No. 1 factor for fleet vehicle acquisitions? Economics

by

Published: July 9,2007

With gasoline prices hovering at nearly $3 per gallon, businesses are increasingly motivated to cut costs for transportation.

“Right now, economics is the biggest motivator for all the corporate and business fleet vehicles purchases,” said Larry Metzler, commercial sales manager, Gray Daniels Chevrolet, Jackson. “Whether a small one- or two-vehicle company all the way to big corporations with hundreds of trucks, they are all looking at it the same way.”

Metzler said businesses aren’t just looking at fuel efficiency, but overall costs to operate the vehicle including maintenance and repairs. Because diesel motors have average longevity that is twice that of gasoline motors, diesel trucks are increasingly popular.

“With diesel prices staying below gas, quite a few of companies have bit the bullet to pay $5,000 to $6,000 more for diesel trucks,” Metzler said. “The diesel has more torque, which gets the load moving. That is key if you are going up a hill or away from a stop sign. The diesel trucks don’t have park plugs, and need oil changes only every 7,000 to 10,000 miles depending on how the customer drives the vehicles. As long as you take care of a diesel, they will last a long time.”

Regular maintenance

His experience has been that while many people don’t take care of their vehicles, most businesses are careful to keep records and do regular maintenance.

“It’s like a tool,” Metzler said. “If you don’t take care of it, it won’t be there in the morning to take you to work.”

There is also a trend to do maintenance on vehicles at 200,000 or even 300,000 miles and keep the vehicles on the road rather than change them out. Metzler said businesses are working harder to economize their fleet costs than in the past.

Don Daughdrill, general sales manager for Estabrook Toyota in Pascagoula, said he has seen an increased interest in hybrids as fleet and business-type vehicles.

“More and more businesses are going for more fuel-efficient cars as opposed to the heavier cars that get worse gas mileage,” Daughdrill said. “Yes, it is definitely heading in that direction.”

But when businesses are buying a truck, the ability to do the job is the most important factor, not fuel economy. If people can use a smaller truck that gets better fuel economy, they will.

“But if they must have towing capacity, fuel economy is not necessarily the main issue with trucks,” Daughdrill said. “It is whether they can do the job.”

Neely Brown, fleet sales manager, Watson Quality Ford, Jackson, said the F series Ford truck is still the best seller.

“Businesses need vehicles that have a good amount of power,” Brown said. “This has been the number one truck for 24 years running. The amount of time an individual keeps one is probably four or five years, putting on anywhere from 150,000 to 200,000 miles. They hold up well.”

Brown said his company sells a lot of fleet vehicles to municipalities in the state. The Crown Victoria is the most popular type of car purchased.

Bulking up

Large companies such as Entergy Mississippi are able to save money through bulk purchasing.

“One thing about our fleet purchases and leases is we are able to get cost concessions and discounts with major manufacturers that translate into savings for our customers,” said Ann Becker, spokeswoman for Entergy Mississippi. “As an example, we pay about $4,000 less to purchase a truck through fleet purchases than an individual would pay. Any chance we can see to measure cost efficiency that translates into savings for the customer is something that interests us.”

Entergy Mississippi has a fleet of approximately 500 vehicles, roughly half of which are large vehicles like bucket trucks. Line trucks are leased. Diesel vehicles are usually kept for 250,000 miles.

“Energy efficiency is something we are looking into,” Becker said. “In Arkansas, we have leased a hybrid truck in a pilot program looking at the total cost efficiency of operating that vehicle. It is much more expensive to acquire than a regular truck, but there are some tax incentives. We want to see if the acquisition costs fall in a range that will benefit our customers.”

In Baton Rouge, La., and New Orleans where Entergy is also a provider of natural gas, the company has approximately 75 vehicles that run on natural gas. They use either full natural gas or a mixture of gasoline or diesel with the natural gas.

“One reason we are able to do that there is the infrastructure exists to support the vehicles,” Becker said. “For example, you can find a pump for natural gas which would be difficult to find in Mississippi.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

[RSS Feed] [del.icio.us]



To sign up for Mississippi Business Daily Updates, click here.

POST A COMMENT

 

Top Posts & Pages