New analysis from Fleet Advantage, Fort Lauderdale, Fla., shows the operating and financial benefits of a lease vs. ownership structure for private truck fleet operators and for-hire carriers.
The analysis illustrates a missed opportunity for cost savings when comparing a 7-year ownership of one truck to a 4-year ownership and a 4-year lease of two consecutive trucks.
The analysis also shows that while there is a slightly higher investment level in lease payments over the 7-year period, that investment is overshadowed by much larger financial losses on the 4- and 7-year ownership in areas such as fuel expenditures, maintenance and repair, tires and financial losses resulting from disposal of the financed trucks.
In fact, the overall financial outlay shows that a 4-year lease model would save approximately $27,893 per truck in comparison to the 7-year ownership model because of the aforementioned factors. The lease model even proves to be beneficial when compared to the 4-year ownership model, showing savings of $12,710.
The study was performed by Fleet Advantage analysts, who continuously monitor and track vehicles’ P&Ls and “tipping point,” the point at which it costs more to operate a truck as compared to replacing it with a new model.
“A shorter lifecycle combined with a proper lease structure can positively impact a company’s overall financial performance through reduced costs and debt-to-equity ratios, improved cash flow and EBITDA performance, increasing the return on assets and preserving capital, in addition to many other significant areas such as driver retention and corporate image,” says Brian Holland, president and CFO.