A lot of industries have the need for one or more specialized vehicles to provide their services to the market.
If your business is in one of these industries, there are certain steps you need to take – from choosing the right company vehicles to properly managing and maintaining them.
Below, we explore what these fundamentals are.
What is a fleet vehicle?
A fleet vehicle is a motorized asset that is owned by a commercial business, organization or government agency to help transport people, cargo or simply assist with day-to-day operations.
Many industries simply cannot operate or function without the use of a company-provided vehicle. A few examples of such industries are trucking, construction, public transportation, waste management, and many more.
Although there are businesses that only have one fleet vehicle, most commercial vehicles are usually bought in bulk as part of a whole fleet. You could think of a fleet of airplanes, ships, cabs, delivery trucks, tractors, trailers, cars etc.
These vehicles can either be leased or owned and once they reach a certain age or mileage the organization will usually sell them.
Now that you know exactly what a fleet vehicle is, let’s dive into their benefits and downsides for fleet businesses.
What are the pros and cons of buying a fleet vehicle?
As a fleet manager or business owner, your first essential task is to assess how much your business actually needs a mobile asset and whether it is worth your investment.
Let’s take a closer look.
The pros of having fleet vehicles
Fleet vehicles offer numerous advantages for businesses. From enhancing operational efficiency to boosting brand visibility, owning a fleet can provide significant benefits. Let’s explore these in more detail.
Increased efficiency of daily tasks
The dynamic and competitive business world has no mercy for those who aren’t able to quickly adapt and find a competitive edge.
A well-maintained fleet of company vehicles can give you that edge and help you better meet the never-ending demands of the market.
Owning a fleet:
- Gives you the autonomy to create and rely on your own schedule with zero dependence on third parties.
- Helps you provide your services in a timely manner.
- Allows you to maintain personal contact with your customers, making them feel much more valued.
- Reduces the time spent on daily administrative tasks.
The business world is like a jungle. And using a vehicle in your business enhances its chances of survivability because it makes you more adaptable.
Increased brand awareness
In its nature, your fleet vehicle is a mobile asset.
It’s expected to travel to different places in and out of your business location daily. This enables you to brand your vehicles in a unique and recognizable way, increasing visibility. For your business, this equates to more potential revenue.
Using your commercial vehicle for that purpose is a brilliant strategic move.
24/7 vehicle tracking
The greatest thing about having a motorized asset is that you have full control and oversight of its movements, location and how it’s being operated.
By installing different safety tools and tracking systems you can not only ensure efficient route planning but also monitor driver behavior and enjoy 24/7 vehicle tracking.
Knowing the whereabouts of your fleet offers a sense of security and eliminates the risks of employees exploiting the vehicles in any unprofessional manner.
The cons of having fleet vehicles
While fleet vehicles bring many benefits, they also come with certain drawbacks. From high initial costs to increased administrative tasks, managing a fleet can present challenges for businesses.
Let’s break down these cons in more detail.
Potential liability issues
The biggest liability your business faces when owning fleet vehicles is getting into accidents resulting in bodily harm.
If a company asset causes bodily harm to a member of the public or even to the employee driving it, the company can be targeted for negligent entrustment and get into a costly legal mess.
In some cases, the fleet insurance may be able to step in and cover some of the resulting legal costs. However, an accident can permanently damage the public image of your company and thus result in many long-term losses.
High initial investment
Purchasing fleet vehicles is always a substantial investment that will melt a big chunk of your cash reserves.
Before allocating a significant portion of your budget towards vehicle purchases, you should first consider if some other branch of your company needs this investment with higher priority.
To avoid spending a large sum of money upfront you can choose to lease commercial vehicles. Whether this option is better suited for your business will be discussed further in the article.
Maintenance costs
The ultimate question that interests any business owner is:
Will the use of a fleet vehicle make me more money than what it costs?
If your entire business model is dependent on transportation and owning a fleet is non-negotiable then you’d want to know:
How much will the profit be?
To answer these questions you have to take a few things into consideration.
A fleet vehicle is a depreciating asset that loses its value over the time of its use. So no matter how well you take care of it, you will never sell it back for its initial price.
Furthermore, owning or leasing a company car will burden you with over 12 different types of expenses which include but are not limited to:
- Insurance
- Fuel
- Licenses and permits
- Tolls
- Maintenance and repair
- Vehicle tax
- Administration costs
- Fines
- Fleet performance
- Vehicle purchasing payments
- Employee salaries and payments
- Purchasing or leasing costs
- Safety
- Software subscription
Managing these expenses efficiently is key to ensuring your fleet remains profitable.
