Preventive and predictive maintenance, vehicle rotation and comprehensive driver training are just some of the ways you can keep the ‘depreciation demon’ at bay - and maximise resale values. The following vehicle lifecycle fleet management tips will help.
Depreciation is an undesirable yet inevitable aspect of the fleet vehicle lifecycle. A van, for example, can lose 30-40% of its value within the first three years. Efficient planning for, and management of, depreciation can help keep these losses to a minimum.
Here we explore how to keep your fleet in the best possible condition so that the ‘depreciation demon’ doesn't take too large a bite into your organisation's bottom line, thereby reducing fleet costs overall...
Harness your buying power
Before we look at how to manage depreciation, it’s important to consider how you purchase your fleet vehicles in the first instance.
If you're planning to buy in bulk, ensure you hold out for as low a cost as possible. And if you tend to purchase vehicles on an ad hoc basis, you might consider bulk buying as a way to control costs over the long term.
For a smaller start up with fewer resources, it may also be worth considering buying second hand. In many cases, the initial buyer has absorbed most of the depreciation costs, leaving you with a vehicle that may have several years of usage ahead of it, but costs much less to purchase. However, potentially increased repair costs and breakdowns, and being forced to buy another vehicle sooner, need to be factored into such a decision.
1. Choose models wisely
When the time comes to sell your fleet vehicles, it goes without saying that you want to achieve the highest possible price. This means buying vehicles that keep their value well - or rather, lose their value more slowly than other models.
Resale value is affected by things like popularity, fuel efficiency, reliability, safety systems, cargo capacity, easy access to spare parts, and other practical capacities and equipment that can be harnessed by another owner later on.
Look to avoid superfluous add-ons that don’t make it any easier for your drivers to do their job, and don’t add much value when it comes time to sell.
But of course, you need to ensure that any vehicles you select support your drivers in their day-to-day tasks; it’s no good having a fleet that holds its value well if it does not support your ongoing commercial goals.
In the end, your ability to carry out fleet duties throughout the vehicle lifecycle trumps resale value considerations.
2. Use market data to predict resale values
Harness fleet and market data to estimate the right time to sell with a view to achieving the best prices.
Aim to work out a sweet spot where a vehicle has achieved a certain mileage and age, but still has value to the second-hand market. This aspect of managing depreciation costs is far from an exact science, but it is very much worth planning for.
3. Predictive/preventive fleet vehicle maintenance
The condition of a fleet vehicle at the time of resale will, of course, have a huge impact on how much it is sold for. With this in mind, preventative and predictive maintenance should be a priority for any fleet manager.
This way, smaller issues will be dealt with swiftly - before they turn into more serious problems that lead to more costly repairs and longer periods of downtime. And long term, a vehicle will be in much better condition when the time comes to sell.
Predictive vs preventive maintenance
A plethora of solutions are available that can help plan predictive fleet vehicle maintenance. These can be especially useful for larger fleets, where it's challenging to keep tabs on the condition of dozens of vehicles.
Predictive fleet vehicle maintenance harnesses Internet of Things (IoT) sensors, data analytics, and artificial intelligence to build a real-time picture of a particular vehicle's health. Engine temperature, battery condition, vibration levels and brake performance can all be monitored with predictive maintenance systems.
Preventive fleet vehicle maintenance differs from predictive maintenance, and involves scheduling maintenance and checks on certain predefined dates. These checks will be determined by manufacturers' guidelines and historical maintenance data. Software solutions are also available for this task - and in many cases are part of packages that handle both preventive and predictive maintenance.
Good maintenance will help prevent breakdowns, reduce asset downtime, adhere to regulatory and safety responsibilities - and help preserve vehicle value.
4. Keep your fleet clean
The build-up of dirt, grime and moisture will corrode vehicle bodywork and other components over time.
By instituting a regular cleaning schedule you'll slow down this corrosion and better manage your depreciation costs. Additionally, maintaining a hygiene schedule is an important fleet management tip since it will bolster the company’s image on a daily basis.
5. Minimise wear and tear by rotating vehicles
If you use some fleet vehicles more than others, those vehicles will suffer more wear and tear, require more repairs, and will ultimately fetch a lower price when the time comes to sell.
With this in mind, it's important to keep tabs on vehicle mileage across your fleet. If you notice that a certain group of vehicles is getting used more than another, consider rotating these, which should help even out usage across your fleet.
Logbooks and/or spreadsheets can be used to keep track of mileage across the fleet.
Alternatively, electronic logging devices, paired with software, can streamline the mileage-logging process - removing what can be a tedious task prone to human error.
Such solutions are often bundled in single overarching fleet management systems.
6. Invest in driver training
It's critical your drivers know how to use your fleet vehicles in a way that reduces wear and tear over time. Invest in comprehensive training programmes that discourage hard braking, acceleration and speeding, and promote safe driving and carrying out necessary checks.
As well as helping to maintain a vehicle's resale value (and reducing the likelihood of a collision), it will assist with overall safety, regulatory compliance, operational efficiency and fuel efficiency.
7. Buy and sell at the right time
Aim to buy as many fleet vehicles as possible in the early part of the model year (this is when they have more perceived value). And when the time comes to sell, avoid the slower winter months, when you're likely to achieve lower prices - adding to your depreciation costs.
Additionally, a vehicle that is still under warranty will fetch a higher price than one that isn’t.
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