Fleet & Plant Management

Light Vehicle Replacement Criteria

  • 1.  Light Vehicle Replacement Criteria

    Posted 25 June 2019 01:14
    ​Hi All,

    I am investigating trigger points that Council's and organisation may be using for their light vehicle replacement.
    Isaac Regional Council currently uses 5 years or 120,000km which seems to be most common, but I realise that there are a number of alternatives.

    If any of you would be so kind, what criteria is your organisation using and what do you feel are the benefits or downsides to this approach.

    Any information you can provide would be helpful.

    Thanks for your time.

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 2.  RE: Light Vehicle Replacement Criteria

    Posted 26 June 2019 18:28
    Hi Robert

    Albury Council currently uses ​150,000km only. The main point of interest at the moment is low utilisation vehicles where the age sometimes exceeds 10 years.

    Peter Lawrence
    Fleet Coordinator
    Albury City

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  • 3.  RE: Light Vehicle Replacement Criteria

    Posted 27 June 2019 20:33
    ​Thanks Peter,
    Is there any concerns about aging vehicles not meeting current WHS standards?
    Do you receive any criticism from senior staff that may wish to have their vehicles turned over more frequently regardless of utilisation?

    Cheers

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 4.  RE: Light Vehicle Replacement Criteria

    Posted 26 June 2019 18:29
    Hi
    Personally I would look at 2-3 years or 80-100,000km.
    Simple reason as soon as vehicle hits 100,000km mark resale/trade in value takes a significant dive.

    Regards
    Ganesh

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  • 5.  RE: Light Vehicle Replacement Criteria

    Posted 27 June 2019 19:46
    ​Hi Ganesh,
    Thanks for the response.
    A question. Does your organization pay stamp duty on new vehicles? As this makes early turnover of some vehicles much more attractive.

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 6.  RE: Light Vehicle Replacement Criteria

    Posted 30 June 2019 17:49
    Hi,

    I've undertaken modelling of this a few times now and considering trade-in value, running costs, kms and general wear and tear, 5 years and 120,000 - 150,000km is the general asset turn-over. Reduced trade-in value less frequently compared to better trade-in value more frequently has little impact on the actual capital cost over time. Its difficult to convince people to hang onto vehicles for 5 years though. 120,000 to 150,000 is usually in the range of needing major maintenance which is actually more of a trigger than trade-in value.

    Just my observations.

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    PeterGall
    MIEAust MIPWEA
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  • 7.  RE: Light Vehicle Replacement Criteria

    Posted 02 July 2019 22:21
    ​Cheers Peter, Thanks for the info.

    Nipper.

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 8.  RE: Light Vehicle Replacement Criteria

    Posted 30 June 2019 17:49
    ​Good morning Robert,
    Southern Downs Regional Council has recently changed from 5 years/120,000Km to 4 years/90,000Km.

    As all of the Auction prices indicate there is a major drop off in values once you exceed the 100,000Km mark.

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    Brett Donovan
    Fleet and Workshop Coordinator
    Southern Downs Regional Council
    Warwick Qld 4370
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  • 9.  RE: Light Vehicle Replacement Criteria

    Posted 30 June 2019 19:48
    ​Hey Nipper,

    RRC renews its light vehicles at 7yrs or 120,000km whichever is trigger first.  Renewal points for all assets are set by the executive team (report by me) when we are doing long term financial plans, so acceptance is not an issue, but I note we have no private use cars anymore as we have moved to vehicle allowances and novated leasing etc.  There has been no WH&S concerns as essentially if there is a fault it is fixed.  Our light fleet averages 18,000km/yr hence most are renewed at 7yrs.  For the very few high km/yr they get done sooner as they trigger 120,000.  Longer periods are always lower cost due to the spreading of depreciation over longer term, but noting I think it is risky to go above 150,000 due to high cost failures not covered by warranty.  I gather this may not be your issue...…..!
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  • 10.  RE: Light Vehicle Replacement Criteria

    Posted 02 July 2019 22:20
    ​Thanks Michael

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 11.  RE: Light Vehicle Replacement Criteria

    Posted 02 July 2019 22:20
    ​Hi Everyone,

    Thanks for your responses and insights.

    Good to see the Community Board is alive and well! Let's keep it that way!

    Cheers,
    Nipper.

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    Robert "Nipper" Winley
    Plant Coordinator
    Isaac Regional Council QLD
    0409595749
    robert.winley@isaac.qld.gov.au
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  • 12.  RE: Light Vehicle Replacement Criteria

    Posted 04 July 2019 00:26
    In a former life working for a rural shire council in northern NSW, it's LV replacement was carried out at 40000 km or 4 years by individual tender process from local dealers. In the early 2000s this changed to a supply contract for the whole LV fleet (30 vehicles predominantly SUVs & tues). The first contract did not work particularly well with two suppliers.

