Posts Tagged ‘vehicle acquisition’
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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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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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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