Posts Tagged ‘company vehicle’
Don’t let your vehicles sit idle
Tuesday, April 27th, 2010
When you run a company that solves solutions for people, it is very difficult to watch people around you ignore the very problem that you can fix. Just this week I was sitting in my office and noticing all the companies around us that have vehicles just sitting on their lot. This is something that we talk to companies about time and time again but as I scan the handful of businesses just in our neighborhood, I see that the message is not getting out there.
It’s important to point out that vehicles are not like real estate, they don’t retain any sort of value. As a matter of fact, no matter how great you take care of a vehicle, it is going to depreciate. So, everyday that a vehicle sits on a lot, it is costing your company money. I will say that again: everyday that a vehicle sits on your lot, it is costing you money.
Think about that for a second. Would you pay rent on an office building you weren’t using? Would you pay an employee that wasn’t working? Would you pay a phone bill for a line you weren’t using? Unless there are some extenuating circumstances, the answer will almost always be “NO” but, for whatever reason, companies are willing to let money slide through there fingers everyday by letting unused vehicles sit on their lot.
Most of the time that we see idle vehicles, executives will tell us that they plan to keep the vehicle incase they can rehire, are stuck in a lease or simply don’t know how to handle the situation. Regardless of the reasoning, it is important to bring in a professional that understands proper fleet management. This may just seem like a plug for our services but really only a professional will be able to properly asses market value and create a plan to right-size your fleet.
I just request that if you do have vehicles that are not being used on your lot, you at least take some action. Calculate what the empty vehicle is costing you to sit there and then figure out if it makes sense for your company to remarket the vehicle. If you need help with doing these calculations, just let us know!
Tags: automotive leasing, business leasing, commercial fleet, company car, company vehicle, corporate leasing, fleet management, fleet manager, fleet vehicles, mayfair leasing, milwaukee, vehicle leasing, Wisconsin
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Stability in an uncertain economy
Tuesday, April 20th, 2010
After so many of us struggled to simply survive over the past year or so, it seems too good to be true that the worst is over. What I hear from fellow executives all the time is that they fear we will once again slide into a recession and all the gains we made will be for not. It is tough to make business decisions when the future can seem so uncertain.
Now, I’m no economist. I have no idea whether the gains we are seeing will continue or whether we’ll see another slump. What I do know though is that proper business planning will help prevent you from getting caught in an undesirable situation. I’ll use my business as an example.
As the economy starts to recover, we are seeing a need for additional staff to help us with some of our administrative duties. Normally we would assume that the growth we are seeing will continue and go ahead and hire a full time employee. At first they might not have a ton of work but eventually we assume they will get there. However, since we are not sure what the economy will do, we have instead decided to hire a temporary, part-time worker. This solution allows us to clear off the administrative tasks we need off our plate, without making a long-term commitment that may have to be broken down the line.
We also see this with our clients. A lot of companies we work with are starting to see growth and need new vehicles but are hesitant to get into a long-term lease. What we show them is that they can use our rental center to get the vehicles they need for anywhere from one day to six months. This way they have the flexibility to grow their business as they desire, while maintaining a proper sized fleet. Then, once they know the vehicles are needed long-term, they can make the switch to a lease.
Flexible options like these are all around us. What is important is that you do not allow fear of the uncertain to dictate the growth of your business. Be creative and look for ways that you can grow your business without unneeded responsibility. You can’t control what the future will bring, only how you will be prepared to handle it.
Tags: automotive leasing, business leasing, commercial fleet, company vehicle, corporate leasing, fleet management, fleet manager, fleet vehicles, mayfair leasing, vehicle leasing
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The magic of numbers
Tuesday, April 6th, 2010
There’s a certain magic in numbers. We grow up learning how to add, subtract and even multiply them but this is not the purpose of numbers. You see, numbers do more than show us how much of something that we have. The true strength in numbers is there ability to tell you what to do.
We see this in our business all the time. A company will take the first step to good fleet management and they will track how much money they spend on their vehicles. That number then gets put into a spreadsheet and sits there. But what does that number tell you? All it shows you is what you spent overall. It doesn’t show you what you spent per mile or what you should be spending. It is simply a static number, not getting you any closer to know what you should do.
Let’s compare this to a family’s cell phone bill. Let’s pretend your significant other has been paying the bills but you have decided to take them over for whatever reason. You look at the bill and see that your family’s cell phone plan costs you $250 a month. Now, is this good or bad? Is this money going to minutes, text messaging or internet usage? Who in the family is using the most minutes? All of a sudden you can take a static number and break it down to it’s components.