    In 2004 a new supply tender was prepared. The subsequent contract went to one supplier only which required replacement at 16000 km or 6 months. With the current usage the 16000 km dominated. The contract price included pick up of the old ( sic) vehicle and return of the new vehicle (180 km each way) to the works depot. It also included changeover of bullbar, towbar, trays, radios, etc. Servicing was done locally.

    The advantages were numerous - minimal downtime (1 day only away from town), new vehicles (great for private use), Contractor arranged everything, minimal (usually nil) repairs & tyre change. Changeover cost was considerably less than the original system - typically  up to $2000 for utes  & up to $3000 for SUVs.

    The 3 year contract had provision for cost adjustments in govt contract prices & the inclusion of additional or changed vehicles. Extensions were available at the end of the initial period & were approve by full Council.
    The relationship with the supplier was great.

    Don't know if the Council is using the same contract but the vehicles are the same breed.

    Just thought I would throw this into the mix as food for thought & an alternative to the usual.

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    BrianTurner
    Turner Civil Engineering Services
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  • 13.  RE: Light Vehicle Replacement Criteria

    Posted 04 July 2019 17:49
    It's great to see the discussion on this topic that Nipper has started.

    For a variety of reasons I caution against drawing too much from past practices or basing your organisation's light fleet replacement policy on what others are doing. Information needs to be current and the decision on when to replace light vehicles (or any asset) needs to be based on optimum replacement timing, determined for the specific asset type in its specific operating conditions. Optimum replacement timing for light fleet considers:

    • Whole-of-life cost
    • WHS considerations
    • Environmental impact
    • Warranty conditions
    • Market conditions (including changeable residual values)
    • Operating conditions
    • Remote locations – make/model availability and service support
    • Technology

     IPWEA's Plant and Vehicle Management Manual provides guidance on determining useful lives. IPWEA also provides subscribers with tools to undertake your own analysis for:

    • A WOL cost calculator which can be used to estimate WOL costs over various scenarios using an organisations data
    • A Light Vehicle Comparison Service which is a great tool to compare WOL costs over different life cycle scenarios using fleet industry data.
    These can be found at the IPWEA website Fleet & Plant - Institute of Public Works Engineering Australasia

    Ideally optimum changeover is reviewed annually taking into account the above factors and the organisation policy allows the fleet manager flexibility to take advantage of market opportunities.

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    Ross Moody
    Director IPWEA Fleet
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  • 14.  RE: Light Vehicle Replacement Criteria

    Posted 24 July 2019 17:35
    It has been interesting following the conversation.  I note that a large part of the conversation has been focused on the finances related to vehicle changeover, which is important considering how we are accountable to the ratepayers.  However, there is also a Duty of Care to any operator and the passengers of the vehicle, and this filter will sit above the financial considerations.  I note that recent media has highlighted crash testing of older vehicles against newer vehicles, and the significant differences in safety performance recorded.

    Vehicle manufacturers are rapidly making improvements to the safety technology incorporated in their vehicles, with many making this part of their standard models.  This starts creating issues about optioning up from entry level vehicles to provide suitable safety equipment, and potentially extend the life of the vehicle.

    I recall an incident several years ago not long after airbags were introduced to utilities, sedans had them as standard for some period prior, my Council was fortunate that our employee and their passenger were in a utility with airbags.  They were injured, but the severity of their injuries were significantly reduced by the presence of the airbags and the other built in safety features. The resulting savings in workers compensation premiums easily paid for the higher safety equipment level in that vehicle.  This little story should help reinforce the need to not focus to narrowly on financial costs and to keep in mind your Duty of Care to provide a safe workplace.  The financial penalties that could result will always exceed your perceived savings.

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  • 15.  RE: Light Vehicle Replacement Criteria

    Posted 02 July 2019 18:02
    Mr. Robert,
                      For a piece of fleet replacement, a well-known analysis known to be Fleet technical analysis (FTA) is used to decide the LHV need to replace or retain in the existing fleet. The major factors of analysis are
    1. Vehicle remaining useful life
    2. Vehicle age
    3. Brand reputation factor
    4. Existing KM's
    5. Instant repairs cost
    6. Condition (Used, Unused)
    7. New market replacement value
    8. Utilization status
    Considering all the aforementioned factors will give us a systematic approach towards making the decision of Replacement Vs Retaining a piece of LHV.

    Regards,
    Muhammad Kaleem
    Fleet Manager
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