Fleet programs are the most expensive vehicle program a business can implement. Yet they continue to persist in companies across industries. Businesses may be content with the program and uninterested in change. Others may simply not know other options exist. But what are typical fleet prices? What goes into those expenses? And how has that changed in 2021?
There are a handful of costs every fleet incurs. Those include purchasing or leasing costs, maintenance and legal costs and fuel costs.
First, there’s the purchase or lease of the vehicles themselves. The vehicles purchased generally depend on the company. For example, an oil and gas or construction company is more likely to lease a fleet of F150s, while a pharmaceutical company will opt for a fleet of upscale sedans. The size of the company and its driver pool will also determine the number vehicles needed. The size will also likely have an impact on the terms of the lease or purchase. Smaller companies may opt to purchase a number of vehicles while a bigger company may lease 50 or more.
Like any other car, fleet vehicles require regular maintenance. Generally that includes an oil change, tire rotation, the service you generally need every 5,000 – 7,000 miles or so. Additional maintenance comes into play when an employee leaves. Now the company has an idle asset to maintain and store until the previous employee is replaced. Finally, if a fleet vehicle gets into an accident, the company must repair it. Which could lead to potential legal costs.
One of the biggest contributors to fleet prices is fuel. It’s standard practice among most companies to give fleet vehicle drivers with a fuel card. With the card employees can gas up at their convenience. As many companies offer allow fleet vehicles to be used personally, fuel cards are ripe for overuse. Some companies account for this by setting up a personal-use charge back. The personal-use charge back is intended to cover the costs associated with personal use of the company vehicle.
Purchasing costs, maintenance costs, legal costs and fuel costs make up the typical fleet prices. While these costs remain in today’s company-provided vehicle environment, there are new factors to consider.
Whether companies are looking to set up a fleet program or replace their current fleet, vehicles are currently hard to come by. Both the new and used vehicle markets are in similar states to their position in 2020. Depreciation levels falling is great for a company trying to sell their vehicles, but if there aren’t vehicles to replace the old ones, that benefit loses its luster. While automotive production did slow down during the pandemic, the chip shortage is playing a big role in the current lack of vehicles.
Vehicles are scarce owing largely to a lack of semiconductors. The chip shortage has been the result of a handful of factors. Those include natural disasters shutting down factories and mobile workers purchasing supplies to work from home. With the exception of these chips, automakers have everything they need to make vehicles to meet demand. The result? Many automakers are having to drastically curb production measures.
Even companies that have always used a fleet program can agree its expensive. Due to the vehicle shortage, fleet prices won’t be getting better any time soon. And there has never been a better time to sell company cars and see a serious return on investment.
Interested in transitioning to a vehicle program without the considerable prices of fleet? Motus can help. Check out our guide, Fleeting Costs: Transitioning Your Idle Fleet to a FAVR Program.