Did you know that the right fleet vehicle management tool can help you do the same amount of work with a fraction of the inventory? You could potentially save millions by sharing vehicles more effectively and selling unused inventory. We’ll explain in detail below.
Unused Vehicles Cost a Lot
Organizations of every type and size rely on vehicles to perform their jobs. Your fleet may be worth millions, tens of millions, even hundreds of millions of dollars.
But we’re using fleet vehicles less than ever before in today's work climate. Remote work and the ability to connect effectively online have changed the world around us. With that in mind, do you need every vehicle in your fleet? A single passenger vehicle in your fleet, for example, may have cost $25,000 to acquire. And you’re probably spending $4,000-$6,000 per year on related costs that include:
- Administrative costs
- Parking spaces
Again, those costs are incurred for each vehicle. That’s why it's important to understand exactly how many vehicles you actually need in your fleet — they all cost money.
Why Unused Vehicles Can Cost More Than Active Ones
Whether or not you're using a given vehicle, that vehicle is costing you money. And an unused vehicle can often cost more money than a used one. A vehicle that sits gets rusted rotors, flat tires, and dead batteries, all of which will need special attention from your fleet staff. So ideally, you want to make sure that the vehicles you do have are being used. Compounding the problem, many organizations haven’t modified their budgets or their vehicle acquisition process even though the way we use organizational vehicles has changed. In short, you may be carrying too many vehicles, and they're probably costing you too much money. How do you solve that problem?
Solving Your Fleet Vehicle Management Problem
Step one is understanding just how much money is involved. Say you have a fleet of 500 vehicles. That might represent a mid-sized county fleet, for example, or a large commercial organization. Five hundred vehicles at $25,000 per vehicle represent about $12 million in investment for your organization. It also represents roughly $2 million in annual carrying costs for depreciation, maintenance, etc. There's a lot of money involved here. Monitoring your fleet can be as simple as driving through a parking lot and noticing that you have too many unused vehicles. Every passenger vehicle sitting idle in your parking lot costs about $16 a day. If you can, take a look after a snowstorm. Let’s say it’s been a week since it snowed and there's still snow on some of your fleet. You paid $112 — $16 per day times seven days — for each of those vehicles.
Here’s another example. Let’s say you assigned a vehicle to an employee who has five weeks of vacation coming up. That vehicle will sit idle for five weeks and nobody else will use it. That's 10% of your entire year. If you have company holidays, that's additional time. So are weekends. There's another portion of time that nobody else can use the vehicle. Now we have 10% for paid time off and another 28% or so for weekends. Before you even talk about usage, that vehicle is already idle for almost 40% of the time — and you're still paying for it. And if we zoom out further, the costs keep adding up. If your fleet of 500 vehicles has a 50% usage rate, which is not uncommon during these times that we're in, you have up to one million dollars sitting idle in those parking lots every single year. Now, let’s say you get rid of one vehicle for a 10-year span. That adds up to about $50,000 in annual savings, just by eliminating one vehicle from your fleet. It's time to take a look at whether you need all of those vehicles, and what the return on investment could be through a minor right-sizing fleet initiative.
Right-Sizing Your Fleet with Vehicle Sharing
If you're not familiar with the concept of fleet vehicle sharing, it's very straightforward, very simple, and easy to implement. You set up an online reservation system or a self-service kiosk for a pool of shared vehicles. Drivers that need a vehicle walk up, check out a vehicle, and return that vehicle without any other human intervention required. It's basically a self-service motor pool. When vehicles are in a self-service motor pool, they're used more consistently. And the right fleet vehicle management software can even rotate through the fleet so that miles are distributed across the fleet evenly, which can lower maintenance costs. Also, with the right tool, you can really understand usage and automate your vehicle sharing processes. Our fleet management info system, called FleetCommander, is exactly such a system.
Three Components of Vehicle Sharing
To share vehicles effectively, you need to master three different elements. The first function is to schedule and coordinate the use of vehicles amongst your team members. You don’t want someone taking a vehicle out when someone else is scheduled to use it at the same time. But with FleetCommander, the system takes care of that for you. The next component is how you get the keys in the hands of the driver and get the keys back. You can do that by staffing locations that expect you to come to pick up a vehicle, or you can use the system’s fully automated, untended self-service vehicle pick-up and return capabilities to do the same job. The third and final step for vehicle sharing to be successful is to have a system that generates reports, metrics, and dashboards so you can know exactly how many vehicles of each type you need at each location. The type of technology we're talking about here is similar, but very different than a fixed asset management system, for example.
Fleet Vehicle Management Case Studies
A high-quality fleet vehicle management tool can create real results by sharing vehicles more effectively. Let’s look at a couple of examples.
Several years ago, the city of Stamford, Connecticut, contacted the Agile Fleet team with a problem that they perceived to be underutilized vehicles. The fleet manager, who was new to the team, would look out the window every day and see about 80 vehicles in the parking lot. Those vehicles were signed out to specific departments or individuals. After speaking with our team, the fleet manager pulled all those vehicles into a centralized pool. And when they leveraged the vehicle sharing technology, they were able to do the jobs that previously were done with 80 vehicles with only 20 vehicles. In short, they eliminated 60 vehicles from the fleet without adversely impacting any of the drivers. The drivers’ access to a vehicle didn’t change. The cost savings amounted to over $1.6 million over five years for the City of Stamford. And their cost savings are not unique in any way, shape, or form.
Forsyth, North Carolina
The County of Forsyth, North Carolina is another good example. During the 2008-’09 financial crisis in the United States, they had to reduce their fleet budget by $300,000. They called the Agile Fleet team and ended up implementing vehicle sharing technology across four automated motor pool locations. In that first year, they actually exceeded their $300,000 cost savings target. And for every year since 2009, they have not had to include those $4,000 annual costs for the vehicles they eliminated back then.
Michigan Department of Transportation Management & Budget
This fleet vehicle management system also works on a larger scale. The State of Michigan’s Department of Transportation Management and Budget manages fleets of vehicles throughout the state. Their locations range from a northern portion of the state all the way down to Detroit, Flint, and Escanaba. At last count, they had used the system for more than half a million vehicle reservations. Sharing vehicles is far more efficient and cost-effective than assigning a vehicle to every individual or department throughout the state.
Modern Solutions For Today’s Fleet Management Challenges
The way we use vehicles today has changed. It's changed for inspectors, assessors, social service providers, and a wide range of other jobs and roles. Usage rates are down. Across many levels of government, for example, average usage rates are 50% of what they used to be. In a university setting, that number may be even larger. In short, it's time to look at eliminating unused vehicles. How much could you save by maximizing your fleet vehicle management? Contact Agile Fleet now and we’ll provide a five-year cost-savings analysis for your unique fleet.