Selling for Steady Ground in Shaky Times
Remarketing underutilized vehicles saves an energy fleet $950,000 when they need it most.
You’re facing a rapidly changing business environment, where budgetary decisions have to be made quickly and efficiently.
That includes cuts to fleet spend and overall fleet inventory. The number of vehicles you needed to serve your customers just a few months ago may no longer be a feasible reality in the current market. What if your fleet could relieve pressure from your company’s budget with some timely right-sizing measures?
Here’s how a fleet facing decreased demand during the pandemic directed cash back into their business to lay groundwork for a more steady future.
With business drastically decreasing in light of COVID-19 shelter-in-place mandates, the manager of a 300-vehicle energy fleet faced a directive to reduce the active fleet by 20 percent. Tightening belts to align with current utilization patterns made sense, but the manager had to carefully balance two ways to achieve this goal:
- Park these 50 vehicles for an extended period of time
- Sell the vehicles immediately
Before making any decisions, the manager turned to ARI for some analytical support.
After analyzing data for 50 vehicles averaging two years in service against their current market value, the fixed and variable costs revealed selling was the best move for the company instead of removing them from service for an undetermined number of months.
Although the net sale amount would not cover the remaining book value in most cases, the reduced lease payments and operating costs would put the company in a break-even position within 60 days.
Eager to avoid any market uncertainty, and pleased with a previous experience using ARI’s BuyDirect program, the fleet manager requested a quote to purchase all 50 vehicles.
The manager was pleased with the guaranteed proposal ARI presented, and accepted the offer. Once the vehicles were off the books, the company was poised to see nearly $1,000,000 in fixed and variable cost savings in the first 12 months.
$950,000 Fixed and variable cost savings within the first year.
CASH FLOW Improved financial liquidity.
THE ROAD AHEAD
As you’re navigating your own fleet recovery, visit the ARI blog for cost avoidance practices that balance today’s urgency with tomorrow’s stability and subscribe to The Morning Brake e-newsletter from Holman Enterprises
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