ARI’s Partha Ghosh Outlines Important Factors and Best Practices to Help Develop an Optimal Vehicle Replacement Strategy
Partha Ghosh, director of vehicle supply chain and remarketing for ARI, discusses the importance of developing a strategic replacement cycle, in a featured article published by Utility Fleet Professional: “Determining the Optimal Vehicle Replacement Cycle.”
Companies with fleets are constantly challenged with developing an effective plan for vehicle replacement – one that meets the needs of the fleet, meets the needs of the budget, and keeps up with fast-changing safety and technology features. Taking the time to develop a sound replacement strategy can help minimize downtime and lower operating costs. So, what considerations and best practices should be adopted? Listed below, are a few factors to consider when developing a vehicle replacement strategy.
Analyze the Company’s Needs: Are there gaps that need to be filled? Alternatively, are there vehicles that are under-utilized or are sitting idle?
Evaluate and Analyze the Data: Look at maintenance expenses, including both recent and year-over-year comparisons. Evaluate fuel expenditures and assess downtime across different vehicle segments.
Factors to Consider: There are a variety of different approaches to replacement cycling; deciding which one to use is dependent on the kind of fleet you may have and the vehicles in use. Considerations include:
- The Usual Suspects: Model year, total miles, overall condition, cost per mile and repair costs over a fixed period of time.
- Specialization: Vehicles with a unique upfit or other specially installed equipment are more likely to remain in service for a longer period of time.
- Remarketing Cycles and Retail Demand for Used Vehicles: While it can vary based on the vehicle and the current demand, consider the benefits of adjusting your cycle to maximize the resale value and take advantage of a hot market.
- Branding and the Company Image: Vehicles with rust, substandard paint or body damage can reflect on the company as a whole and do damage to the brand.
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