Government Fleets Report 2010 Buying Inclinations

All indications are that new-vehicle orders from government fleets will be down or flat for the 2010 model-year. Many fleet budgets have been decimated by dramatic decreases in tax revenues. The downturn in the economy has caused many user departments to scale back new-vehicle and equipment orders.

Also, widespread government layoffs have created a surplus of vehicles available for reassignment, deferring the need to acquire new vehicles. However, many government fleet operations operate with internal service funds that will allow them to maintain planned replacement schedules.

Many fleets are seeking to take advantage of the unprecedented availability of grant monies and federal stimulus dollars to green their fleets. Public sector fleets are adhering to sustainability and greenhouse emission reduction mandates by acquiring more hybrids and AFVs or downsizing to smaller, more eco-friendly  vehicles, where applicable. They are hoping to use stimulus dollars to allow them to fulfill these commitments.

Another factor that will influence next model-year ordering is the 2010 diesel emission standards. There are concerns about potential "hiccups" with new diesel emission technology, and some fleets are shying away from first model-year ordering. The new emission systems are causing upfitting problems requiring fleets to spec longer trucks. In addition, fleets are relocating fuel system components and moving oil tanks away from the high level of heat generated by the new emission system to burn off diesel particulates.

The other issue created by the new diesel emission standards is the requirement for operator and technician training at a time of bare-bones training budgets. Many public sector fleets either are pre-buying to postpone use of the new diesels or are deferring 2010 orders until the 2011 model-year.

One concern voiced by public sector fleet managers has been the numerous dealer closures. They fear this will result in fewer bidders for new-vehicle orders, which could result in higher prices. In smaller municipalities that do not operate in-house warranty stations, dealership closures are now requiring them to travel farther distances to get warranty work done. In addition, fleets are reporting shortages of some OEM-manufactured parts, which is increasing downtime as vehicles sit idle awaiting shipments.

Government Fleet magazine recently conducted an informal survey to get a handle of 2010 vehicle-buying intentions by public sector fleets. Below is a sampling of what government fleet managers told us, segmented by municipal, county, and university fleets.

2010 Municipal Fleet Buying Inclinations

New York City

The larger macroeconomy is influencing government fleet buying decisions. For instance, the fiscal crisis that hit Wall Street,  one of the key components of the New York City economy is impacting the City's fleet acquisitions. New York City has scaled down not only its fleet size, but its MY2010 plans.

"We will be procuring far less next year for vehicles with unit prices under $35,000," said Steve Weir, CAFM, director, Office of Fleet Administration for New York City. One change in the OEMs from which NYC sources its vehicles is that it will increase its volume of Nissans. "We may buy more Nissan Altimas than we have in past years," said Weir. "They are getting received better than the Prius."

New York City is making a major commitment to hybrid technology and hopes to be an early adopter of plug-in hybrids. "We are anxiously awaiting the advent of the plug-in hybrids and the Chevy Volt. If they get to market as expected and onto a contract, it is likely the City will buy some," said Weir.

City of Fort Worth, Texas

The City of Fort Worth is working to control fleet growth, said Wayne Corum, director, Equipment Services Department for the City of Fort Worth.

"An effort to transition from the use of city vehicles to more mileage reimbursement is currently in the works," said Corum.  "Therefore, the goal is to acquire either the same or fewer vehicles in MY2010.  We have seen a growth in acquisitions for each of the past five years. The goal is to either plateau the growth or move the direction downward."

As in past model-years, the City of Fort Worth will continue to acquire more alternative-fuel vehicles using stimulus and other grant opportunities.

One concern about 2010 model-year ordering plans is the new diesel emission standards. "This could have some impact on our purchase decisions," said Corum.  "With a large mixed fleet, we will evaluate each situation to acquire the right vehicle for the application."

City of Columbus, Ohio

The City of Columbus is facing a $100 million shortfall for budget/FY2010. As a result, most capital budgets have been cut by 60 percent. "The bottom line is that we will purchase significantly fewer vehicles and equipment this MY2010 than last," said  Kelly Reagan, fleet administrator for the City of Columbus. "This will place a significant burden on 2011-MY."

