Posts Tagged ‘optimal cycling’
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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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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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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