, the life cycle of the vehicle must be analyzed.
What is the vehicle life cycle
Lifecycle management is about fleet management decisions to get the most value out of your vehicles. It includes everything from the purchase cost of the vehicle, the cost of insurance and maintenance, and the end-of-life vehicle sales price for the company.
Read more: How to prepare a fleet maintenance plan and ensure more safety in operations
The best vehicle in the fleet (and the one that can be maintained) is what it is efficient, safe and holds its value. It may be that its purchase cost is high, but that the economy during its life cycle “pays” for it easily.
The first step in developing a fleet renewal strategy is to understand this lifecycle and the many factors that determine it and, consequently, when it must be replaced. For example:
- Purchase price;
- Cost of insurance;
- Maintenance cost;
- breakage risk and downtime;
- Sale price.
Looking at all the different factors associated with vehicles helps to develop a cycle with a consistent schedule for maintenance and replacement.
Create a routine self-inspection the correct maintenance of vehicles is not only a financial issue, but also one of environmental and legal responsibility.
Is defining a fleet renewal strategy necessary?
Establishing the life cycle for fleets is essential. Otherwise, there is not a sufficiently strategic base to justify the vehicle's exchange or permanence in the fleet. Without defining the strategy, the decision becomes extremely subjective and based on guesswork, which can mean immediate financial losses and bad business in the long term.
By collecting information about the time and money spent on all aspects of using a vehicle, managers can save thousands of dollars. This level of real-time data allows you to replace vehicles at the end of their optimal lifecycle, minimizing the waste that an older vehicle entails.
Being flexible is also necessary.
It may be that the replacement cycle has a fixed time as ideal for the exchange, however, as previously stated, it is relative. The accuracy of this range will depend on how much data you can collect about the vehicle.
Elaborating life cycles for fleet renewal is a really challenging task and the best advice is to use the data in your favor, considering each need and evaluating changes in the short and long term.
Read more: 7 tips for efficient light fleet management planning
Manually recording all of this data and turning it into actionable insights is humanly impossible work, especially for managers, who already have a myriad of assignments in their roles. Therefore, it is best to invest in a form of automate this type of registration and control.
Lifecycle costs to consider
Costs that increase over time:
- Fuel: the cost of fuel is directly linked to the number of kilometers traveled, but the price per liter tends to increase over time.
- Maintenance and repairs: Repairs are generally covered under warranty for three to five years and begin to become more frequent as the vehicle ages.
- Administration: Administrative costs are fixed, but can increase as the vehicle becomes less reliable.
- Accidents: breakdowns and collisions become likely with age.
Read more: Fuel economy: 8 tips to reduce fleet expenses
Costs that decrease over time
- Depreciation: over 60% of the acquisition cost can be lost in depreciation in the first year alone, although the rate decreases over time.
- Safe: insurance costs are slightly higher for new vehicles and fall as the value of insured vehicles decreases.
- Interest and taxes: they are also tied to a vehicle's value and decrease with depreciation.
Fleet renewal checklist
To assist in structuring a renewal strategy, consider putting together a data checklist and using the information obtained from automated tasks to add to the process.
- Time since service date: informs the months and years since the vehicle was purchased and put into use.
- Odometer: informs how many kilometers the vehicle has traveled since it began to be used.
- Estimated resale value: this number decreases over time.
- Annual maintenance cost: these expected maintenance needs must be adjusted for each year the vehicle is used, as they will increase over time.
- Annual fuel consumption: evaluate this metric against previous years to track price inflation.
- Expected total downtime: the vehicle may be spending more downtime than expected.
- Estimated retail price: that price drops quickly after the purchase, and then drops at a slower pace in subsequent years.
A fleet management system can make all the difference
The fleet management system can help with reporting and comparing the cost of extending lifecycles vs. fleet renewal. This data can also help create different scenarios for you to evaluate ways to optimize the use of your current fleet.
Having analyzed all factors in detail, a standard lifecycle for your vehicles may be ideal. However, every effort to discover this is important, as the mistake in defining the best strategy can be very costly.
A fleet management system not only optimizes the cycle strategy, but the lifecycle itself. This happens because he can provide data about the fleet and obtain the:
- Vehicle tracking
- Fuel consumption management
- Real-time breach alert
- Safer data and information management
- fleet policies
- Automation of tasks
- Safety for drivers
- speed per lane
- Video driver behavior
The best choice for managing your fleet
A fleet management system must be able to meet your company's requirements and needs. Before choosing the best technology to implement in your daily life, consider the following questions:
- What information do you want to track? Does this system give you these answers?
- How do you intend to use the collected data?
- What's your budget?
- How many vehicles will be tracked?
- What are your goals with a tracking system?
- What is the desired return on investment (ROI)?
The platform Golfleet has fleet management solutions for managers who want greater control and profitability, enabling the identification of the main points that can be improved.
In addition, we have a solution for every type of fleet management need, take the test and discover the ideal solution for your fleet.