Every dollar spent – from maintenance and repairs to fuel and insurance – eats into your bottom line. Yet the good news is that careful planning and smart management can help maximize your return.
More paperwork
All of the above-mentioned expenses – from insurance to maintenance – will not only lighten your wallet but will also tie you up in more administrative workload.
They require detailed record-keeping and paperwork that must be managed on a regular basis. This adds hours of work to your month, whether you’re personally handling it or have hired additional staff.
Managing licenses, permits, compliance, fuel receipts, repair logs, and even fine disputes can overwhelm your time. Without streamlined systems, the paperwork can pile up fast, becoming an additional, often overlooked, cost of ownership.
What You Should Do Before Buying A Fleet Vehicle
Without further ado, let’s get down to the nitty-gritty of buying a commercial vehicle.
Here’s everything you should consider.
1. Evaluate business needs
A well-chosen fleet should align with the specific transportation requirements of your business. This choice will result in increased efficiency, reduced costs and a better company image in the competitive market.
So logically, some of the first questions that you’ll have before purchasing a fleet vehicle will be:
- What type of vehicle do I need? – Consider whether a van, truck, or specialized vehicle is the best fit. Each type offers distinct advantages depending on the nature of your business. For example, service-based companies may prioritize storage capacity, while client-facing businesses might focus on comfort and brand presentation.
- What size should it be? – Size impacts not only how much cargo or how many passengers a vehicle can handle but also how easy it is to maneuver in the areas your team frequents. Think about parking constraints, urban driving, or narrow roads.
- How much horsepower do I need? – The power of the vehicle should match the load you expect it to carry regularly. Consistent overload could result in wear and tear on the vehicle or even safety issues.
- How many passengers will it fit? – Think about future-proofing your decision. If your business grows, will this vehicle still meet your needs? Having a clear picture of your operational scale will help you choose the right capacity.
- Do I need only one vehicle or a whole fleet? – Analyze your business’s current and projected workload. Do you foresee scaling operations quickly? You may need to purchase several vehicles or build a plan for a gradual expansion.
- How fuel-efficient would it be? – Fuel can be one of the most significant ongoing costs for a fleet. Prioritizing fuel-efficient vehicles can significantly impact your bottom line, especially with long-distance travel or frequent trips.
By thoroughly evaluating these factors, you can make a more informed decision that balances performance with cost-efficiency.
2. Decide between Leasing and Buying
The next key decision when expanding your fleet is whether to lease or buy vehicles.
Leasing allows businesses to use newer vehicles with lower upfront costs and typically includes maintenance packages, making it an attractive option for those needing flexibility.
The leasing agreement may also allow for easier upgrades when new models are introduced.
On the other hand, buying vehicles outright means higher initial costs. However, you’ll own the asset and can avoid the mileage restrictions or penalties common in leasing.
Purchasing may be more cost-effective in the long run if you plan to keep vehicles for an extended period.
Leasing
Leasing a truck for example, basically means paying a monthly rent in exchange for using the vehicle for a limited time (upon negotiation).
The most appealing aspect of leasing your company vehicle is that you save yourself the high upfront cost. The size of each lease payment depends on various factors, but they are generally lower than the loan payments for a new vehicle.
There’s also the benefit of tax reduction.
Additionally, you don’t need to worry about the maintenance or wear and tear as it’s all being taken care of for you as part of the lease agreement.
You can also easily upgrade to newer models, preventing you from falling victim to becoming outdated.
The main restrictions of choosing leasing as an option apply to how many miles you can drive. You might also have to pay additional fees if you wish to add any modifications to the asset.
Buying
Buying the mobile asset means that you have full ownership and full control over it.
You can own and operate the vehicle as long as it remains road-worthy. Best of all, the decision of how to dispose of it in the end is ultimately yours – drive it until it dies, sell it outright, trade it in etc.
There are no mileage restrictions and you can change certain features as you see fit.
The insurance and maintenance costs will, of course, fall onto your shoulders when owning a fleet.
Which option will be more viable for your business needs?
There is no one right answer and it is up to you to decide.
If flexibility and being up to date with new models and technology are what you value more, then leasing the vehicle will be a better option.
If control and complete oversight on the other hand is a higher priority and you intend to keep your company vehicles for many years, then buying a motorized asset is a better financial decision.