Let me take this comparison to the next level. I stated earlier that good fleet management starts with collecting all of the data. What would happen if your cell phone company didn’t tell you where your money was going? Can you imagine if cell phone bills didn’t break out where each of those dollars were spent? I for one would be upset that I could not make proper cost-saving decisions. However, cell phone companies provide this information on almost every bill so that you know just how your money is being spent.
So let’s circle back around to fleet management. The first thing a company needs to do is make sure they have the technology in place to properly document their vehicle expenditures. Without it, you don’t get any magical numbers. Once this is in place, you need to look at the numbers for more than just their bottom dollar. By examining how that money is being spent, you will be able to make better decisions on how to properly manage your fleet. The best way to do this is to break the entire number down into a cost per mile. From there, your numbers will start to look like magic!
Tags: automotive leasing, business leasing, commercial fleet, company car, company vehicle, corporate leasing, fleet management, fleet manager, fleet vehicles, mayfair leasing, optimal cycling, vehicle acquisition, vehicle leasing
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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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Making smart decisions in tough times
Monday, March 22nd, 2010
This recession has been hard on a lot of people. Over the past two years companies have had to make tough decisions to try to stay in business. I know that there is no worse feeling than having to let employees go or cut back on what you offer your employees. However, simply because times are tough, does not mean that it is okay to stick your head in the sand.
Now, I’m not saying this is a wide spread phenomenon so if this doesn’t apply to you, I apologize. However, I am noticing more and more companies that are having a tough time facing some of the issues in their organization. In my industry we see a lot of companies that simply are not in a position to talk about leasing new vehicles. Fair enough, if you don’t have drivers to fill the seats, you don’t need new vehicles, understood.
Where I am seeing the disconnect is the companies that have had to let people go. As I said before, I know there is just about nothing worse than having to let people go. I further understand that you have every intention on hiring back the employees as soon as the economy recovers. However, we are seeing a fair number of companies that have had to let employees got but they hang-on to their company vehicles.
The useful company vehicle has now become a piece of iron that is sucking your company of needed cash. Although you might not be seeing this directly, market value and depreciation are very real costs to consider in owning a vehicle. By keeping vehicles on your lot that you are not using, you are preventing your company from collecting on the capital from their sale and costing your company money in depreciation.
Instead of ignoring the vehicles that you are no longer using, it is important to ensure you right-size your fleet. This means that you remarket any vehicles that you are currently not using and then grow your fleet when the time comes. Although this may not seem like a major issue for your company, in tough times, every dollar counts.
So please, set some time aside this week to review your fleet. Is it the right size for your company? Should it be bigger or smaller? What are the cost-saving opportunities? Answering these few questions, on a regular basis, will prevent you from costing your company any unneeded money. Hopefully these smart decisions help you through these tough times.
Tags: automotive leasing, business leasing, commercial fleet, company vehicle, corporate leasing, economy, fleet management, fleet vehicles, mayfair leasing, vehicle leasing
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Spring is in the air
Tuesday, March 16th, 2010
I for one love this time of year. As the snow starts to melt away and things start to bloom I cannot help but feel invigorated. It is always great to see all the smiling faces walking around town on the first warm day of the year. As winter ends, so too does our hibernation.
It is not too surprising then that spring is a great time to look into cycling your fleet vehicles. As people come out from their winter long slumber they will be looking at options to upgrade their fleet. Spring is the perfect opportunity to remarket your vehicle to ensure you get the most money from your investment.
Also, if you acquire a new vehicle now, the lease term expiration will align with cycling during the spring months, when car values are at their highest. We’ve spoken about optimal cycling before but if you are not familiar with it, check out this link: http://www.mayfairleasing.com/blog/?p=23. What this means is that you will automatically cycle your vehicle when the market value is at its highest.
So what happens if you need to lease a vehicle in the winter months? Don’t worry; you are not out of luck. We offer odd term leases to our clients so that the vehicle will be cycled during optimal buying time, instead of the dead winter months. If you did not do this then look into your options of ending your lease early or extending it a few months.
For those of you that purchased your fleet vehicles, now is the perfect time to consider cycling them, if it makes sense. We see a lot of companies that have unused vehicles sitting on their lots due to the downturn in the economy. Instead of having that depreciating asset sitting on your lot, make use of this spring buying season to turn that iron into cash. As the economy starts to turn around you will have many options to maintain a right-sized fleet. (More to come on that next week!)
