Archive for the ‘Vehicle purchasing’ Category
How smart is the Smart car?
Tuesday, March 30th, 2010
The naming of the car is pure genius. I mean you would have to be an idiot to not want to own a Smart car. The fact that you would even consider another brand makes you feel foolish. Why would they call a car Smart, if it weren’t indeed smart to own one? Of course, Bill Shakespeare did say something along the lines of “A rose by any other name would smell as sweet.” Maybe the name isn’t all its cracked up to be.
Now, I’m not saying that Smart cars are bad vehicles. All I am trying to say is that there are a lot of vehicles that are smart to own. Furthermore, what is smart for one person to drive may be down right stupid for another person to drive.
The appeal of the Smart car appears to be its gas mileage. One would conclude a vehicle the size of a go-cart would get pretty good gas mileage. However, the average Smart car gets around 35 MPG and there are a lot of other options that get the same mileage. What is great about the other options is that they actually have room for more than two people and a large purse. The entire point I am trying to make is that purchasing a vehicle, especially for a business, is a complex equation. It is something that should be carefully considered.
I’m also not advocating that gas mileage shouldn’t be considered. To the contrary, gas mileage is an important consideration when selecting which vehicle to purchase. By increasing your vehicle’s MPG by just a few gallons, you can save hundreds of dollars a year. Check out our Fuel Mileage Savings Calculator to see just how much money you could be saving. If you are like our customers and have a fleet of vehicles you must keep filled with gas, the savings can add up very quickly.
The trick is to not jump into a vehicle simply because it would seem to have the best gas mileage. Consider your usage of the vehicle, any possible limitations of the vehicles and what sort of image you want your vehicles to project. This process may end up leading you to a Smart car, however, any vehicle that you select this way will be smart.
Tags: automotive leasing, business leasing, commercial fleet, company car, company vehicle, corporate leasing, fleet management, fleet vehicles, mayfair leasing, milwaukee, Smart Car, vehicle acquisition, vehicle leasing
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Avoiding price shopping
Tuesday, March 2nd, 2010
In this economy it is hard to fault price shoppers. We all want to save money wherever we can, however we can. Sometimes simply looking for the best price tag can actually back fire. This is especially true when purchasing a vehicle for your company.
All too often people look for the lowest cost vehicle that will meet their needs and they think they are saving their company money. However, without understanding the total cost of ownership, this might not be true at all. Instead of looking at the one time price tag, the buyer should focus on the operational Cost Per Mile (CPM).
CPM takes into account fuel, maintenance and depreciation when looking at the cost of a vehicle. A vehicle that was inexpensive upfront may not get the best gas mileage, may be expensive to repair and could have a low resale value. If this is the case, the vehicle that you thought was saving you money is actually costing your company more money than an alternative vehicle.
In addition to helping you purchase the best vehicle for your company, a CPM analysis also allows you to know if a vehicle is operating at a higher cost than it should. If one vehicle in your fleet has a higher CPM than the rest then it will be important to find out why the vehicle is costing so much more to operate.
Beyond CPM, you also want to make sure the vehicle that you purchase fully meets your needs. We see a lot of companies that buy their vehicles off of a showroom floor and the vehicle either doesn’t meet the needs of the company or has far more features than is required. In either case, you will be spending money that does not need to be spent. Instead, you should focus on building a vehicle that will perfectly fit your needs.
Although it would seem to make sense to simply purchase the least expensive vehicle, you can see that a lot more should go into the decision. Hopefully this helps you purchase a vehicle that is the best value for your company.
Tags: automotive leasing, business leasing, commercial fleet, company vehicle, fleet management, fleet vehicles, mayfair leasing, milwaukee, vehicle acquisition, vehicle leasing
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How commercial leases differ from consumer leases
Monday, February 15th, 2010
Of all the commercial vehicles in the United States, about 51% of them are leased. However, when I walk into a company that falls into the other 49% category, it is usually because of misinformation that they do not lease. Its not anyone’s fault that the company was given the wrong information, it is that retail car salesmen rarely understand commercial leases.
When we talk about leases in a commercial application we are generally referring to open-end leases. Open-end leases mirror ownership in that there are no mileage caps and the company shares in the gain or loss from the sale of the vehicle. However, instead of being a capital expenditure, the vehicle becomes a monthly expense with a planned cycling point. Also, planning allows time to order vehicles instead of buying them off the lot so they are tailored to fit your exact demands.
What happens in an open-end lease is that an anticipated market value at the time of cycling is determined. This value is based on expected use and wear and tear of the vehicle. The monthly payment is then determined to amortize the cost of the vehicle over the length of the lease. From there the company uses the vehicle however they see fit. Once the vehicle is cycled with a new vehicle, the old vehicle is marketed for the highest possible amount. Assuming market predictions were correct, there is no additional expense. However, should the vehicle sell for less then expected, that difference will have to be made up but at the same time, if the vehicle sells for more than expected, the business profits.
