Once you have correctly spec’ed your trucks, what can you do to ensure long, useful lives and high resale values?
A truck’s lifecycle is simply the time between purchase and disposal, also known as the useful life of your truck.
“Knowing your fleet’s lifecycle is important to identify a proper vehicle cycling strategy. Cycling vehicles too early can cause unnecessary extra lease or depreciation costs, whereas cycling too late can lead to unnecessary, non-preventive maintenance costs and associated vehicle downtime expense,” said Eric Miller, CAFM, senior fleet consultant for Merchants Fleet.
Understanding the lifecycle for a fleet’s trucks is essential.
“A good fleet manager has to find the right balance between a vehicle’s falling fixed costs and its rising maintenance and downtime costs. If your fleet is too young, the fixed expense will be too high. And if the fleet is too old, then your organization risks losing focus on ensuring productive servicing of your customers and instead of becoming experts on how to maintain older trucks,” said Collin Reid, truck strategic consultant for Element Fleet.
Establishing the optimal lifecycle for your vehicles is typically the foundation upon which your overall fleet strategy is built.
“How long you keep a vehicle in service influences virtually all aspects of your fleet operations — how often you’re cycling vehicles, capital expenditure requirements, how you establish PM parameters, repair versus replace decisions, even how many vehicles you need to efficiently support your business, etc.,” said Ed Powell, manager of business intelligence & analytics for ARI.
It is also essential to keep in mind that there isn’t a one-size-fits-all lifecycle strategy effective for all asset classes and truck types.
“The ideal lifecycle for a particular vehicle is influenced by factors such as specifications, job function, geographic location, payload, criticality to your business, etc. All of these elements can vary greatly across your fleet, and it is important that you adjust accordingly when necessary,” Powell added.
Additionally, understanding your fleet truck’s lifecycle is vital for both the development and execution of your fleet plan.
“While fleet managers are tasked with managing fleets in a cost-effective manner, the vehicles must also be able to get the job done. In addition, downtime can be very expensive in a truck fleet. Planning ahead and avoiding the unnecessary consequences that come with pushing cycles too long is always a best practice,” said Jeff Krogen, assistant vice president of fleet strategy for Enterprise Fleet Management.
At the end of the day, understanding the factors that impact a truck’s lifecycle is key to striking the right balance between operating costs and vehicle productivity.
“At the optimal point in a truck’s lifecycle, cost of operation will be at its lowest point while the truck itself is operating efficiently with minimal downtime. If you replace that truck before that optimal point, you risk overpaying on the effective depreciation of that asset. Conversely, if you replace that truck too far beyond that optimal point, you risk paying for rising variable costs, including repairs, downtime, and repair rentals,” said Alexander Walker, sr. data strategist for Donlen.
How to Increase the Useful Life of Trucks
Effective fleet management and cost control require getting the most out of your truck assets.
There are several steps fleet managers can take to help increase the overall useful life of their trucks.
“Fleet managers should not overlook the obvious things that keep a fleet of trucks intact, and that is ensuring preventive maintenance (PM) compliance and having regular vehicle condition inspections completed,” said Miller of Merchants Fleet.
When it comes to maximizing the useful life of a fleet vehicle, it’s all about your PM strategy.
“A comprehensive PM strategy helps you control operating costs, increase reliability, and minimize unforeseen downtime while also ensuring your vehicles remain in top operating condition for as long as possible,” said Powell of ARI.
It is also important to keep in mind that consistency is key when it comes to preventive maintenance.
“Consistent PM, often measured in terms of PM variability, is the cornerstone of any effective strategy. Arbitrarily extending intervals or skipping services may help reduce maintenance costs today, but undoubtedly, your operating expenses will increase over time, and these escalating costs typically far exceed the perceived savings,” Powell added. “Today, best-in-class fleet operators emphasize PM compliance with a focus on minimizing PM variability, which is among the most effective ways to improve reliability and reduce your total cost of ownership.”
How you spec your trucks will also have a huge impact on its useful life.
“Build your truck to best meet the demands of the job it has been acquired to perform. This includes proper tires to payload and everything in between,” said Walker of Donlen. “Also, don’t underestimate the value of real-time dashboards to understand the readiness availability of your trucks, historical and projected costs, and key performance metrics.”
And don’t forget: Data is king.
“Use data to show the best replacement cycle. Stagger the replacement of your fleet. It’s easier to replace 20 trucks per year than 100. Know the OEM requirements for load and tow capacity, maintenance costs, and order lead time,” said Dale Jewell, director, North American maintenance for Emkay.
Reid of Element Fleet noted that to best maximize the useful life of trucks, fleets should:
- Ensure a timely PM schedule on all units.
- Be diligent on driver safety and monitor driver behavior.
- Use mobile intelligence to drive better fleet usage.
Better planning can help ensure your fleet has the right trucks for the jobs at hand, instead of having to settle for less.
“Many fleet managers are becoming impatient with extended lead times for both the chassis and bodies and are looking for pre-built options instead. They risk settling with the wrong setup for the job, which can hinder efficiency and create safety concerns,” said Krogen of Enterprise Fleet Management.
Lifecycles and Truck Resale
Resale value is heavily influenced by vehicle age, mileage, conditions, and popularity.
“Cycling vehicles at the optimal time can allow clients to capitalize on resale values during peak times in a vehicle’s life before the vehicle’s value starts to erode. To bolster resale value, fleet managers should consider new vehicle models that are projected to hold their value and models that are easily transferable to the retail market.,” said Miller of Merchants Fleet.
One of the key variables of determining the right cycle is the resale on the vehicle assets.
“Fleets that get higher returns can replace their units a faster rate than fleets that do not get good returns,” said Reid of Element Fleet.
A unit’s projected resale value is a critical factor in determining a vehicle’s optimal lifecycle, and this information certainly needs to be accounted for in your projected lifecycle models.
“When developing your lifecycle strategy, you’ll want to identify the ideal window to remove your vehicles from service to maximize their resale value and, in turn, lower your total cost of ownership. This will also influence your capital expenditure forecast, which will also impact your acquisition strategy,” said Powell of ARI. “Again, it’s all intertwined. Typically, you are best served selling the vehicle while it still has value on the secondary market, recouping some of your investment, rather than simply running it into the ground.”
Krogen of Enterprise Fleet Management added that the obvious drivers of resale value are time, mileage, and condition.
“But choosing a vehicle that works well in various industries will increase the future buyer base when it comes to resale,” he said.
Equipping vehicles for the largest audience and ensuring repairs are completed by a qualified shop are both important.
“Mileage intervals should be monitored, because being on the right side of certain mileage milestones can boost resale value. These include warranty and certified pre-owned limitations as well as bank loan limitations,” Krogen said.
How you care for your vehicles is essential to a long useful life.
“When a fleet manager takes better care of their fleet, their vehicles will last longer and have a higher value when sold. Utilizing the tips listed above can help a vehicle be sold for a higher price,” said Walker of Donlen. “Utilizing proper cycling parameters can also help sell the vehicle for a higher value.”
Source: https://www.worktruckonline.com
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