Fleet Management

March 2010:
UA Not Just a Toyota Problem
Many makes and models blamed for unintended acceleration

The issue of unintended acceleration is reaching witch-hunt status as politicians and consumer advocates search for someone to blame for the deaths and injuries attributed to Toyota vehicles. Congress paraded Toyota executives past the cameras and NHTSA is under fire for not reacting aggressively when reports of Toyota’s UA problems first began to trickle in years ago. The public’s perception is that everyone involved is negligent, incompetent or both.

Maybe, but it is important to note that complaints of unintended acceleration are more common than you might think and have in the past involved many different makes and models. UA is not a new phenomenon and research has linked the problem to several disparate causes, not the least of which is driver error.

None of this is meant to diminish the harrowing experience and tragic consequences of unintended acceleration. But amid the media frenzy over Toyota’s current recalls it is worth noting the fact that other vehicles have worse reported histories of UA, depending on how you analyze the data.

In an article in The Truth About Cars, writer Paul Niedermeyer points out that “numbers and statistics are largely useless without context.”  He says it is important to factor in the total number of vehicles produced before judging whether Toyota’s hundreds of UA incidents constitute a monumental failure in engineering or something less spectacular . . .
                                       (excerpts from the March 2010 issue)

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February 2010:
EV Revolution: Little Help to Fleets
Current and future crops of electric vehicles still lack size, range

Last spring we reported that economic uncertainty was forcing many fleet managers to scale down or mothball their AFV programs. Now, nearly a year later, fleets continue to struggle with two realities: electric vehicles, both hybrid and pure, are far too costly compared to conventional gas-powered vehicles; and hybrids remain ill-suited for most fleet purposes.

While the electric vehicle revolution is certainly gaining momentum, it is driven in large part by altruism, not economics. Most hybrids today are being purchased by well-heeled consumers, not fleets. Consumers tend to ignore the unfavorable economics of hybrid ownership in the name of cleaner air and reduced petroleum consumption. Their motives are commendable but expensive.

The problem facing most fleets is that their budgets have been cut to the bone. Even in the rare instance where a fleet can function with today’s selection of comparatively small and underpowered gas-electric models, budget limitations prevent a full scale switch to hybrids. The traditional gas-powered vehicle simply presents a better business case.

 Fleet managers find themselves stuck between two constituencies, those pushing for environmental accountability and those  pushing to reduce departmental costs. These goals are incompatible in the EV marketplace as it stands today . . .       (excerpts from the February 2010 issue)

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January 2010:
Implementing a Policy to Limit Cellphone Use While Driving
National Safety Council offers free online policy development tools

Hardly a day goes by without a new report detailing the risks of driving while operating a cell phone. In response, many state and local laws have already been enacted to limit some or all types of cellphone use while driving, and federal legislation is likely soon.

Most fleet managers are now keenly aware of the safety risks and liability exposure that come with allowing employees to operate cellphones and other electronic devices while driving a company-provided vehicle. And most managers recognize that the same risks and exposures apply when employees drive their own vehicles while conducting company business.

In response to this awareness, more and more fleets are implementing safety policies to limit or ban cellphone use while driving. Some fleets have extended their policy to include all handheld electronic devices. But implementing such policies isn’t always easy. Management may resist because they don’t know anything about driver distraction, or they worry that cellphone restrictions will reduce productivity. Drivers typically resist, too, because they instinctively feel something is being taken away. Overcoming such resistance is a big challenge for every fleet.. . .     (excerpts from the January 2010 issue)

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December 2009:
Fleet Accident Costs and Prevention
Proactive accident prevention programs yield substantial benefits

In today’s economic climate, where existing expenses are scrutinized to the bone and future expenditures are being delayed, pitching a driver safety program to senior management poses a challenge. Key to any proposal is a true understanding of the total cost that on-the-job vehicle accidents impose on your organization.

The Network of Employers for Traffic Safety, a private-public partnership involving federal safety agencies and private corporations, says motor vehicle crashes cost employers $60 billion annually in medical care, legal expenses, property damage, and lost productivity. They drive up the cost of benefits such as workers' compensation, Social Security, and private health and disability insurance. In addition, they increase the company overhead involved in administering these programs.

NETS presents a convincing argument that the benefits of a comprehensive driver safety and accident program far outweigh the costs of implementing such a program. In fact, when taking into account all the direct and indirect costs associated with on-the-job vehicle accidents, NETS says the expected return on investment in a driver safety program is about three to one. This means that for every dollar spent on safety training, you can expect to save three dollars in accident-related costs. Additionally, employee injuries (and deaths) may be substantially reduced when a well-thought safety program is in place, a benefit that has no price. . . .       (excerpts from the December 2009 issue)

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November 2009:
Fleet Vehicle Residual Value and Resale Practices
Once again, fleet residual values jump over past 12 months

A recent survey of U.S. and Canadian fleet managers shows that even though fleets are pushing the limits of time and mileage before retiring vehicles, a strong used car market is driving up residual values across the board. This scenario has been in play for nearly three years, with fleet residuals climbing despite the auto industry’s up-and-down turmoil during the same period.