 One concern about 2010 ordering has been the impact of numerous dealer closures.

"A number of local dealers have closed, and this may very well impact the bid process," said Reagan. "There will be fewer bidders to the table, which, in turn, could mean higher prices based on our bid model for local dealers. The offset here will be the incentives passed on by the OEM to the buyers."

Reagan does not anticipate any change in OEMs used "unless GM, for some unforeseen reason, God forbid, were not to survive Chapter 11."

Despite the decline in 2010 orders, Reagan sees a silver lining for 2011 ordering. "Orders will be down significantly this year, but this shall become a boom for the dealers as we work to play catch-up next year," said Reagan.

City of San Diego, California

The City of San Diego has replaced more than 1,200 vehicles in the past two years. "This was due in part to the consolidation of fleets in FY2008, and because we are finally catching up to re-placing overage and over-mileage vehicles, we will only be replacing about 450 vehicles this next year," said John Alley, fleet manager for the City of San Diego.

Alley does not anticipate any major changes in OEMs used. "We have five-year contracts with our vendors. Only the trash trucks are up for bid this year. We do not anticipate any changes in the other types of vehicles except for green technology," said Alley.

One change will be with Ford Motor Co. "We are looking at a major partnership effort with Ford and plan to invest more in 'green' vehicles in the coming year," said Alley.  "We are also downsizing where we can and purchasing hybrids is now a way of life."

Alley says the availability of grant monies will give him an opportunity to upgrade the quality of his fleet. "A number of leads on federal and state grants will enable us to look at green technology and telematics in our near-term investments," said Alley.

City of Longmont, Colorado

The City of Longmont operates under an internal service fund. It collect funds from end users for a vehicle replacement fund to replace vehicles due for replacement. Purchases in a given year are based on a review of vehicles benchmarked for replacement. Those reviewed and deemed in need of replacement will be replaced.

"The amount of vehicles being replaced is dependent on this process, which has not changed," said Bruce Maysilles, fleet manager for the City of Longmont. "For 2010, based on our replacement schedule and review, we will be replacing about the same amount of vehicles, but they are larger, more expensive vehicles, so our replacement budget will double from 2009."

The current financial difficulties of GM and Chrysler are influencing the City's purchasing decisions.

"We are reluctant to purchase GM or Chrysler vehicles until we see what pans out with these companies and their status," said Maysilles. "We recently heard our Chevrolet dealer was being shut down. We now have to travel an unreasonable distance to get warranty work done. We have no GM dealers left in our city."

Another concern is the difficulty to get certain OEM-only parts for some Dodge vehicles. As a result, these vehicles are sitting idle. "We lost our Jeep dealer as well. So we will be looking elsewhere until we are sure we can get reliable support," said Maysilles.

For 2010, the City of Longmont is planning to acquire more AFVs and large hybrids.

"My biggest concern is if Ford has problems as well; we will have difficulty trying to find sources for Class 3, 4, and 5 vehicles suitable for our work applications from the other manufacturers," said Maysilles.

City of Everett, Washington

The City of Everett will be acquiring fewer vehicles in 2010. According to Bill DeRousse, fleet manager, the reason for the decreased purchases are not due to funding, but because City vehicles have not reached their replacement mileage/hours or date to qualify for replacement.

"Most of the fleets I have talked with that collect money from the departments they support, used for future equipment replacement, will be purchasing the same number of vehicles they have in the past," said DeRousse. "For agencies that do not collect funds for future equipment replacement, they are looking to extend equipment life. This action is not because of funding, but is based on the fact that equipment we are purchasing today is better built and will last longer. It makes economical sense to look at your agencies equipment replacement life and not replace equipment based on practices in place 15 or 20 years ago."

DeRousse does not anticipate any changes in the OEMs used by the city fleet.

"The only change in 2010, as we have been doing over the past few years, is purchasing more electric and hybrid vehicles," said DeRousse.

