The impact of the present COVID-19 crisis is directly being felt in cash flow, so are you talking to your bank and lenders to see what arrangements you can make?
Many business use vehicles to get to work, provide a service and carry their tools. Have you really thought about the impact of a worldwide change of this business model, and how that is going to impact on your fleet?
Your people are presently getting very used to working from home and they are kind of liking the lifestyle changes it give them. If they continue to operate from home, there are many fleets and personal cars that will see a significant drop in their utilisation. The good news with this is that fuel and maintenance costs will reduce, but what are you going to do about the fixed costs?
Fixed costs comprise of:
- Lease/Loan payments
Here is what we at Uniqco Fleet Data Analytics recommend you should discuss and implement:
Insurance – talk to your insurers and explain that some of your fleet will be travelling a lot less. Your people may be confining their activities to runs to the shop, school and parking their vehicle in the garage more. The insurer may consider reducing the premium because they will not have as great a risk of having an accident.
Depreciation – depreciation is by far the highest cost of owning a vehicle. The reliability of vehicles has increased tenfold, so to hold on to the vehicle is a good thing. Our data indicates that the optimum time to replace a vehicle is 5 years or 150,000km (or in the old miles money nearly 100,000 miles). If a mileage is lower, say 15,000km, the economical timing for replacement is more like 7 to 10 years. While the vehicle will be worth very little at the end of life, it will have still amortised the depreciation over a much longer period.
Operating Lease – because an operating lease accommodates the depreciation, if there is going to be less driving, look at the contract. Negotiate with the provider to align the contract appropriately with the mileage that is now predicted. Ask for them to provide a longer term, they should be able to give a term of 84 months over which to lease. Don’t wait, renegotiate now!
Loan – repayments, these can be renegotiated based on today’s outstanding balance and the funding of this balance for a longer period than previously predicted. If your vehicle is paid for and has only done low kilometers (below 150,000km) hold on for a couple of years before replacing the vehicle, it is not going to lose a lot more value. We all like the smell of a new car but you need to be able to afford it.
Parking – this is an interesting challenge particularly for people who live in apartments and pay for parking. Short answer is if the need for a vehicle is 10,000km per year or less, look at car share, ride share, hire car. A car is not really needed.
At Uniqco Fleet Data analytics we merge data, analyse the data and tell the story behind the data. Traditionally we have worked with Government fleets but coming soon we can offer you our analytics product in a monthly charge per vehicle. This will allow you to become part of the Uniqco community sharing fleet data to make sure your mobility costs are in control.
Contact us email@example.com
Uniqco fleet data analytics is a company that provides a software to merge data from multiple sources to deliver easy to use fleet data analytics to monitor financial risk and safety compliance. Grant Andrews the Managing Director of the Uniqco Group was the main author of the Institute of Public Works Australasia Plant and Vehicle management manual 1st 2nd and 3rd edition and regularly commentates on the stories behind fleet data