For most of 2009 the used vehicle market had been trending higher, and demand seems strong across all vehicle types, even the truck and SUV segments which haven’t sold so well on the new-vehicle side of the business. Demand for used vehicles remains strong because many consumers simply cannot afford a new vehicle. Additionally, for many months this year consumers found a wider selection of vehicles on the used market because cash-strapped manufacturers had cut new vehicle production to the bone. These factors work to the benefit of fleets.

Surveyed business fleets say their median residual value has jumped nearly 9% in the past 12 months. Government fleets are doing well, too, with the median residual value climbing 7.2% compared to a year ago. Private utility fleets face a particularly specialized resale market, yet surveyed utility managers say their median residuals have soared 10.7% since late last year.

The median service life among corporate/business fleets
stands at . . .       (excerpts from the November 2009 issue)

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October 2009:
2009 Fleet Manager Salary Survey
Weak economy puts downward pressure on fleet manager pay

U.S. fleet managers are currently earning an average of $66,781 per year, according to our latest annual fleet salary survey. This amount is down 4.9% from one year ago and essentially cancels out last year’s substantial jump in fleet manager salaries (see our October 2008 issue).

A number of factors are placing downward pressure on fleet pay. Most significantly, a sluggish economic recovery has forced many corporations to slash every conceivable expense category, from the number of eligible drivers to the number of fleet miles driven. On the government side of fleet, every state and local entity is reeling from lower property tax, sales tax and business tax revenues, the result being across-the-board departmental budget cuts, including fleet.

Fleet department budget cuts are extending beyond the typical  steps of reducing miles driven and acquiring less expensive, downsized replacement vehicles. Many fleet managers have been forced to reduce administrative staff, and fleets with in-house repair garages are squeezing their technician workforce by cutting hourly wages, limiting overtime and trying to make do with fewer workers (see our August 2009 issue).

Even fleet managers themselves are in some cases being asked to take a cut in pay, and expectations of automatic year-over-year merit and cost-of-living pay increases have all but evaporated. The result is that today’s fleet managers are earning, on average, a meager 1.7% more than they were paid three years ago . . .
 (excerpts from the October 2009 issue)

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September 2009:
U.S. Biofuel Boom Running on Empty
Wall Street Journal examines the biofuel industry’s decline

The biofuels revolution that promised to reduce America's dependence on foreign oil is fizzling out.

Two-thirds of U.S. biodiesel production capacity now sits unused, reports the National Biodiesel Board.  Biodiesel, a crucial part of government efforts to develop alternative fuels for trucks and factories, has been hit hard by the recession and falling oil prices.

The global credit crisis, a glut of capacity, lower oil prices and delayed government rules changes on fuel mixes are threatening the viability of two of the three main biofuel sectors— biodiesel and next-generation fuels derived from feedstocks other than food. Ethanol, the largest biofuel sector, is also in financial trouble, although longstanding government support will likely protect it . . .
 (excerpts from the September 2009 issue)

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August 2009:
Fleet Mechanic Pay Falls 1.6%, Workload Jumps 6.9%
Many fleets stretching preventive maintenance intervals

 The nation’s anemic economy has forced many fleets to cut back on vehicle maintenance. They are extending their preventive maintenance service intervals and skipping some factory-recommended service procedures entirely.

Among government and utility fleets, where the vast majority of vehicle service and repair takes place in-house, shop managers have reduced the number of full-time mechanics and bumped up the average workload for those mechanics who remain on the job.

Over the past 12 months the average fleet with in-house repair capability has reduced its technician workforce by nearly 20%. This has resulted in a jump in vehicle-to-mechanic ratios and average technician workload. According to our latest shop survey, the typical in-house mechanic has seen his workload increase 6.9% in the past year, yet mechanic wages have fallen 1.6% during the same 12-month survey period.

Deferring certain maintenance procedures, or skipping them altogether, is always a risky path. Fleet administrators surveyed for this report say they are managing to reduce overall service costs without compromising vehicle dependability or resale value. They are doing so primarily by extending service intervals to match factory-published specifications which generally have grown longer, in terms of months and miles driven, compared to just a few years ago.

Currently the interval between PM work averages . . .
 (excerpts from the August 2009 issue)

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July 2009:
Roadside Survey: Alcohol Levels Decline,
Weekend Drug Use 16%

A new roadside survey by the National Highway Traffic Safety Administration confirms a continuing decline in the percentage of legally intoxicated drivers.

 In 1973, 7.5% of drivers had a blood alcohol concentration (BAC) of .08 or higher. In the latest survey, that figure had fallen to 2.2%. A BAC of .08 or higher is now above the legal limit in all 50 states and the District of Columbia.

 Previous roadside surveys conducted by NHTSA have measured only alcohol. But the latest survey used new screening techniques that detected other substances as well and in the future may help show the extent of drug impairment among drivers.

 The survey found 16.3% of nighttime weekend drivers were drug positive. The survey focused on weekend nighttime drivers and found that the drugs used most commonly by drivers were: marijuana (8.6%); cocaine (3.9%); and over-the-counter and prescription drugs (3.9%).