City of Yuma, Arizona

The budget situation at the City of Yuma does not allow it to schedule the purchase of any new or replacement vehicles for 2009-2010 budget year. "If we were buying vehicles, we would evaluate the needs of our customer and purchase units that would best suit their needs and fit the City's long-term goal of greening the fleet," said Charlie Caudill II, CEM, CPFP, fleet manager for the City of Yuma Fleet Services.

The City's long-term goal is greening the fleet wherever possible.

City of Bellevue, Washington

The City of Bellevue will be acquiring more vehicles for MY2010 compared to last model-year. 

"I will be buying more vehicles as the stimulus dollars allows for grants for hybrid vehicles. With all the mandates being imposed on us to reduce greenhouse gas emissions, we will be converting more vehicles to hybrids," said Peter Bednar, fleet and communications manager for the City of Bellevue Fleet and Communication Operations, Civic Services Department.

The City of Bellevue anticipates decreasing its volume of vehicles purchased from Chrysler. "I will be staying away from the Chrysler/Dodge platform until I can see who will run the company and how they will support fleet customers," said Bednar. "In the past four years, I have bought no products from them because of issues dealing with warranty coverage. I will continue to buy from GM, Ford, Toyota, and also look into some of the electric vehicles. On the larger vehicles, we will be buying Peterbuilt, International, and for Fire we will go with Pierce. These are the platforms we have standardized to at the City of Bellevue."

The biggest change for 2010 ordering is moving to hybrid vehicles at an accelerated rate. "I am looking forward to seeing what GM and Ford have to offer in the Volt and Fusion. We will continue to purchase the Prius and Camry from Toyota. At this time, I am not looking at Honda because I am trying to minimize the number of OEMs," said Bednar.

 However, the shortage of some hybrids is somewhat of a concern for Bednar. "I hope we will be able to get the Escape Hybrids as they have worked very well in our fleet. I am concerned the ordering and delivery dates are all over the board and I cannot really plan my purchases and level-load my shop. With the latest news with GM, I have even more doubts on delivery dates."

Town of Greenwich, Connecticut

The Town of Greenwich will acquire about the same number of vehicles for MY 2010 as it did the last model-year. "All vehicles recommended for replacement were approved. It took many long meetings, but my replacement plan held," said Elizabeth Linck, CFM, fleet director for the Town of Greenwich.

She does not anticipate any changes in the OEMs from which vehicles are sourced. "We are purchasing more Ford Escape Hybrids. The large trucks are Macks, and the same specialty equipment as in the past. We are purchasing more vehicles off of the State contracts. The pickups we acquire will depend on which ones are on the contract," said Linck.

Linck said she has already started  FY2010/2011 replacement projections and is looking more closely to see which can be held another year.

City of Ft. Wayne, Indiana

The City of Ft. Wayne will acquire about the same number of vehicles for MY2010 compared to last model-year.  "We cut vehicle purchases in half for 2009, and money for 2010 does not look any better," said Larry Campbell, CPFP, director of fleet management for City of Fort Wayne.  The City will buy primarily Ford and GM products. Model changes will be new crossover vehicles and Fusion Hybrid for the sedans.

"I think GM is going to pull out of this even if they have to file for bankruptcy. International did this back in the 1980s and early 1990s, and now look how strong they are. I think GM will do the same. Ford was smart in not taking any money. Look at their sales. The market knows they can still operate their company without government input on what they have to do financially." 

City of Loveland, Colorado

The City of Loveland's 2010 budget calls for a 10-percent reduction from the 2009 budget. Only planned fleet replacements will occur. There will be no additions or upgrades to existing equipment. In terms of the volume of vehicles purchased, 2010 will be the same as the previous year, said Stephen Kibler, ACFM, fleet manager for the City of Loveland.

 Kibler does not anticipate any changes in OEMs. "There will be no changes; standardized models and ancillary equipment are according to performance history and cost."

