Fleet Finance Tips for Commercial Fleet Managers

As a fleet manager, you have the important responsibility of ensuring every facet of your commercial fleet business runs smoothly—including its financials. Events over the past couple years have made managing fleet costs particularly challenging. The prices of new vehicles¹⁰³⁶, parts, and equipment¹⁰³⁷  have increased, which can make it difficult to keep expenses under control. The volatility in gasoline prices¹⁰³⁸  adds another layer of uncertainty. Despite these challenges, the right strategies and tools can help you optimize operations and boost your bottom line. Here are three tips to consider.

 

1. Track Your Fleet’s Total Cost of Ownership

 

The initial purchase price is one of several costs related to fleet vehicles. Relying on a comprehensive total cost of ownership (TCO) analysis can help fleet managers make smart decisions that will help maximize their bottom lines. Three cost categories make up TCO: depreciation costs, operating costs and downtime costs.

 

Depreciation costs, often the largest TCO category, result from the initial purchase price minus any credit received when the asset is sold. Operating costs become clear during the vehicle’s life cycle: think fuel/energy, insurance, maintenance, non-warranty repairs, financing, and fees/taxes. Finally, when a vehicle can’t be driven, it incurs downtime costs in the form of rental vehicles or lost revenue from having to reschedule work.

 

The introduction of electric vehicles (EVs) has made the use of TCO even more important and has likely added more mystery to the fleet manager’s purchase selection. For example, did you know that, despite potentially higher initial purchase prices, the TCO of EVs is often lower than conventional gas-powered vehicles? Here are some of the considerations related to EV TCO outcomes:

 

• Depreciation Costs: Depreciation costs for EVs are sensitive to several factors, including range, the battery’s state of health, and product reliability.
• Fuel Costs: The long-term costs to charge an EV can be lower than the fuel costs for a gas-powered vehicle.⁷⁹⁶ However, fleets mustn’t forget about charging downtime and charging infrastructure costs.
• Repair and Maintenance Costs: Ford all-electric vehicles have fewer moving parts, which could help lower scheduled maintenance costs.²⁸³

 

2. Use Fleet Software to Manage Recurring Costs

 

Because fuel costs fluctuate,¹⁰³⁸ they can impact your budget and profitability in hard-to-predict ways. It’s imperative to closely monitor fuel consumption, but manually tracking and analyzing monthly fuel costs is time-consuming, error-prone, and costly. Instead, leverage advanced fleet software solutions to gather fuel consumption insights and identify cost-saving opportunities.

 

For example, Ford Pro^TM Telematics⁸⁶⁷ tracks how much time each vehicle spends idling and produces digestible reports that include associated costs. Your drivers will always spend some time idling at red lights or in congested traffic. However, you can reduce unnecessary vehicle idling by using data to inform driver training strategies. When Bevill Vineyard Management¹⁰³³ implemented Ford Pro Telematics⁸⁶⁷ as part of a pilot with Ford Pro, the grape grower was able to cut idling time in half—during peak harvest period—which resulted in average monthly fuel savings of about $75 across five vehicles.¹⁰³⁹

 

3. Understand Fleet Financing Options

 

When vetting fleet financing options, make sure you calculate the TCO for each vehicle, including the acquisition cost, depreciation, interest, and residual value. If this sounds intimidating, lean on the experts. Ford Pro FinSimple specialists are trained in commercial fleet financing, and they can help you find a suitable option. For instance, a Commercial Line of Credit¹⁴⁰ (CLOC) grants you access to capital on an as-needed basis.