These are risky days for car rental fleet planners. It’s especially intimidating when you consider that it’s critical to have a disposal plan when you purchase the vehicle, yet the used car market is saturated. So, how do you refresh your fleet without losing money on the back end?
In an effort to help answer this question, Bill Lanier, managing partner, and Jerry Marifke, partner, of Automotive Fleet Resources of Memphis, Tenn., discussed the advantages and disadvantages of the many purchasing options available to operators at the Car Rental Show in Las Vegas. During their seminar, “Buying and Financing Vehicles,” Lanier and Marifke highlighted several aspects to consider, such as whether to purchase new or pre-owned vehicles, how to finance those vehicles and what’s the most profitable method of disposal. Following are nine keys to determining the least risky, most cost-effective ways to refresh your fleet.
1. Have a Fleet Plan
Because of today’s economy, operators are being forced to become more and more creative with purchasing decisions. However, it’s imperative to have a foundation from which to work. That foundation is your fleet plan.
The fleet plan takes into account your market history and helps you make educated guesses about where your fleet should be every month of the year. Industry experts recommend that you develop a 12-month fleet plan, which changes constantly due to market demands.
“Fleet is the backbone of the car rental operation. It will make or break you,” says Flavio Ruiz, director of fleet services for U-Save Auto Rental of America Inc. in Jackson, Miss. “I always tell our franchisees, ‘If you don’t have a fleet plan, you’re planning to fail.’”
U-Save’s fleet size peaks at about 15,000. Each franchise runs about 40 vehicles. If the fleet isn’t managed properly, a lot of money can get lost in the shuffle.
Frank Colonna, president of Triangle Rent-A-Car in Raleigh, N.C., also has a 12-month fleet plan, which changes throughout the year as needed. “We have an error factor of about 15% to 20%, so we underfleet by that amount,” says Colonna. “In this economy especially, it’s better to underfleet and add cars when business is going well, as opposed to having too many cars.”
Colonna also believes that creating a fleet plan is not a one-man job. “There are several people involved in creating our fleet plan,” he says. “The managers at each branch get involved as well as our regional managers, vice president and chief operating officer. This decreases our error factor considerably.”