There will be some changes in the types of vehicles ordered for 2010. "But this will be out of necessity, not desire. When we find the right model and type that fits a specific job duty (i.e., law enforcement, prisoner transport, crime-scene investigation, fire prevention education, etc.) and the OEM discontinues that model, we have to start over. Examples include GM discontinuing the Chevy Caprice, Trailblazer, and Astro Van," said Kibler.

One concern about the financial difficulties facing GM and Chrysler is the impact on GSA. "There is a fear the OEMs filing chapter 11 (God forbid, Chapter 7) will dissolve the GSA infrastructure," said Kibler.

 Another new variable in 2010 ordering is the increased amount of available grant dollars.

"Savvy grant writers, with 'get-rich-quick' schemes from huge EPA grant funding, are approaching local elected officials with 'green-looking' retrofit proposals," said Kibler.

The City of Midwest City, Oklahoma

The City of Midwest City will acquire fewer vehicles for MY 2010 compared to last model year.

"In anticipation of reduced consumer spending, resulting in less tax revenue, we will be reducing the vehicle purchases for FY2009/2010 by approximately 25 percent," said Craig Davis, transportation manager for the Fleet Services Department for The City of Midwest City.

 The City is taking a wait-and-see approach to GM and Chrysler being in Chapter 11 bankruptcy protection. "We are currently heavy into GM vehicles with a great dealership close by, so we are optimistic their trouble will be resolved," said Davis.

 The City will increase the number of hybrids and flex-fuel vehicles acquired in 2010. "We are pursuing hybrids and flex-fueled vehicles more than ever before. Local infrastructure doesn't support natural gas vehicles yet, so we won't be going down that road without a natural gas infrastructure partnership of some sort," said Davis.

One concern about new-model ordering is the impact of the 2010 diesel emission standards. "I'm particularly concerned about the current and future diesel emissions standards and the impact on the fleets," said Davis. "The purchase, storage, and handling of urea/DEF will be an issue for us. The DPF systems are already causing upfitting problems by having to spec longer trucks, relocate fuel system components, and move oil tanks away from the heat. Additionally, operator and technician training have to be scheduled for each new system that pops up," added Davis.

City of Oxnard, California

The City of Oxnard will acquire about the same number of vehicles as last year. It does not expect to make any changes in OEMs. The most likely changes in its 2010 ordering will be downsizing vehicles and selecting those deemed more eco-friendly.

"In Oxnard, we are stuck in-between old and (upcoming) new vehicle use and procurement policies," said Dan Berlenbach, fleet services manager, City of Oxnard Fleet Services. "What I've advocated for years, in terms of controlling fleet size and growth, is finally seen by others as necessary due to the economy. But old habits die hard and change is excruciatingly hard for many in the City."

City of Littleton, Colorado

The City of Littleton will acquire fewer vehicles for MY2010 compared to last model year. "This is partly due to normal replacement cycles and partly due to lifecycle extensions," said Alan Brown, CPFP, fleet manager for City of Littleton. "We are trending towards downsized units and exploring alternative technology where practical."

However, the City's ordering plans are not yet fully finalized. "Budget projections are not clear yet, so we are proceeding cautiously," said Brown.

City of Coppell, Texas

The City of Coppell will acquire fewer vehicles for MY 2010 compared to last model-year. "The vehicles will be purchased mainly from Ford and Chevrolet distributors," said Mark Brochtrup, fleet manager for the City of Coppell.

An ongoing City strategy has been fleet right-sizing. "We have been in a pattern of right-sizing our platforms for three years now, so I don't anticipate major changes for 2010 ordering," said Brochtrup.

 As with many other municipalities, the City of Coppell is seeking to pre-buy diesel equipment to avoid 2010 models that meet the new diesel emission standards. "Fire apparatus purchases, if they hold through the budget process, will be 'late 2009' in an attempt to eliminate the purchase of 2010 HD emissions on these vehicles. If this cannot be accomplished, we will wait until 2011 to see how the 2010 emissions affect these platforms," said Brochtrup.

