A global pandemic is resulting in thousands of dollars per day worth of vehicles sitting idle in parking lots yet many financial officers, business analysts and fleet managers haven’t started making substantive adjustments to their operations. The pandemic won’t end tomorrow. When are you going to make the changes to save, and even enhance, your fleet? The time is now. The good news is that it may not be as difficult as you may think.
Understanding the bottom-line costs of idle vehicles during the COVID-19 pandemic is critical to saving, and perhaps even enhancing, your fleet and maybe even your enterprise. Nearly every segment of the fleet market is experiencing low utilization rates. Idle vehicles are costing organizations hundreds, thousands, or even hundreds of thousands of dollars per month. Yet, many fleets have not started making changes to the quantity, composition, or use of the fleet. Why? Nearly all of those polled suggested that the uncertainty of when and how the pandemic will end was the reason for inaction. While no one knows for certain when we’ll return to normal, it is certain that every additional day that we go without changes to fleet operations is an additional day of an opportunity missed to save money. Step one for planning changes is understanding the financial impact of inaction.
The best way to help financial officers and others understand how important it is to make fleet changes is to do some simple math. A big picture estimate of the cost of idle vehicles can be calculated by:
# of Idle Vehicles
X daily carrying cost of a vehicle
X # of days until anticipated return-to-normal
= Total cost of idle vehicles
Do the math. The costs may alarm you. A fleet of only 100 vehicles with an on-going utilization rate at 5% would have a total pandemic impact of $630,907 if we don’t return to normal until November of 2021. That’s from just a fleet of 100 vehicles. How big is your fleet?
The best way to drive down costs is to reduce vehicle count by selling vehicles that are not being used and perhaps delaying any lease renewals. Eliminating assigned (department or individual) vehicles that aren’t being used is an obvious answer if the vehicles are significantly under-utilized. But how will a drivers’ needs be met if department-assigned or individual-assigned vehicles aren’t there? Some strategies include a combination of outside rentals, reimbursing for personal vehicle use, and creating a self-service, no-attendant-required shared vehicle fleet, aka automated motor pool. An automated motor pool is an easy way to provide vehicles to your drivers while maximizing the use of your vehicles.
One way to think of it is: For every driver that is working from home and no longer driving an assigned vehicle, there is a 1:1 ratio of drivers to unused vehicles. In a motor pool setting, for every eight drivers (for example), there is an 8:1 ratio of drivers to unused vehicles. That’s an 8-fold savings to your bottom-line.
What happens if the pandemic ends? One might wonder how will I afford to acquire new vehicles to replace the ones I sold or didn’t lease? No one knows the future. But the likelihood of an immediate return to business as usual at 100% of pre-COVID rates is not likely. There is a strong likelihood that the return to work will be predictable with plenty of lead time, and we likely won’t return to working exactly like we did prior to the pandemic. In October of 2020, for example, Amazon announced that they will defer until at least June of 2021 before they return employees back to work. So, if a fleet reduction of 10 – 20% is made now:
- Proceeds from vehicle remarking or disposal may well cover the costs of acquiring the complement of vehicles that may once again be needed in the future
- All indications are that the lead time for acquisition or leasing will be sufficient enough to identify a viable, financial solution for vehicle replacement in the future if vehicle replacement is needed at all.
There is a strong likelihood in many fleet environments that long-term needs of the fleet may drop by at least 10% due to the realization that Skype and Teams can now replace our “old way of driving to get things done.” If there is indeed a need to acquire vehicles in the future, automated motor pools are an affordable, viable solution in the interim.
People who have been reluctant to share vehicles in the past should take another look at how far motor pool and vehicle sharing technology has advanced. Systems such as Agile Fleet’s FleetCommander technology can automate every facet of sharing vehicles and can even be fully supported from remote, work-from-home staff… even handing out and collecting keys! Reservations can be fully automated online. COVID-specific safety capabilities such as collecting data for contact tracing, communicating cleaning procedures, and even adding buffers between reservations to reduce the risk of spreading the virus are all incorporated in the most modern sharing systems. Utilization reporting and billing functions are automated. And, since there is no attendant required for pick up and drop off of keys, the entire process is not only secure, but safe.
If you’re wondering how much your fleet could save, our experts at Agile Fleet are here to help you figure it out. We offer a free Fleet Savings Assessment to help quantify what you could achieve by right-sizing your fleet and sharing vehicles. Request one here.
If we can help you during this time, or any time, feel free to reach out to me at email@example.com or via our website at http://www.agilefleet.com. Above all, stay well my friends! We will all get through this together.