3. Explore Fleet Management Solutions
The more trucks you have in your fleet, the harder it gets to track all variables – from vehicle location and diagnostics to monitoring driver behavior, compliance (ELD, IFTA, DVIR) and much more.
The best option to easily stay ahead of all this data without getting overwhelmed is by relying on fleet management software with telematics features.
Think of this technology as an all-knowing solution. It monitors all data regarding vehicle movement, driver behavior and operational activities, reporting it back to you in a single app.
Having all these details visualized in a comprehensive way will help you identify inefficiencies that increase your expenses. Such levels of optimization can be achieved by considering some of the following features when exploring fleet management solutions:
- Integration options with existing technology
- A convenient and affordable pricing structure
- Telematics capabilities
- Advanced reporting tools
- Visualization features
- Alerts and notifications
There are various software tools for managing a fleet, so take your time to explore and evaluate them and eventually choose the one that best caters to your business needs.
4. Apply For A Fleet Identification Number
A Fleet Identification Number (FIN) is a code assigned to you by the vehicle manufacturer.
The FIN gives you access to exclusive benefits such as discounts, priority scheduling, advance notice of product information and so on.
In order to get your FIN, you first need to apply for it directly to the respective auto manufacturer.
Keep in mind that every manufacturing company has different eligibility requirements, so you need to take time and read them carefully beforehand.
If you meet these requirements, your application for a FIN will be approved and you can take advantage of the incentives offered by the manufacturer.
Best Practices for Managing Your Fleet
Managing a fleet of vehicles effectively can save you time, money, and reduce stress.
Here are some practical steps to help you keep things running smoothly.
Incorporate Preventative Maintenance
Preventative maintenance is the backbone of good fleet management. In short, it means taking care of your vehicles before problems arise.
This could be as simple as following a regular schedule for:
- Oil changes
- Brake checks
- Tire rotations
- Engine tune-ups
And others.
Keeping track of all these schedules as a person can be unreliable, overwhelming and time-consuming.
So how can you further elevate your maintenance practices?
Consider investing in predictive maintenance tools that will automate these processes for you. They capture information from the vehicle to anticipate potential failures and ensure that your trucks remain roadworthy and reliable with an extended lifespan.
Some solutions also enable fleet managers to work with PM Intervals, making the entire process much easier and more reliable.
Prioritize Driver and Fleet Safety
The safety of your drivers and your vehicles should always come first. Make sure your drivers are trained on safe driving habits and have the right tools to do their jobs.
The telematics systems we talked about earlier can strongly assist you in tracking drivers’ behavior on the road and flag undesired actions like speeding or hard braking. Use this data to help you encourage safe driving habits.
It’s also recommended to equip your vehicles with modern safety features like backup cameras, lane departure warnings and collision warning systems. Fewer accidents mean safer roads and lower insurance premiums.
The ultimate goal is to cultivate a culture of fleet safety where drivers feel responsible for not only their own well-being but also the care of the vehicles they operate.
Monitor and Optimize Fuel Costs
Fuel is a major expense for any fleet, but there are ways to manage it better.
Use fuel cards to track how much fuel your vehicles are using and where they’re filling up.
This data can help you spot any inefficiencies, like excessive idling or poor route planning.
You can also train drivers on fuel-efficient driving techniques, like maintaining steady speeds, reducing aggressive acceleration, and braking. Optimizing routes can also minimize unnecessary fuel consumption.
Many fleet management systems also use fuel monitoring tools providing real-time insights to help reduce fuel waste and optimize overall fuel efficiency.
Leverage Fleet Management Software
Finding the right fleet management software for your business is only the first part of your optimization quest. The next step is leveraging its features to drive real results. Here’s how:
- Telematics tracking to access real-time data on vehicle location and driver behaviors for smarter routing and faster response times.
- Preventive maintenance scheduling to set up automated alerts for regular maintenance to catch potential issues early, minimize costly breakdowns, and extend vehicle lifespan.
- Downtime monitoring to track downtime patterns and take steps to prevent disruptions that affect productivity.
- Inventory management to know exactly what parts are in stock so you’re always prepared for repairs, minimizing delays during emergencies.
- Advanced reporting to generate detailed reports that break down vehicle costs, highlight inefficiencies, and reveal new opportunities to save.
By strategically using each of these tools, your software becomes a powerful ally in keeping your fleet efficient, cost-effective, and reliable.
Compliance
Maintaining compliance with local, state, and federal regulations is critical for avoiding fines, penalties and potential legal issues.
