“Out of chaos comes opportunity.” In the current fleet industry havoc created by parts shortages, supply chain obstructions, and the pandemic lie opportunities for public sector fleets, advised an industry panel at the recent Government Fleet Expo & Conference (GFX) in Orlando, Florida.
Panel members included Al Curtis, fleet services director, Cobb County, Georgia; Marc Canton, senior consultant, Mercury Associates; Mike Domin, supply development administrator for Sourcewell; and Dain Giesie, assistant vice president, business development, Enterprise Fleet Management.
The panel, which took place November 17, suggested tactics for fleet managers to take advantage of the current long vehicle delivery delays and astounding resale values. According to Enterprise’s Giesie, resale prices have reached all-time highs across all types of vehicles. He pointed to just one example of a Ford Explorer with a $48,000 new-sticker price now assessed at $60,000 by industry valuation services.
The ‘New Normal’
While the resale values may be flattening, Giesie believes they will continue elevated for some time. “As long as you’re having a hard time getting new vehicles, used car prices are going to remain high. And the new normal, whatever that is, will be higher than the old normal was. It’s the reality we will live in,” he said.
Flexibility and a readiness to pivot outside a fleet’s established operating plan is key — at least during current conditions, panel members said. Now is the time to be strategic — “break the mold,” the experts noted. “What you do today or in the next two years doesn’t have to be what your operational plan will be like in the long term,” they agreed.
The panel urged fleet managers to use the time presented by lengthy deliveries to focus on taking a “hard, realistic” look at the entire fleet to identify potential surplus vehicles — units that can be sold on the used-vehicle market to return profits to fleet budgets. They recommended the following four tactics to exploit the industry’s uncertainties right now.
- Right Size & Assess Utilization. Examine your fleet creatively and objectively. Evaluate which assets are truly needed. Will another vehicle model work? For example, can today’s half-ton trucks replace your fleet’s 10-year-old one-ton units? Can some fleet applications accommodate a sedan in place of a van or truck? Consider moving units around within the fleet; for example, exchange lower milage vehicles for those with higher milage units. Analyze whether alternative mobility options — pool or rental — are feasible to free up surplus vehicles temporarily and capitalize on current resale values.
- Buy What You Can. If you can get an order placed and picked up, do it. With the new units on board, determine what existing fleet vehicles can be sold. Their resale prices will generally cover most, if not all, replacement costs.
- Revalidate Fleet Strategy. An annual evaluation of your fleet strategy can uncover new opportunities when responding to changing fleet industry trends and developments.
- Sell Surplus Vehicles Now. These units will never be worth more than right now.