By Rob Wilson – Director IPWEA FLEET
Know when to hold ‘em.
During the 2019 Plant and Vehicle Fleet Management Workshop series we were joined by the team from Summit Fleet Leasing and Management (Summit). Summit provided a very interesting and engaging insight into establishing the right time to replace fleet assets. They also had some participants struggling to get the Kenny Rogers song out of their heads!
One of the underlying messages was that data is everywhere and drives good decision making. With today’s data capture capability, telematics and analytical tools, very high levels of data are available instantly covering areas such as; vehicle maintenance, driver behaviour, incidents, emissions, fuel consumption and so on. The availability of data can assist to make dynamic replacements decisions. Summit quoted economist.com saying “The world’s most valuable resource is no longer oil, but data”.
A dynamic approach to asset replacement is important because the reselling market is a moving target. New technologies, new energy sources, new types of vehicles and macro-economic factors such as interest rates all influence the return you get for your retiring assets. You need to be across the market.
Trends and fashions can also influence outcomes – think of the impact SUVs have had on the sedan market. We’ve also seen fuel prices influence the market in the past. What might happen in the future with environmental governance increasingly moving into the frame?
Complexity of fit-outs can change optimum replacement points. If you modify or enhance a vehicle with a special purpose body or high-level accessories your depreciation profile will change and affect your whole of life costs.
Is the asset the right type for the job? We know fitness for purpose affects operational performance, maintenance costs and safety – but it will also impact residual value. An asset that is not suited to its task will bear the scars and have a lower residual value.
The key takeaway for the Summit session for me was that optimum replacement timing needs to be a dynamic thought that considers all the factors that affect residual values. Collect the data you need to make good decisions, understand the market and react accordingly to maximise returns.
Summit provides a free service to IPWEA FLEET subscribers – the Vehicle Comparison Service. If you are trying to establish the best asset to buy or decide when to replace it, you can ask Summit to provide a free, no obligation comparison of vehicles based on real life and current data. You can find out more here.