These regulations could cover things like vehicle emissions, driver qualifications, or how long drivers are allowed to be on the road without a break.
For example, the Federal Motor Carrier Safety Administration (FMCSA) mandates that commercial drivers in the U.S. adhere to strict HOS regulations to prevent fatigue-related accidents.
Make sure you’re up to date with all the rules that apply to your fleet.
Fleet management software often includes compliance features, such as automated documentation and reporting to ensure your fleet stays compliant with industry regulations.
Staying ahead of these requirements can also improve the safety and reliability of your operations.
Utilize Fleet Checklists
Checklists are a simple but effective tool to keep your fleet organized and make sure nothing slips through the cracks. They help fleet managers and drivers track vehicle conditions, routine maintenance and compliance requirements.
Two of the most important types of checklists are pre-trip and post-trip inspections.
Pre-Trip Checklists
Pre-trip checklists are required by law in many countries, including the U.S. under regulations set by the Federal Motor Carrier Safety Administration (FMCSA).
Before hitting the road, drivers must conduct a thorough inspection of their vehicle to ensure it’s safe to operate.
This checklist typically includes tasks such as:
- Checking tire pressure
- Inspecting the brakes
- Ensuring that lights and signals are functioning properly
- Verifying that fluid levels are sufficient.
Completing a pre-trip checklist helps catch any potential issues that could cause breakdowns or accidents. It also provides a documented record that can be reviewed if an issue arises later.
Post-Trip Checklists
While not always required by law, post-trip inspections are just as important.
These checklists help identify any problems that may have developed during the day, such as worn tires or brake issues, giving mechanics and fleet managers time to address them before the next trip.
Post-trip checklists ensure that vehicles are in good condition at the end of the day, which helps prevent delays and keeps the fleet running smoothly.
Both pre- and post-trip checklists help your organization catch small issues before they turn into bigger, more expensive problems, while also ensuring that drivers meet regulatory requirements.
Monitor Driver Hours
Monitoring driver hours is essential for both safety and regulatory compliance, particularly for fleets subject to hours of service (HOS) regulations.
Fatigued drivers are more likely to be in accidents, so make sure your drivers aren’t exceeding the legal driving limits and are taking breaks when required. The specific limitations are listed on the FMCSA website, so be sure to do your research thoroughly.
Electronic logging devices (ELDs) have become the industry standard for tracking driver hours, replacing paper logbooks and reducing the chance of errors or fraud.
ELDs automatically record driving time, making it easier for fleet managers to ensure compliance with HOS regulations. They also improve transparency and reduce the administrative burden on drivers.
Invest in Fleet Insurance
One of the best ways to protect your company vehicles is with a fleet vehicle insurance policy.
Most fleet insurers cover a wide range of vehicles, from cars and vans to semis, trailers, and heavy equipment like bulldozers and forklifts. This flexibility allows you to create a single policy that covers any combination of vehicles, making it much easier to manage.
Instead of purchasing individual policies for each vehicle, you can bundle them under one plan. As your fleet changes, you can easily add or remove vehicles while maintaining a single renewal date. This structure simplifies management and typically saves you money, as fleet policies often come at a discounted rate compared to insuring vehicles separately.
Another advantage of fleet insurance is its flexibility regarding drivers. With a fleet policy, you only list the vehicles, not every potential driver, which is much easier to manage – especially with high driver turnover or varying vehicle qualifications.
In short, fleet insurance provides simplified management, cost savings, and protection for all your mobile assets.
You can also lower your premiums by encouraging safe driving, as some insurers offer discounts for businesses that prioritize safety. Getting the right coverage means peace of mind in case the unexpected happens.
How can Fleetpal help you with your fleet management?
Running an efficient fleet requires tracking of so many administrative and technical parameters at once, that no human being can possibly process.
And that’s okay. As a fleet manager or a business owner, your job is to focus on the big-picture strategy and delegate roles and responsibilities to the respective qualified members of your team.
The best way to make data-driven decisions is by centralizing everything you need in one user-friendly platform.
Imagine having everything you need – like maintenance schedules, work orders, and parts management – right at your fingertips.
With Fleetpal, you can keep your vehicles running smoothly, reduce unexpected breakdowns, and save time and money.
Whether you’re on the road or at your desk, you’ll have the tools to make informed decisions that keep your business moving forward.
Say goodbye to chaos and hello to a more efficient, reliable fleet management experience!
Schedule a free online demo with a member of our team and find out all that our solution can offer.
