Automotive Fleet

FEB 2014

Magazine for the car and truck fleet and leasing industry

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Need to Proactively Address Technological Change When I became a f eet manager more than 20 years ago, f eet management was in transition from paper-based accounting systems, and was largely focused on the core f eet activities of acquisition and maintenance. The major change has been that the eff cient management of those areas are largely taken as a given. Technological changes, such as telematics, safety de- vices, alt-fuel, and data management are the focus of non-f eet personnel, so we, consequently, must be proactively prepared on those issues. Ken Tucker Asset Management Manager San Diego Gas & Electric Co. San Diego Top Trends in Truck & Van Fleet Management When examining the top trends inf uenc- ing truck and van f eet management, it is important to understand that, f rst and foremost, bottom-line results are what mat- ter. Finding ways to achieve cost reduction is always the most important trend in the f eet industry. Effectively controlling operat- ing expenses can contribute to the bottom line and obviously increase prof tability. Two key areas for this cost-reduction focus are: 1. Greater use of telematics to measure f eet use and improve vehicle eff ciencies, as well as to help develop and reinforce positive driver behaviors. 2. Balancing higher acquisition costs with longer vehicle lifecycles and residual values in remarketed units to help drive cost-reduction initiatives. The second trend is in one of the larg- est f eet cost drivers: fuel management and fuel-price volatility. Fleets are f nding that effectively leveraging driver fuel cards can help defray the variable cost of fuel by bringing greater visibility to fuel spend. Furthermore, fuel management is also an area that is being positively impacted by the use of telematics to change driver behavior, which economizes fuel use. The third key trend, which is being seen in other industries as well, is sustainability. Clearly, greater awareness and interest in protecting the environment and the di- minishing supply of fossil fuels are driving this trend. There are several sustainable solutions for f eets to consider using, including greater use of hybrids, electric vehicles, and, of course, alternative fuels. Of particular interest is the use of alterna- tive fuels (such as propane autogas and compressed natural gas), which raises a number of key issues or questions for f eets. For example, how feasible is it to convert the f eet to use these fuels? What's the viability of the fuel itself as a practical solution? Is there suff cient infrastructure to support utilization? What is the invest- ment required, and how does it affect overall operating expenses? Besides just alternative fuels, when also considering other types of vehicles, one has to consider the overall lifecycles compared to conventional engines and maintenance, and the impact on f eet operating costs. While concerns and ques- tions are numerous in this area, social and business pressures are forcing f eets to look at sustainability initiatives as part of their strategic outlook. Vehicle and equipment specif cation revisions are driving the fourth trend among f eets: as f eets evolve over time, so are the vehicles they purchase. Revising speci- f cations becomes increasingly important in driving f eet eff ciencies and driver/ employee satisfaction. Optimally, specify- ing the "right" truck, car, van, or SUV can result in signif cant eff ciencies as well as benef ts. Going to lighter-weight equipment, where it can still support needed vehicle applications, can help fuel economy, and, of course, ergonomically smart specif ca- tions can supplement and enhance driver safety and comfort, enhancing productivity as a byproduct. Last, but certainly not insignif cant, is the trend in remarketing opportunities. The growing used truck and van market has many f eets rethinking their asset portfolio and changing FMCs' approaches to remarketing vehicles. Overall, quality and growing lifecycles have the used-vehicle market on a growth trend. Many f eets see AUTOMOTIVE FLEET I FEBRUARY 2014 6 LETTERS TO THE EDITOR I read the article in the January AF issue about the greatest challenges faced by f eet managers. My biggest problem is getting new bosses every two to three years. They are in procurement, with a procurement mindset of buying a widget. For them, f eet is just another commodity (like a widget). They don't understand everything we touch and how many elements affect f eet. A manager might be a "car guy" and think he or she knows everything about cars — so how hard is it to manage that? I am constantly re-explaining closed-end versus open-end leasing. This is a continuing saga, since the believers of closed-end leases cannot see the benef ts of an open-end lease. My story is the same year over year. Simply stated, we must be proactive. Knowing that we will be under pressure to reduce costs, we must always be prepared to discuss current strategies we have in place, and present cogent arguments against "other" potential strategies. Our knowledge of industry benchmarks and un- derstanding of the overall industry and related markets are our best weapons. It is important to remain operationally sound and strategically savvy in an extremely strong procurement environment. You must keep the customer and the driver f rst and foremost in everything you do in spite of pressures to provide year-over-year savings. Author wished to be anonymous An Ongoing Saga: Same Story, Different Year A F 0 2 1 4 l e t t e r s . i n d d 6 AF0214letters.indd 6 1 / 2 3 / 1 4 9 : 3 2 A M 1/23/14 9:32 AM

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