Vehicle Selection
Correct vehicle selection is one of the key factors of reduced fleet cost and optimised vehicle utilisation. The initial choice of Car vs LDV vs MCV vs HCV is relatively simple but the detail is in identifying the “Fit for Purpose” requirements and then selecting a make and model using a range of cost, operating and service support criteria.
However, let’s select an LDV where a driver may consider that a 4x4 double cab is essential for business and private use, yet closer evaluation may identify that a pickup will do. Decisions like this will significantly reduce costs.
The initial selection process will identify the “Fit for Purpose” requirements for a vehicle and equipment by clearly defining operating requirements (usage, cargo specifications, customer access, driver needs, etc.). Of course there is no point in using an MCV when an LDV will do.
This initial process will identify a range of vehicle from a number of OEMs but what factors determine the final selection.
- Vehicle Cost - this is important but often not the best criteria. Selecting on price, as is seen in tenders, can create a mixed fleet of makes and models which negatively influences workshops ( training, tools and stores) and operating efficiency (driver training). Best to minimise the model mix.
- Maintenance costs – where maintenance represents 10 -15% of Total Cost of Ownership (TCO) the benefits of maintenance and service plans, service intervals and warranties need evaluation.
- Dealer support – is the vehicle supported locally, no point in travelling far to service a vehicle.
- Spares availability – critically important to maintain vehicle uptime. Both mechanical and crash parts.
- Fuel Consumption – this is easy to understand. As an example, a reduction of 2 litres per 100 Kms for 30,000 Kms pa represents an annual saving of R7,800.(TCO)
- Spares pricing – this requires a simple comparison for a range of wear and crash parts. Do not forget to include windscreens and tyres. The answers to this simply survey will surprise you!
- Make and model continuity – don’t buy a vehicle on runout, unless there is a cost benefit, as it will affect resale value and ultimately cost of ownership (TCO)
- Funding methods – Dealer incentives, OEM backed finance packages or your own usage requirements may introduce attractive financing options which are appropriate to your financial needs.
- Company’s procurement policy – minimise your mix of vehicles and focus your procurement on the least number of suppliers. This will maximise the cost benefits of fleet and spares discounts, and labour rates. Service levels will increase because they know you as a valid customer.
Many of the above factors are incorporated into the Total Cost of Ownership (depreciation, interest, maintenance, fuel, insurance & licensing) cost model.
This mix of TCO, finance options, service support and Fit for Purpose considerations will enable you to easily select the right vehicle.
Have a question?
Contact Nigel Webb - Latitude Fleet Services - nigelw@latitudefleet.co.za