Don’t stop replacing vehicles just because lead times are outrageous

We’ve known all year that 2021 was going to present an unusual ordering season. How many times have we said it? “Due to COVID outbreaks, microchip shortages, and plant downtime….” Plans for implementing best practices for spring and fall order cycles went out the window a while ago. The second most used phrase with fleets in 2021 has been “get your orders in as soon as possible,” and you will continue to hear it from us.

Here’s how the OEMs are rolling for MY2022:

  • They are delaying the opening of order banks and/or swiftly closing order banks with little, if any, advanced notice. For example, the order bank for one major van model was reduced from six months to just three weeks.
  • They are cutting back fleets’ order quantities by hundreds of vehicles.

Then, once your orders are in, it’s going to be a long, long wait for delivery. Here’s what you can anticipate in terms of status updates:

  • Scheduled for production – It will take at least a month, probably longer, for your order to come up at the OEM.
  • Lead time to upfitter – It could take 20-40 weeks before your vehicle heads from the OEM to the upfitter.
  • Lead time to build – Once your vehicle is heading to the upfitter, it will be travelling with a whole slew of other vehicles all coming off the assembly lines at the same time. Your upfitter will start working on it when they have: 1) room on the floor, and 2) all the parts and equipment they need. That could take an additional two-to-four months.
  • Lead time to delivery – Realistically, you’re looking at six months to a year.

To sum it up, if you place an order for a standard vehicle today, you will likely receive it next spring. If you order a vehicle today that needs upfitting, you should get it sometime in the latter half of 2022.

You can find model-specific production status information on the ARI Fleet Industry Updates webpage. Select the “Manufacturers” option from the dropdown menu.

Unlike ordering last year for MY2021, getting your budget approved for new vehicle orders hasn’t been the biggest problem this year. Instead it’s managing an existing fleet of aging vehicles that you can’t take out of service because there are no new vehicles available to replace them. Don’t get caught in the Budget Uncertainty silo.

Here’s how you deal with this challenge:

  • When it comes to ordering for MY2022, you may be starting with a blank canvas. Be willing to branch out to other OEMs and vendors than the ones you’ve been most loyal to. Don’t get caught in the Supply Chain Bidding silo.
  • Accept that your specs may need some adjusting, depending on what kinds of shortages the OEMs are experiencing. Knowing these vehicles may not be perfectly suited for the work they’ll be doing, expect increases in operating costs and downtime, and lower than expected resale values.
  • At ARI, we’re seeing customers have more success buying stock vehicles off dealers’ lots, but that statement is relative to the fact that most vehicles arriving at dealers are already sold despite being significantly more expensive due to demand.

Like the Journey 1980s rock anthem says, Don’t Stop Replacin’

Don’t hold off your replacement cycle just because you’re facing astronomically long lead times. By the time order-to-delivery schedules return to pre-pandemic rates, it’s likely an entire replacement cycle will have passed, and if you’re still running old vehicles, your operating costs could become overbearing.

It’s a scary season out there for vehicle ordering. If you’re struggling to grasp it all, Holman can help you get your arms around everything and ensure you have a comprehensive, end-to-end solution. Contact us.

Also stay up-to-date with auto industry news and other current happenings by signing up for our weekly newsletter, The Morning Brake, or monthly podcast, MOTIVE.