Fleet Management

August 2010:
Budget Woes Impacting Vehicle Maintenance,
Technician Pay
PM intervals, repair technician pay, vehicle-to-mechanic ratios

Our latest fleet management survey shows a continuing deterioration in key metrics relating to preventive maintenance programs and in-house vehicle repair operations. In a nutshell many fleets are underfunded to the point where maintenance and non-critical repairs are being deferred or ignored. Among fleet garages, technicians are subject to the morale-killing situation of working harder for less pay because of layoffs and wage freezes.

These trends are being driven by a sluggish economic recovery and persistently high unemployment. Among many corporate/business fleets, vehicle count and miles driven are both down. Among some government fleets, trucks and equipment often sit idle because tax revenues have evaporated, resulting in worker layoffs and the postponement of many fleet-dependent public works projects. The only fleet segment showing growth right now is private utilities, where cable and fiber optics buildouts are underway in many metropolitan areas.

Fleet cutbacks haven’t been limited to reductions in vehicle count and miles driven. Managers report all expense categories are under the knife, from scheduled vehicle replacement to routine oil changes. Preventive maintenance intervals are being stretched out longer and vehicle replacements are being deferred in favor of extended vehicle life cycles. Over half the fleet managers surveyed for this report say they are keeping their vehicles longer on a months and miles basis . . .
                                       (excerpts from the August 2010 issue)

Table of Contents

July 2010:
Proactive Fleet Safety Programs Reduce
Accident Expenses, Injuries
Yet 17% of surveyed fleets lack a formal written safety policy

 Depending on which research report you read, the typical fleet suffers an annual vehicle accident rate ranging from 6% to 15%. Either figure represents an enormous cost to the average fleet, including but not limited to vehicle repair, property replacement, medical liability, lost productivity and loss of business.

Anything that can be done on the fleet management side to lower vehicle accident rates is going to improve the bottom line. Accident rates among corporate and government fleets are higher than the general population, where the annual accident rate hovers around 3%.  Fleet accident rates tend to be higher because fleet drivers log more miles per year than the average non-fleet driver, and fleet drivers tend to travel more inner city miles where traffic congestion leads to more vehicle collisions.

Fortunately, most vehicle accidents only result in property damage, but nearly a third of all vehicle crashes result in bodily injury, and roughly 0.5% result in fatalities. Though the business mindset often focuses on the financial costs of vehicle crashes, there are also significant human and societal costs involved.

Corporate accountants zero in on the risk management aspect, as is their duty. Accident costs can be staggeringly high among large fleets, and among smaller firms an unusually serious fleet accident claim can cripple or bankrupt the company . . .
                                       (excerpts from the July 2010 issue)

Table of Contents

June 2010:
Crash Avoidance Technologies
Use of existing technologies could cut fatalities by one-third

Current crash avoidance features could prevent or mitigate about one of every three fatal crashes and one of every five serious or moderate injury crashes involving passenger vehicles, according to the Insurance Institute for Highway Safety (IIHS). As many as 1.9 million crashes could be prevented or mitigated each year. This is the Institute's latest estimate of the safety potential of equipping all passenger vehicles with four crash avoidance features already on the market.

Now that more systems are on the road, the updated projections take into account limitations of current systems. The fresh numbers follow the 2009 release of survey results indicating most early adopters are using the crash avoidance features in Volvo and Infiniti models to be safer drivers.

The four new technologies the Institute studied include lane departure warning/prevention, forward collision warning/mitiga-tion, side view assist (also known as blind spot detection), and adaptive headlights.

In line with the Institute’s 2008 study, a main finding is that lane departure warning has the potential to prevent or mitigate the most fatal crashes, while forward collision warning appears to have the greatest promise for reducing crashes of lower severity. Side view assist doesn't show as much potential simply because not as many serious crashes are relevant to this technology . . .
                                       (excerpts from the June 2010 issue)

Table of Contents

May 2010:
On Merit and By Default, Imports Gain Among Fleets
”Buy American” credo has given way to market realities

Just five years ago surveys showed that import nameplates were a rarity among North American fleets, with imports holding just two to three percent of the overall fleet market. For years prior to that imports were nothing more than a statistical blip in Fleet Management’s annual surveys, always running less that 1% of vehicles within corporate and government fleets.

Not any longer. Today, so-called “import” vehicles make up 21% of corporate fleets. Even among government fleets, where “Buy American” remains an unwritten if not fully documented policy, import nameplates are creeping into the fleet mix. Even the term “import” is losing significance because so many import nameplates are manufactured in the United States. The globalization of vehicle manufacturing has rendered “Buy American” little more than an obsolete cliche, with imports being assembled in the U.S. and domestic automakers sourcing parts from all around the globe.

In 2005, surveyed fleet managers overwhelmingly ranked domestic nameplates as best suited for fleets, by a margin of nearly nine to one. Today, corporate fleet managers are almost evenly split. Even government managers, who in 2005 rated domestics over imports by 98% to 2%, have changed their tune, at least among passenger cars, ranking imports as “best suited for fleets” 9% of the time. While a seven-point shift among government fleets over a five-year period sounds immaterial, it is indeed a sea-change event. During decades prior, government fleets were virtually 100% “Big Three” to a fault.. . .
                                       (excerpts from the May 2010 issue)

Table of Contents

April 2010:
Fleet Managers Hold the Line on Vehicle Operating Costs
Annual survey shows nominal 1.8% increase in operating costs

Non-fuel vehicle operating costs increased a modest 1.84% during the past 12 months and currently total 4.71 cents per mile, up from 4.63 cents per mile one year ago when averaged across all vehicles represented in our latest fleet analysis. A breakdown of costs by vehicle type follows.

Fleet managers surveyed for this report predominantly operate owned vehicles (83% owned vs. 17% leased) and 89% administer their own PM program. The vast majority of corporate fleets (92%) outsource their vehicle repair work but the opposite is true among government and utility fleets, where virtually all PM and more demanding repair work is performed in-house.

It is a noteworthy accomplishment that these fleet managers have succeeded in keeping non-fuel operating costs in check and below the nation’s overall inflation rate for two years running. This is true even though many fleets are keeping their passenger cars and light-duty trucks on the road longer than ever.

Reasons for this success are varied. Certainly vehicle quality continues to improve, and new vehicle warranties are getting pretty generous. But the greatest influence on operating costs is hands-on vehicle management, typically on a unit-to-unit basis.

The days of treating all vehicles the same are gone, thanks to maintenance tracking software and other sophisticated management techniques. . .
                                       (excerpts from the April 2010 issue)

Table of Contents

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)

Table of Contents

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)

Table of Contents

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)

Table of Contents

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)

Table of Contents

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)

Table of Contents

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)

Table of Contents

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)

Table of Contents