Ed Smith
President, Agile Fleet
In over 22 years of working with hundreds of fleets of all types and sizes, I’ve never seen anything more effective at producing savings than by right-sizing a fleet with automated vehicle sharing.
Why? Because idle vehicles cost money... lots of money. Improving how you share vehicles allows you to eliminate vehicles from your fleet while continuing to provide drivers with the access they need.
To put this into perspective, the following example illustrates that for each fleet vehicle that you eliminate, you can save more than $50,000 over ten years. Do the math for your fleet or download the easy-to-use 10-year fleet cost-savings calculator that Agile Fleet, Inc. developed to see how much you can save by right-sizing your fleet!
“The 50 vehicles we cut (using FleetCommander Data) were elegible for replacement. It would have cost the county $800,000 to replace those vehicles, not to mention ongoing maintenance and depreciation expenses that would have been associated with those new vehicles. That’s a considerable savings.”
— Forsyth County, North Carolina
10-Year Cost-Savings from Eliminating One Vehicle
How much money can a fleet save by eliminating just one vehicle? Take a look:
Each vehicle that you eliminate from your fleet is “a gift that keeps on giving.” As a start, you generate cash from selling the under-utilized vehicle. Then, you eliminate the annual carrying costs for that vehicle each subsequent year. Carrying costs include depreciation/lease expenses, maintenance, insurance, parking, and administrative costs. So, you end up eliminating the carrying costs in the first, second, third year…and on and on.
Eliminating just one vehicle has a 10-year savings of $50,000
How Much Can You Save?
The math is straightforward. Just figure out how many vehicles you anticipate eliminating and multiply that by the 10-year cost savings per vehicle. Even though the math is simple, how do you know how many vehicles you can eliminate? Here’s a simple approach:
The example above is for a 100-vehicle fleet. There may be vehicles that you know cannot be shared. For example, emergency vehicles, dedicated special purpose vehicles, and others. In the above example, we first subtract 35 of these from the 100 total to arrive at 65 vehicles that can potentially be shared.
Next, the example estimates the percentage of the fleet that is used daily. In practice, you can estimate this percentage by looking at paper trip logs, telematics data, and other internal sources. At Agile Fleet, we’ve seen that many fleets today are operating at between 40 and 60% utilization, and, in the past 18 months, the utilization rates have even decreased further due to job function changes brought on by remote work or teleconferencing.
By multiplying vehicles to be shared by the utilization rate, the example shows that mathematically, 26 vehicles are essentially “idle.” In reality, this is spread across the entire fleet. So, to be conservative, the example reduces this number by an extra 20% so there are enough vehicles to meet peak demands. The calculation leaves an extra 5 vehicles (~20%) in the fleet to handles these peaks. The result is an estimate of 21 vehicles that could potentially be eliminated.
In this way, once you have estimated the number of vehicles that you propose eliminating (20), you can calculate 10-year savings by doing the math one last time:
That’s it. $1,000,000 saved over ten years without impacting fleet drivers. While that saving seems very large, it likely understates the true potential savings. Other factors that can increase the savings include:
- Reduced costs associated with labor that previously had to manage each of the vehicles eliminated
- Eliminating or reducing outside rental charges since automated vehicle sharing can fulfill the occasional need for vehicles that would otherwise be fulfilled through outside rentals
- Eliminating or reducing reimbursements for the use of personal vehicles. The vehicle sharing initiative would fulfill the need for vehicles that would otherwise be fulfilled with personal vehicles.
Fleet Savings with Automated Vehicle Sharing – A Case Study
The cost savings from vehicle sharing has been demonstrated across nearly every type of passenger & light-duty fleet, including in federal, state & local governments, higher education, utilities, social services, commercial, and non-profit fleets. This example from the City of Stamford, Connecticut, reveals 10-year savings exceeding more than $3,000,000!
City of Stamford, CT
- The new city fleet manager perceived that the fleet of 80 passenger vehicles assigned to departments at the city’s Government Center was under-utilized.
- All 80 vehicles were moved from department-assigned pools to one central pool.
- Vehicle sharing was enabled through an automated motor pool system using FleetCommander.
- Drivers had improved access to shared vehicles through self-service, automated kiosks 24 x 7.
- Fleet staff monitored utilization and gradually removed vehicles from the fleet until utilization rates peaked at around 85%.
- In the end, the City of Stamford eliminated 61 vehicles from an initial fleet size of 80 vehicles.
- The estimated 10-year fleet savings at the time exceeded $3.3 million dollars… and all drivers still had easy access to vehicles! The savings in 2022 dollars would have been even higher due to the extremely high resale values in today’s market.
This tool is simple by design. Beyond what the tool shows, there are many other benefits and savings that are realized through improved vehicle sharing. We invite you to talk with our team to learn more about additional savings that can be achieved by optimizing existing shared fleets, eliminating assigned vehicles, automating manual fleet processes, and more. You can download the fleet savings calculator here.
“With FleetCommander, we are now able to collect the utilization data we need to make smart decisions about where to cut our pool vehicles while still enabling our drivers to have access to the vehicles they need to do their work.”
— Central Arizona Project
“The Kentucky Cabinets for Energy, Environment and Public Protection (EEC PPC) has reduced their two original motor pools by 28% through the use of FleetCommander fleet and motor pool software solutions.”
— Commonwealth of Kentucky
