Vehicle Acquisition and Disposal

Sound decisions come from good intelligence and weighing a number of requisite factors


Review any status reports - From time to time, status reports from the vehicle manufacturer or leasing company may be issued, advising of how the ordered vehicle is moving through the manufacturing and delivery process.

Review delivery confirmation - When the vehicle is built, it will be delivered by the process established at the time of order to the person and place directed, and will be signed for by someone representing the fleet. After the new vehicle has been delivered, a delivery receipt will be sent from the source which processed the order.

If a used vehicle was to be picked up at time of delivery, this would be a good time to ascertain that this process was completed.

Process invoice and final paperwork - The final invoice and related paperwork associated with the purchase or lease of the vehicle will also be sent. "It is essential to carefully verify every item on the invoice," says CAFM. "This is your opportunity to assure that you are being charged the correct price for each element of the vehicle, and to be certain that all fleet incentives, special programs or other arrangements you negotiated are properly reflected."

DISPOSAL CONCERNS

It is important to recognize that what vehicles are purchased, when they are purchased, color, options and accessories, etc., not only impact the value of the vehicle at initial purchase but also significantly influence the vehicle's resale/trade-in value when it is disposed of. "While fleet use is a key factor when selecting vehicles, also keep in mind the retail market and what is demanded from that market," CAFM says.

Moreover, at the time a vehicle is purchased, a fleet needs to predetermine the likely disposal time frame and ensure budgets anticipate potential replacement costs.

Fleet replacement policies are most effective when also teamed with a fleet remarketing policy, says CAFM. "While a replacement policy can set the guidelines of what to acquire at the most opportune time, the remarketing policy sets the guidelines in actually determining the opportune time. Elements of both policies will overlap, but they should not just restate information, they should compliment each other."

As an example, the replacement policy may indicate which sedans are the best for a sale force, but the remarketing policy may show when and where the old sedan in the fleet should be sold.

Fleet managers can certainly have a replacement policy with no remarketing policy, but when both policies are clearly defined, the acquisition dollars being spent and the sales dollars being realized can be maximized, CAFM notes.

Regardless of how vehicles are disposed of, each vehicle sale should be audited to ensure such items as: end-user condition reports match the description of the vehicle when it was sold, that sale proceeds are in line with industry benchmarks and that this was the most efficient way to dispose of the vehicles. "Depending upon the size of the fleet and number of vehicles sold annually, vehicle sale proceeds can significantly affect the bottom line, either positively or negatively.

"It is up to you to market your vehicles effectively, use the disposal method resulting in the greatest residual return, ensure all legal issues are addressed, and continually analyze your disposal function," says CAFM.

As would be expected, there are many factors that affect resale or trade-in value. Among these: vehicle makes and models, age, mileage, condition, options and accessories, maintenance level, geographic location, time of year, market glut and interest rates.

There are also a variety of ways in which to remarket used or surplus equipment, including: sales to employees, sell or trade-in to a dealer, sell to a wholesaler, sell direct, conduct an in-house equipment auction, contract with an auction company or use an equipment broker. Equipment not worth selling for re-use could be sold for salvage or scrap.

When setting prices and values for used equipment, CAFM suggests obtaining price comparisons of similar vehicles sold in a fleet's area. This can be done by reviewing pricing in national trucks-for-sale publications and websites. Used equipment valuation guides are another good source for determining a vehicle's worth.

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