2010 County Fleet Buying Inclinations

Lee County, Florida

Lee County will buy fewer vehicles than last year. "We have been laying off people, so we are using their turned-in vehicles (if they are in good shape) to upgrade our higher-mileage vehicles that we would normally be replacing with new models," said Marilyn Rawlings, CEM, fleet manager for Lee County Fleet Management in Ft. Myers, Fla.  "Equipment is being replaced as necessary, but for the first time, we are looking at purchasing used equipment or leasing whenever possible."

She does not anticipate changes in OEMs. "Our OEMs will probably not change a lot on cars and light trucks, since we are standardized with Ford products. We are looking at some new equipment vendors though.  Some high-end equipment vendors have adjusted their pricing downwards, and they are now much more competitive," said Rawlings.

One change from the downturn in the economy has been the increased receptiveness by the County to outsourcing work, which has a direct impact on vehicle acquisitions. "We are looking at every process to determine who can do the task cheaper - an outside vendor versus ourselves.  If the outside vendor can, then there is no reason for us to buy new equipment."

San Diego County, California

The County of San Diego is a fully funded internal service fund. The County anticipates purchasing the same quantity of vehicles as in the past -- approximately 400 replacement vehicles. There are, however, some exceptions. 

"First, the State is expected to make radical cuts to balance its budget. Therefore, our vehicle acquisition could be affected by their actions," said John Clements, fleet manager for the County of San Diego. "Second, the Sheriff's department has indicated they only want to replace 'patrol-type' vehicles next year, avoiding new-car payments (ISF payments) and driving their civilian fleet longer.  We all know that may or may not work; we'll see." 

Also, in the next few years, the County of San Diego will have to budget accordingly for the anticipated surge of vehicle purchases.  "If the Sheriff's Department continues its stance of not buying new vehicles, I anticipate using the allocated funding to replace some of our older diesel trucks in order to meet the State diesel deadlines -- with or without grants."

The County of San Diego Governing Board has given approval to purchase Ford light-duty vehicles. "We'll continue to do so, especially since Ford seems more financially stable. We'll still purchase a variety of undercover vehicles, heavy trucks, and specialized equipment. We have just put eight new Ford Fusion Hybrids into service, and we're really impressed.  So, we may head that direction in lieu of Toyota, Honda etc., since we try to stay with a mid-sized sedan that meets all customer needs," said Clements. "Historically, we have not been heavy into alternative fuels due to the decentralized nature of our fleet and lack of infrastructure.  However, that could change quickly, based on how the stimulus funding affects the transportation market."         

Clements added the types of vehicles will remain the same, and is already hearing strong support for fire apparatus.

Polk County, Florida

Polk County plans to acquire fewer vehicles. It sole-sources its light-duty fleet with Ford Motor Co. and will continue to do so for the 2010 model-year. The County's new ordering will follow the specs, revised in 2009 to smaller vehicles and engines, said Bob Stanton, fleet manager for Polk County.

"The stalled economy is impacting capital and operating costs. Many departments have downsized and turned in vehicles as a result," said Stanton. "We're 'mothballing' these vehicles to use as the first source of replacements for the next cycle."

Arapahoe County, Colorado

Arapahoe County will acquire about the same number of vehicles for MY 2010 compared to last model-year.

 One change is that Arapahoe County plans to acquire more Ford product and decrease the volume of GM models.     

Among 2010-model cars and light trucks will be a focus toward more fuel-efficient models, such as hybrids and smaller units.  

"At this time I am watching the budget and we seem to be okay, but I will monitor the situation throughout the year," said Don Carson Sr., CEM, fleet manager/facilities and fleet management for Arapahoe County Government in Englewood, Colo. 

Franklin County, Ohio

The fleet department for Franklin County is recommending purchases be a little higher next year than in 2009.  "This is because many departments chose to pass on cars this year because of budget restraints, and now they are in a situation where they have to decide to replace the car or go without one," said Charlotte Ashcraft, director, Franklin County Commissioners Dept. of Fleet Management.

The County purchases vehicles from the State of Ohio contract.