Spring is not only a beautiful time for getting out and enjoying the weather, it is also a beautiful time to look at your fleet vehicles. Consider if it makes sense to cycle your vehicles and if it does, take advantage of this seller’s market!
Tags: automotive leasing, business leasing, commercial fleet, company vehicle, fleet management, fleet vehicles, mayfair leasing, open lease, optimal cycling, 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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Holding onto your company vehicles to save money
Tuesday, February 2nd, 2010
In this tough economy we have heard a lot of companies state that they plan to hang onto their company vehicles for longer than they initially planned. Although this may seem like a great way to save money, the opposite usually ends up being true.
We talked last week about fleet management and what is required to ensure you keep your costs low (http://www.mayfairleasing.com/blog/?p=34). The week before that we talked about how optimal cycling can ensure you maximize your fleet dollars (http://www.mayfairleasing.com/blog/?p=23). This week we want to combine these topics to examine the idea of hanging onto vehicles for too long. Lets look at these two categories:
Maintenance: I want to talk about this because this should be the most obvious to a company. Although value of a car continually drops, it is the rising costs of maintenance that is easier to see and feel. We always recommend carefully tracking vehicle maintenance expenses, but if you do not do this, we at least recommend that you periodically review the service records of the vehicles and benchmark your expenses to national averages.
What you are most likely to see is a sharp increase in upkeep costs at some point in the vehicle’s life. When this happens depends on miles and condition. However, when it does happen your company is no longer saving money but rather loosing money on a car that should be replaced. If you fall into this category than you are dumping more money into a vehicle than it is worth, not a good idea.
Fuel: I want to talk about fuel next because again, it hits us in the pocket book. Although 2009 was a decent year for gas prices, it is predicted that we will experience future increases. As gas prices go up, it will be important to have the most fuel-efficient model vehicle that will meet your demands. The miles per gallon will differ for each company but most certainly newer model vehicles will have better fuel efficiency than their predecessors.
I could continue on with market value and depreciation but I have talked about these before. What I wanted to do was point out the two ways that keeping a vehicle for another year can actually cost money instead of save money. Just something to think about….
Tags: automotive leasing, business leasing, commercial fleet, company vehicle, fleet management, fleet vehicles, mayfair leasing, milwaukee, Wisconsin
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How long should we keep our company vehicles?
Tuesday, January 19th, 2010
Everyday your employees use them to get to where they need to go. They hop in and turn the key with little thought as to what the vehicle is costing your company. However, as a business owner or fleet manager, you know that every mile that your employees put on is an added expense for you. So how do you keep the cost of company vehicles to a minimum?
The answer is extremely simple: optimal cycling. Although these words do not mean anything to you now, they should shortly. Often companies buy a vehicle and run it into the ground because they feel it is the most economic thing to do. A well structured lease program will actually guard against this and still provide you with all of the flexibility of ownership, plus you will be able to minimize the money you invest in your vehicle fleet, but more on that another day.
So, what is optimal cycling? Simply put it is figuring out the point in a vehicle’s life where maintenance costs are still low and your depreciated value and the market value of the vehicle are equal.
Let me back up for a second. When you drive a vehicle off of the lot you immediately loose market value, which is no surprise. From there market value will continue to plateau and drop over the life of the vehicle. Depreciation is similar but the loss in value happens gradually over time. However, maintenance costs start at relatively zero and then spike and rise over time. Below is a great slide that illustrates how these three values decrease or increase over time.
The idea behind optimal cycling is to find the exact point in a vehicle’s lifespan where all three values meet. This is the point in which keeping the vehicle any longer will require you to spend more money on maintenance then the vehicle is worth. Although you may think you are saving your company money by not buying a new vehicle, you are actually losing money that could come from the sale of the old vehicle and lease of a new vehicle that does not have the high cost of ownership.
To determine this point in a vehicle’s lifespan requires careful documentation of the vehicle’s history, as well as carefully track your maintenance expenses. The two key factors to determining a vehicle’s value are mileage and condition. By monitoring these on a consistent basis you are able to pinpoint, and plan for, the exact moment when you should get rid of the old car and bring in the new car. And although this may sound counterintuitive, sometimes a new vehicle is the best way for your company to save money.
Tags: automotive leasing, business leasing, commercial fleet, company car, company vehicle, fleet management, fleet manager, fleet vehicles, mayfair leasing, milwaukee, Wisconsin
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