 “This troubling data shows us, for the first time, the scope of drugged driving in America, and reinforces the need to reduce drug abuse,” said Gil Kerlikowske, Director of the Office of National Drug Control Policy. “Drugged driving, like drunk driving, is a matter of public safety and health.”

 Among the findings of the latest roadside survey are these: . . .
 (excerpts from the July 2009 issue)

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June 2009:
Fleets Abandon GM and Chrysler
MY2010 fleet selector lists heavy on Ford, imports

Despite assurances from GM and Chrysler’s respective fleet operations, U.S. fleet managers are widely skeptical about the immediate future of both companies. The marketing message from Detroit is that the automakers will march on in a “business as usual” fashion during restructuring, but there is nothing continuous nor usual about what has occurred in Detroit over the past few months.

Most fleets don’t care to gamble that Detroit might bounce back, and many fleet managers believe it is unrealistic to expect GM or Chrysler to turn their businesses around anytime soon. The 2010 model year is in complete disarray, and it is widely believed MY2011 could be a bust, too. Chrysler has no idea what MY2011 will look like under Fiat’s management, and GM is focused on slashing its lineup even more in a struggle to reinvent itself as the “new GM.” Both companies may collapse a second time, in which case liquidation would be the likely outcome.     

At a time when fleets are working to finalize their 2010 vehicle selector lists, the upheaval at GM and Chrysler has led many fleet managers to drop these automakers altogether. Even among fleets where GM or Chrysler had been the primary vehicle source for years or even decades, managers are relegating those automakers to secondary status. Reasons for the change include concerns that the companies won’t survive, doubts about product availability, and fears that residual values will be hopelessly depressed across the GM and Chrysler model lineups.. . .
 (excerpts from the June 2009 issue)

May 2009:
DOE Summer Fuel Price Projections Reflect Weak Economy
Gas prices predicted to average $2.23 during the summer months

DOE’s Energy Information Administration predicts relatively stable gas prices and a continuing decrease in diesel prices throughout the summer months, even though summertime is usually associated with increased fuel consumption and moderately higher prices. Here’s a summary of the DOE’s analysis.

Regular-grade gasoline prices, which averaged $3.26 per gallon in 2008, are projected to average $2.17 per gallon in 2009 and $2.42 per gallon in 2010. On-highway diesel fuel retail prices are projected to average $2.30 per gallon in 2009 and $2.69 in 2010.

The expected continuing decline in diesel fuel consumption in the United States this year as well as the growing weakness in distillate fuel usage outside the United States are projected to result in lower refining margins for distillate throughout the forecast period. Because of the global weakness in industrial output and the onset of a recovery in motor gasoline consumption, domestic diesel prices could fall below gasoline prices this summer.

Summer Transportation Fuels Outlook
Regular-grade gasoline retail prices, which averaged $3.81 per gallon last summer, are projected to average $2.23 per gallon during the current driving season. The monthly average gasoline price is expected to peak at about $2.30 per gallon late this summer. Diesel fuel prices, which averaged $4.37 per gallon last summer, are projected to average $2.27 this summer. However, because short-term prices can be quite volatile, weekly prices will be higher (or lower) than the monthly average . . .
 (excerpts from the May 2009 issue)

April 2009:
Non-Fuel Vehicle Operating Costs Rise 3.4% in Latest
12-Month Survey Period
Annual survey shows moderate increase in operating costs

Non-fuel vehicle operating costs increased 3.41% during the past 12 months and currently average 4.55 cents per mile, up from 4.40 cents per mile one year ago when averaged across all vehicles represented in our latest fleet analysis. Operating costs vary significantly according to vehicle size, as illustrated on the next page.

Fleet managers are reporting higher non-fuel vehicle operating costs across the board, but the rate of increase has moderated from one year ago, when surveyed managers reported a hefty 4.2% annual increase. That increase, along with much of the increase recorded in this year’s survey, was driven by soaring crude oil prices, which in turn drove up the cost of tires, repair parts and oil changes.

This year’s increase had been forecast to be much larger, but the collapse in crude prices that began last winter reversed many of the price hikes that went into effect during the first eight months of 2008 . . .    (excerpts from the April 2009 issue)

March 2009:
Fleet Managers Slash AFV Plans Amid Economic Uncertainty
With budget cuts looming, fleets reject AFVs’ added costs

Fleet managers across the U.S. are putting their AFV program plans on hold. That’s a 180-degree swing from last fall, when fleets were clamoring to expand their AFV programs, the assumption being that in a few years longer-range hybrids would overtake the car and light-truck markets.

Fleet manager sentiment is shifting, but not from lack of commitment to AFVs. Fleets know better than anyone that hybrids, pure EVs and non-petroleum vehicles are the future of transportation. But the deepening economic recession is creating enormous uncertainty among fleet managers trying to determine which manufacturers, technologies and fuels will constitute the next wave of alternative fuel vehicles. More bluntly, fleet managers don’t want to get stuck with a fleet of old technology built by a bankrupt manufacturer.

In our most recent survey of fleet managers, we gathered responses from 377 corporate and public sector fleet managers regarding their AFV activities, vehicle evaluations and program plans. A key goal of the survey . . .
 (excerpts from the March 2009 issue)