"The price on the state contract has historically been so low that bidding out a purchase doesn't even come close to the price on the State contract," said Ashcraft.  "If you bid it out, you have the cost involved in that, and then you have to pay more for the same car you could have gotten on the state contract. We would like to buy local, but the prices just can't justify it. If we have an individual purchase that falls under our bid level we try to purchase locally, to help the local economy. We typically have one of those purchases a year."

However, the fleet department anticipates major changes coming to the composition of its fleet.  "Our Commissioners really want to go hybrid.  With that, you have limited types and styles.  We are looking at the 'job' the vehicles do and evaluating if what is available in a hybrid can do the job," said Ashcraft. "Going smaller does not always work, but the manufacturers are coming out with more and more hybrid choices. So depending on what is available and what will fit the job, we want to go hybrid."

 Another factor changing the composition of Franklin County's fleet will be available federal stimulus money. "What gets awarded will change the landscape," said Ashcraft. "We have, like many other government entities, applied for stimulus money to help with the cost of going green. If we get an award of the stimulus money, that will impact many of our decisions on whether or not to purchase."

 Ashcraft cites a variety of factors influencing her 2010 purchasing decisions. "There are so many things in play now. First, we need to go green. Second, the economy is still in trouble and money is tight. Third, hybrids and alternative-fuel vehicles are more expensive to purchase. What other budget items can we give up to afford the hybrid? If the economy doesn't right itself soon will we have any budget to work with? Federal and state funding cuts reduces the services provided, will we have the service to even have the jobs to need a vehicle?"

2010 University Fleet Buying Inclinations

University of California, Davis

The University of California, Davis campus projects fewer total vehicle purchases for the upcoming year. "But due to shifting vehicle requirements, no MY2010 vehicle procurements are set in stone," said Richard Battersby, director of fleet services for the University of California, Davis. "Budget reductions and downsizing are leading to an internal reshuffling of existing assets. There seems to be no shortage of serviceable standard vehicle types at this point, although we do expect a reduced number of vehicle replacements ultimately. Needless to say, other than specialized vehicles, there will be no additions to the fleet."

The current budget uncertainty in California, however, makes anything subject to sudden alteration. "California fleets must be prepared to respond quickly to a rapidly changing environment, not just with vehicle purchases, but also with staffing, facilities, and any other related areas," said Battersby.

He does not foresee any changes in OEM bids. "The changes to the OEMs from which we procure vehicles are mainly a function of the types of vehicles we are purchasing," said Battersby. "For example, we intend to procure CARB-approved CNG sedans this year, which are only available from Honda. We intend to procure and retrofit CARB-approved plug-in sedans, which limits us to the Toyota Prius. We would also like to demonstrate biodiesel use in sedans, which would limit us to Volkswagen."

A key factor driving UC Davis' vehicle acquisition strategy is the university's environmental initiatives. "Our organization is firmly committed to minimizing fleet's environmental impact, and our fleet composition is migrating to alternative fuels, low carbon fuels, and ultra low emission vehicles. Cost is no longer the ultimate determining procurement factor," said Battersby.

Another factor driving 2010 purchases is the availability of unprecedented amounts of grant monies.

"Many of our vehicle selections and procurement predictions this year are also tied to the previously unheard-of amount of grant funding available at the federal and state levels this year," said Battersby. "I expect to utilize OEMs we have historically procured from in the past for law enforcement and utility vehicles. However, the standard sedan market is evolving so rapidly and there are so many variables, it is difficult to predict much further beyond current or immediately pending purchases. For example, the dedicated EV sedan rumored to be available in 2010 from both Nissan and Mitsubishi - two OEMs we have rarely, if ever, procured vehicles from previously and vehicles, such as GM's Volt could also have a major impact on procurement decisions when it is released," added Battersby.

University of California, Irvine

The University of California, Irvine campus has virtually no funding for vehicle acquisition or replacement, said Gene Allen, fleet services manager. "I don't foresee any purchases for MY2010."

What are YOUR Buying Intentions?

What are your new-vehicle buying plans for the 2010 model-year? Do the comments above reflect of what's happening at your fleet?

Let me know what you think.

mike.antich@bobit.com