Automotive Fleet

JAN 2014

Magazine for the car and truck fleet and leasing industry

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2014 FLEET TRENDS tracts," said Phil Schreiber, feet manager North America for Otis Service Center in Bloomfeld, Conn. One future concern is the uncertainty of interest rates. "Interest rates are somewhat of a concern, especially with vehicles on foating interest rates," said Anderson of ANDERSON Sentry Insurance. Te eventual elimination of models, such as the Ford Econoline, is a key concern as voiced by Julie Bromley, manager, credit and administrative services for Reedy Industries in Glenview, Ill. However, the biggest issue revolves around staggered production schedules from the manufacturers in the light-duty pickup segment. Tis includes early cut-of dates and downtime between models. "Trying to deal with manufacturers changing their build out and start out dates — everyone is diferent now — makes choosing selectors difcult," said Woloszynek of National Gypsum. Also, as OEMs streamline product lineups, it is making it difcult for some global feets to source from a single OEM. Fleet complexity is another issue. Te vast diference in vehicle assets utilized by diferent business units creates a complex feet at many multi-divisional conglomerates. Complexity also occurs when drivers have greater vehicle selection choices. "My company now allows customization of ordering, which is quite difcult when ordering pickups because there are numerous combinations available that then cause other changes, such as tire sizes and axles," said one feet manager, who asked not be identifed. Vehicle upftting packages are becoming more complicated based on electrical constraints with the vehicles. "With the amount of additional electronics drivers are using in the vehicles, the standard electrical systems are not enough so we have to install afermarket equipment to manage the electrical load," said Brandon Morris, director, feet services for DirecTV in Englewood, Colo. MORRIS 22 AUTOMOTIVE FLEET I JANUARY 2014 More companies are now adopting driver scorecards to identify high-risk drivers and taking the appropriate action, getting support from management to terminate these drivers if necessary. One complaint deals with vehicle pools. "Te lack of pooled inventory to pull from the body companies when you need a vehicle in a pinch can cause headaches," said ARMSTRONG Tom Armstrong, director of feet for Tyssenkrupp Elevator in Fort Lauderdale, Fla. Vehicle Replacement Schedules A top challenge is long-term forecasting to maintain timely vehicle replacements to avoid the increased expense of operating an aging feet. "We are a small company, with expensive specialty vehicles. Replacing these vehicles on a regular cycle is not an option, not the least due to a tremendous lead time, since these are built to order, and very few suppliers build them. Terefore, maintenance, parts, and downtime are a major consideration when dealing with older vehicles. Lack of an adequate budget, an adequate staf, and increasing taxes, paperwork, and regulations push a small company to the limit on a daily basis," said Nelson of AM-Liner East, Inc. Vehicle Maintenance Trends Te good news for maintenance costs is that they have been fat. Overall, the quality of vehicles from all OEMs continues to steadily improve, and extended powertrain warranties have covered some expensive repairs at high mileage. However, not all feets share this assessment. Joy Global Inc., a worldwide manufacturer and marketer of original equipment and afermarket parts and services for the mining industries reports an increase industries, in maintenance costs for its feet of trucks. Tis is especially exacerbated when there is a decrease in feet maintenance budgets. One ongoing feet maintenance issue has been the increased cost of replacement parts. In many cases, the parts price increase is due to raw material cost increases, especially those built of materials that are oil-based, such as plastic parts. Also, OEM proprietary systems require national account vendors to source parts from the OEMs rather than the afermarket. However, one maintenance expense that has been on the rise is the cost for replacement tires. A key factor to higher tire prices is commodity price increases for raw materials, in particular the higher cost of oil, which is a key ingredient in tire manufacturing. While the industry forecast is for passenger tire costs to remain stable for 2013, unpredictable raw material costs will continue to be a wild card in determining future costs. Unpredictability of Fuel Prices To the pleasant surprise of most feet managers, fuel prices remained relatively stable in CY-2013. "Fuel prices have been a very good surprise in 2013, let's hope this will continue," said Schreiber of Otis Service Center. Regardless, feet managers are relentlessly examining ways to reduce their fuel spend. As the largest cost component of operating expenses, feet managers are focusing on a multitude of fuel-reduction strategies, which ofen morph into corporate sustainability initiatives. In many ways, fuel-efciency initiatives and sustainability initiatives are very much intertwined.

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