What is also nice about open-end leases is that they do not lock a business into stringent constraints. If the case is made to replace the vehicle before the original lease term, it can easily be replaced with a new vehicle. This saves the company money by maximizing the market value and minimizing maintenance costs.
Hopefully this helps illustrate the differences between a commercial lease and consumer leases. Generally, open-end leases are the best way to accommodate commercial fleet applications. Should you have any other leasing questions, please feel free to email me at: dewald@ewaldauto.com
Tags: corporate leasing, fleet management, lease terms, open lease, optimal cycling
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My beef with companies that buy their vehicles
Tuesday, February 9th, 2010
Spoiler alert! I am the president of a leasing company and, although this may come as a surprise to you, I recommend that all companies lease their vehicles as apposed to buy them. There, my bias is out in the open. I still want to touch on this subject though because it is something we see in a lot of companies. I’ll provide you my biased, albeit very smart, opinion and then you can make a better-informed decision from there.
The first problem that I see with purchasing vehicles is the fact that they are generally left in service too long and incur ridiculously high repair expenses. They are left in service too long because they are treated as capital expenditures. In most companies this requires a lengthy approval process before those funds are available. In the mean time, the old vehicle is depreciating and racking up maintenance costs. Leasing on the other hand forces you to make a decision as the lease term nears, yet still provides you with flexability. This is a perfect example of how leasing helps you maximize the optimal cycling point (http://www.mayfairleasing.com/blog/?p=23).
When companies buy a vehicle they look at the price of the vehicle and not the overall cost. Sure, you may be able to save a few bucks upfront buy purchasing a lower- priced model but are you considering how well it holds its value or will cost to operate? When you lease a vehicle you are comparing the total cost of ownership, not just the initial sticker price.
One of my favorite things about leasing is that it is easy. There are no heavy upfront taxes, intense record keeping or wasted capital. You simply get a pristine vehicle that will be properly maintained and replace at just the right moment. As an executive, not even I want to spend a lot of time thinking about company cars. Leasing allows for a simple, cost effective plan.
Alright, I have ranted and raved enough. Of course this is an important subject for me but I honestly would not bring it up unless I truly believed it would help companies save money and time. Hopefully next time your company is considering buying a vehicle you will at least be able to get them to consider an alternative. Thanks for the ear!
Tags: automotive leasing, business leasing, commercial fleet, fleet vehicles, mayfair leasing, milwaukee, vehicle acquisition, vehicle leasing
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How to select the correct vehicle for your company
Friday, January 8th, 2010
How did you buy your last personal car? Did you buy it off the lot or have it built just for you? What made you decide on the model of vehicle that you selected? When you are looking to purchase a vehicle for your business, think about all of those things and then throw them out the window!
The fact of the matter is that buying a car for your company should be night and day from how you personally buy vehicles. Nine times out of ten when we buy a car for ourselves we rely heavily on emotion, however, if you do this for your business you will end up spending money that you need not. Instead, focus your decision around four key areas: fuel economy, safety, budget and image.
Fuel economy: When gas prices sky rocket this is usually the first thing that we think about. However, even with gas prices being relatively low, you still need to think about maximizing your fuel economy. Even if your vehicles require the carrying of a lot of equipment, you may be able to find a vehicle with a smaller engine or cargo area that will still satisfy your needs. We call this “right sizing” with our customers and it means finding a vehicle with the maximum fuel economy that will still meet your needs.
Safety: Obviously we want our employees to remain safe but what steps are you taking to ensuring this on the road? Is the vehicle you purchase ensuring their safety? For us, being in the Midwest, this often means finding a vehicle that can handle the brutal winter roads. This could also mean purchasing some extra safety features that may not come on the showroom floor model.
Budget: We often hear from clients that they want to buy the cheapest car they can find to meet their needs. This is all well and good but what will the upkeep, insurance and fuel costs be with that cheap vehicle? Often times people will spend more down the road (pun intended!) because they tried to save money upfront. Also, few fleet managers consider what the resale value of the vehicle they buy will be but this is direct money in or not in your hands! The key is finding a vehicle that will be the best value in the long run, not the lowest sticker price.
Image: This is where things get fun. What do you want your vehicles to say about your company when your employees pull in to meet a client? Do you want them to say that you are environmentally conscious, a high-end service provider or blue-collar worker? Every vehicle tells a story so it is important to know what you want that story to be and then figure out what vehicle will tell that story. Whether it is what model of vehicle your employees drive or a high-end graphics package, the look of your vehicle can be very important.
So, forget everything that you know about buying a vehicle and focus on these four criteria. When you do you will find a vehicle that is the best value for you today and down the road.
Tags: automotive leasing, business leasing, commercial fleet, fleet management, fleet vehicles, mayfair leasing, milwaukee, Wisconsin
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