Part 2 – How Automotive Tariffs Will Impact Fleet – An ARI Special Blog Series

It’s Time to Talk Tariffs with Your Fleet Partners

The saying “time waits for no one” conjures up fond musical memories for some of us, but the Rolling Stones song title from 1974 is a pretty accurate way to describe life in 2018’s fast-paced fleet industry.

Living in a world where everything happens quickly and around the clock, the delayed impact of the new tariffs on imported aluminum and steel announced earlier this year feels somewhat odd. We all know that trade policies of this magnitude take time to implement. Still, with the holidays upon us and 2019 close behind, it’s almost impossible to shake the feeling that “something of significance” should have happened by now, right…?

Right. That something is indeed happening, but at a slower rate than what we’ve become accustomed to these days. There is a trickle effect to how tariffs will impact your actual fleet costs, in part because there’s a time element to the importing process. Products and materials that have already reached the United States didn’t incur the tariff, so pricing increases are still ramping up for the most part.

Here’s some good news – you can leverage this time to your budgetary advantage.

Pro Tips for Tackling Tariff Impacts

Here are some insider tips for how to work with your upfitter partners to get ahead of price increases:

  • Demand transparency – Hold your upfitter partners accountable for discussing potential pricing pitfalls with you upfront, and not after they happen. At Auto Truck Group, we’ve already changed the way we work with our customers to help shield them from pricing surprises. In order to be as transparent as possible in this new environment, we’re issuing quotes that are valid for 30 days rather than the entire model year. This ensures that we’re constantly re-evaluating the market for any supplier increases, and we can immediately notify clients in case they want to pivot their plans.

 

  • Spill all the details – There’s no such thing as TMI (Too Much Information) when requesting an upfitting quote these days! The more visibility you share with your upfitter regarding your intended order timing and volume, the better we can negotiate the entire supply chain on your behalf. This clarity is also important to best equip your upfitter to support your budget conversations with internal stakeholders.

 

  • Consider changing up the calendar – If you’re open to making some timing changes, set that expectation with your upfitters. Arming your partners with these details empowers them to offer creative solutions to delay exposure to pricing increases. For example, Auto Truck Group can facilitate pre-orders and the increase in interest costs may be less than the pending price increase. Leveraging bailment pools are another tactic that can mitigate cost increases in 2019.

 

  • Give permission to get creative – If your vehicle specifications and job requirements allow it, your upfitters should be making design recommendations that can save money. Auto Truck Group will review our customers’ specs for opportunities to change suppliers or materials. Can we use less aluminum or steel without have too much of a negative impact on the vehicle’s weight? Is there an opportunity to leverage parts already in our inventory? We will have these conversations with our clients to consider options as well as the long-term pros and cons of any changes.

 

  • Communicate, communicate, communicate – Keep the lines of discussion open with your upfitter partners. We’re all in this together. At Auto Truck Group, we believe that our job is not only to deliver high quality, job-ready vehicles on-time, but help our clients navigate policy changes that impact their budgets.

 

Keep your eyes on the horizon

As you’re planning orders for next year, involve your upfitter and fleet management company as soon as possible if you haven’t done so already. There’s still ambiguity around the cadence of actual tariff impacts in 2019, so leverage your strategic partners early to discuss options, alternatives, and how we can help adjust your planning to make the most of this situation.

 

 

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