Look at as much data as you want, visit as many fortune tellers as you can afford, the fact remains: no industry is immune to market fluctuation. Even if you aren’t particularly good at dancing, you know the steps. When the market booms, your company grows. When it busts, your company tightens its belt. What does this have to do with your oil and gas vehicle program?
Right now, the market is doing pretty well. While gas prices are in flux and the U.S. is one of the highest oil exporters in the world. If that doesn’t warrant a pat on the back, I’m not sure what does. But the success of the market is fickle. Natural disaster and world politics can make incredible impacts in a short time span. Companies in industries like auto parts manufacturers and food and beverage are suffering unexpected expense due to the recent tariffs.
The company car program is the most common oil and gas vehicle program. Employees like the benefit of a company-provided vehicles, and your company knows your mobile workers will get to where they need to go. Unfortunately, having a fleet of vehicles puts your company in a bad spot, especially when the market goes from boom to bust. We’re going to run through a hypothetical situation to show the headache involved with company car programs in downturns.
The year is 2021. The sun still rises in the East and sets in the West. But the volatile oil and gas market has taken a turn for the worst. Best case scenario, your company can support your current operation exactly as it stands. But one more issue might have you in trouble you can’t fix easily. Here are a few trending issues that could give your company trouble, both currently and in the event of a bust:
No matter how well they’re treated, your fleet vehicles will require maintenance. No problem, right? Buff out the scratches, pop out the dents, good as new… except the cost of maintenance has been growing. A recent survey revealed that fleet vehicles are 75% more likely to require maintenance than non-fleet vehicles. That’s not a number you can sweep under the rug. Multiply even small repair costs across your fleet. You probably won’t like the number you come back with. Even in a boom.
But, like the typical oil and gas vehicle program, your company likely leased the fleet. You should see a nice return when you sell those back, right? Unfortunately, depreciation is trending upwards. This has put several companies currently running fleets in a bit of trouble. Not only is the resale value of cars falling, the price of new vehicles is going up. Companies looking at cycling out their current fleet can expect less of a return on their old vehicles and a higher bill for the new ones. Again, these costs may seem manageable now. Imagine trying to work out the numbers when the market isn’t so hot. Getting your hands on new cars is bound to be considerably more difficult. And they may not still be available.
The automotive industry is doing some soul searching. We can expect to see more discontinued vehicles as the industry continues to search for its next product. And you never know when a recall may come through or the line might halt due to an unforeseen circumstance.
Speaking of unforeseen, accidents happen all the time. And, recently, more than ever before. We can blame the drop in unemployment, and we can blame driver distractions. But they’re on the rise. What’s worse, 40% of vehicle accidents are work-related. And those work-related accidents cost companies $56.7 billion in 2017. That number doesn’t account for the missed time at work due to accident repercussions. You can pay for it now, but can you pay for it later? Not to mention, some companies pay more than others when their mobile workers are involved in accidents.
We covered the increasing cost of maintenance in the last section. Fleet vehicles may not receive the same love an employee-owned vehicle does. Those costs are covered by the company. Now say a mobile worker driving a company car is found at fault in an accident. The employee isn’t going to be the target of the lawsuit. Many companies with fleet vehicles allow their employees to drive those vehicles outside of work. That’s 24/7 risk. Maybe in a boom your company can pay out a lawsuit. But come bust, you won’t be so lucky.
So, what’s the key to keeping your oil and gas vehicle program running through good times and bad? Flexibility. Company car programs simply cannot adapt to the fluctuations of a market, not like other vehicle programs can. When things are great, a vehicle program is easy. But when they aren’t, you need a vehicle program that meets your companies demands, bends with a buckling market. Interested in learning more about a flexible oil and gas vehicle program? Check out our white paper, Flexibility In Any Economy.