How The Right Fleet Vehicle Management Tool Can Save You Millions
The right fleet vehicle management tool can help you do the same amount of work with a fraction of the inventory. You could potentially save millions by sharing vehicles more effectively and selling unused inventory.
The Steep Cost of Unused Vehicles
Organizations of every type and size rely on fleets of vehicles to effectively perform their jobs. However, with the increase in the remote and hybrid work environments in today's workplace, many organizations may find that they are relying on the use of their vehicles less frequently than ever. This shift poses an important question: does your organization really need every vehicle you currently have in your fleet?
A Costly Cumulative Effect
Let's look at carrying costs of a single passenger vehicle in your fleet.
Initial Purchase Price: $25,000
Ongoing Annual Cost: $4,000-$6,000
Annual costs for each vehicle in a fleet typically consists of:
- Administrative costs
- Parking spaces
Based on the costs above, a fleet of only 10 single passenger vehicles could cost you up to $60,000 per year.
Now, let's say you have a fleet of 500 vehicles.
- 500 vehicles at $25,000 purchase price per vehicle represents about $12 million in initial investment for your organization.
- This size fleet will generate roughly $2 million in annual carrying costs for depreciation, maintenance, etc.
If cutting unnecessary costs and saving money is a goal for your organization, it's essential to examine the necessity and cost of each vehicle in your fleet and right-size accordingly.
Why Unused Vehicles Can Cost More Than Active Ones
Every vehicle in your fleet is costing you money, whether or not it's regularly driven. And, while it might seem counterintuitive, an unused vehicle can actually cost your company more money than a vehicle that is being driven frequently.
A vehicle that goes unused for significant periods of time is subject to a number of frustrating issues: rusted rotors, flat tires, and dead batteries, among others. All of these annoyances will require special attention from your fleet staff and ultimately cost you money. Compounding the problem, many organizations haven’t modified their budgets or their vehicle acquisition process even though the way they use their fleet vehicles may have changed over the past few years.
Let's look at another example of how vehicle cost can quickly add up.
- A vehicle is assigned to a single employee who is allotted 5 weeks of vacation per year. This employee is also granted additional time off for federal holidays and weekends.
- 5 weeks of vacation equates to roughly 10% of the calendar year. Additional paid holidays and weekends equals roughly 28% of a year. Combined, the idle time of this vehicle equates to almost 40% of the entire year - and your organization is still paying for it.
Clearly, it's important to consider the long-term cost of idle vehicles, as well. If we looked ahead at a 10 year span of this same scenario, the cost of maintaining this vehicle would be significant. By eliminating it, the company savings would amount to roughly $50,000 in annual savings in a single decade.
Right-Sizing Your Fleet with Vehicle Sharing
While the concept of fleet vehicle sharing may seem daunting at first, it actually can be straightforward and easy to implement when you have the right tools. First, let's look at the essential factors that make vehicle sharing successful.
Components of Vehicle Sharing
To share vehicles effectively, you need to master three different components.
1. The first component is the scheduling and coordination of vehicle sharing among a team. This part is essential, as it helps ensure that all vehicles are accounted for and that team members are able to schedule - and adhere to the schedule - when sharing vehicles. This will help teams efficiently use their vehicles and prevent overlap in vehicle sharing and other issues.
2. The next component is key management. This is the process that ensures drivers are able to obtain keys when needed and that they return them in a timely manner.
3. The third component for successful vehicle sharing is ensuring your company has accurate and up-to-date data of fleet metrics. Having a system that automatically generates reports, metrics, and dashboards is key, so that you can know exactly how many vehicles of each type you need at each location.
How FleetCommander Can Get You There
We developed FleetCommander, our fleet management software solution, to help you manage each component of successful vehicle sharing.
Our innovative software system allows your organization to:
- Set up an online reservation system or self-service kiosk for a pool or shared vehicles
- Automate fleet key management around the clock
- Collect data for vehicle usage, fuel cost, maintenance cost, and more to identify where you're spending the most
When vehicles are in a self-service motor pool, they're used more effectively and consistently. And with fleet vehicle management software like FleetCommander, organizations are also able to better understand vehicle usage, automate vehicle sharing, manage key sharing, and assess for accident and risk management.
All the efficiencies you can achieve from our software not only provide ease of service but can save hundreds of thousands - if not millions - of dollars for your company.
Modern Solutions For Fleet Management
Vehicle use across many industries has changed in recent years. Government fleet vehicle usage across the country has dropped by an average of about 50%. Among colleges and universities, that number may be even larger. In an ever-evolving remote and hybrid workplace climate, it's the perfect time to look at eliminating unused vehicles and saving big on fleet management costs.
How much could you save by maximizing your fleet vehicle management? Contact our team of experts.