Whether it’s a refrigerated truck or a sales rep’s sedan, foresight and proper management throughout the entire life span of a fleet vehicle can have a significant impact on your company’s bottom line.
When the supply chain is managed well, a company can realize cost savings every step of the way. It’s important even at the end of the life cycle to think strategically about when it’s time to get rid of a vehicle and the best way to do so.
Timing the sale of a vehicle starts with effective planning, and then strictly adhering to that plan. A successful replacement strategy strikes a balance between maximizing the useful life of a vehicle, and understanding when it would cost more to keep what it’s actually worth. Not having a proper strategy in place can lead to rising operating costs, including increased fuel, repair and maintenance expenses, all of which increase a vehicle’s total cost of ownership. Leaving a vehicle in place past its useful life can also lead to significant increases in downtime, which can impact productivity and a company’s bottom line.
A replacement strategy should take more than age and mileage into consideration. Companies should track a vehicle’s data throughout its entire lifespan to discover the equipment’s true wear and tear. When deciding to pull the plug on a vehicle, be sure to consider fuel consumption, repair history and maintenance expenses. New technology allows you to view multiple aspects of your fleet in real time and drill down into the data, so you can learn which vehicles are disproportionally consuming more fuel or are sitting idle in a repair shop longer than their counterparts. Pairing this information with how long it will take its replacement to arrive is the foundation of a sound replacement strategy.
Once you determine that it’s time to re-market a fleet vehicle, you then need to determine what is the best outlet to re-sell this particular vehicle. This choice will have a major impact on its resale price, what you’ll pay to sell it and how long it will take.
There are six primary options generally available to a company when looking to remarket a vehicle:
Employee sales. Some companies allow employees to purchase the vehicles they drove for business use.
Physical auctions. Dealers buy and sell units through a traditional auction process.
Online auctions. Vehicles are sold through the internet.
Virtual markets. Recent technological improvements increase exposure by allowing vehicles to be offered on multiple online platforms simultaneously.
Remarketing centers. Wholesale dealers at warehouses and lots bid on vehicles through online auctions.
Brokers. Vehicles are sold directly to dealer wholesalers.
Matching the right vehicle with the right sales channel is critical to optimizing your net return. In today’s competitive remarketing environment, using a combination of data analytics, well-established and diverse networks of sales channels and sound operational processes lead to consistent and superior long-term remarketing results. The marriage of data and an experienced staff will help drive a quick decision on which outlet is right for this vehicle. This combination of “art and science” is still a big part of successful remarketing operations today.
In the rapidly changing automotive and remarketing world, there are numerous avenues available to a company looking to sell. And, finding the right balance and exposing the right vehicle to the right channel is a critical component of managing a vehicle’s total cost of ownership. Nuances of particular auctions, markets and vehicles will also impact sales results.
It’s also important to understand the variables to ensure you’re getting the best return on your investment. For example, you might want to consider partnering with a fleet management company. Finding the right partner offers flexibility over the sales cycle and expands your ability to expose the vehicle to the broadest buyer base available. It could relieve most of the administrative burden that comes with the territory.
Faced with the complexity of a vehicle’s life cycle and ongoing pressure on team resources to manage a fleet, especially as more and more companies are adding technology to track their fleet’s data in real-time, it’s important to not forget about strategy. Thoughtful planning and decision-making at every phase of a vehicle’s life span will bring only positive effects to your company’s bottom line.