fleet financials january/february 2011

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T H E M A G A Z I N E F O R E X E C U T I V E V E H I C L E M A N A G E M E N T A B O B I T P U B L I C A T I O N

JANUARY/FEBRUARY 2011 • VOL. 25 NO. 1WWW.FLEETFINANCIALS.COM

COX ENTERPRISES:COX ENTERPRISES:FLEET EFFICIENCY CREATEDFLEET EFFICIENCY CREATEDTHROUGH SUPPLY CHAIN THROUGH SUPPLY CHAIN MANAGEMENT MANAGEMENT

INCREASED DRIVER VIOLATIONSGROW TO 1-3%

OF FLEET COSTS

10 FUEL MANAGEMENT STRATEGIES

THAT REALLY WORK

EXTENDING REPLACEMENT CYCLES:

THE UNINTENDED CONSEQUENCES

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fl eet.ford.com

HIGHER QUALITY.At Ford Fleet, we believe higher quality is in the details. When your employees are in our vehicles, you can be confi dent we’ve left no stone unturned to ensure those vehicles are reliable, durable and sustainable. We’re committed to continuous improvement and dedicate ourselves every day to creating cars and trucks that are greener, safer and smarter. When it comes to quality, hard work and higher standards are all we know. Because our fl eet is your fl eet. Ford Fleet. Get More.

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JANUARY/FEBRUARY 2011 VOL. 25, NO. 1 Features Departments

Contents16 Cox Enterprises’ Fleet Creates Effi ciencies by

Utilizing Supply Chain ManagementWith more than 13,000 vehicles nationwide, the fl eet team has saved millions of dol-

lars and lowered greenhouse gas emissions by selecting the right vehicles, streamlin-ing operational processes, and implementing GPS.

22 10 Fuel Management Strategies that WorkIt’s in the news again; fuel prices are climbing and fl eet managers are looking for ways

to manage that largest variable expense. Ten tested strategies are discussed.

28 Why Senior Management Should Oppose Extended Vehicle Replacement Cycles

Extending replacement cycles may seem a simple, short-term solution to shrinking budgets, but factors such as increased maintenance costs, impact on driver morale,

loss of fuel effi ciency, and increased downtime should be considered.

32 In a Slow Economy, Driver Violations IncreaseVehicle violations now represent 1-3 percent of total fl eet costs. Traffi c violation revenues are being used by many jurisdictions to balance budgets. In an era of

budget defi cits, fl eets are discovering a sharp uptick in driver violations.

4 What’s on the Web

6 Editorial New 100% First-Year Bonus Depreciation

8 LettersThe Generational Gap Between Drivers

12 Fleet Briefs Hyundai Announces Fleet Incentives

36 Automotive Financials Most Improved Order-to-Delivery

On the CoverThrough increased fl eet effi ciencies, Cox Enterprises aims to save mil-lions. SEE PAGE 16

Fleet Financials (ISSN 1558-5719) (USPS 022-987) (CDN IPM#40013413) is published bi-monthly, by Bobit Business Media, 3520 Challenger Street, Torrance, California 90503-1640. Periodicals postage paid at Torrance, California 90503-9998 and additional mailing offi ces. POSTMASTER: Send address changes to Fleet Financials, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 12 weeks for address changes and new subscriptions to take effect. Subscription Prices: United States $28 per year; Canada $34 per year; Foreign $75 per year. Single copy price $10. Bobit Business Media reserves the right to refuse non-qualifi ed subscriptions. Please address Editorial and Advertising correspondence to the Executive Of-fi ces at 3520 Challenger Street, Torrance, California 90503-1640. The contents of this publication may not be reporduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission.

16 22

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2 ■ FLEET FINANCIALS ■ JANUARY/FEBRUARY 2011

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WHAT YOU’RE READING

NOW F L E E T F I N A N C I A L S . C O M

CARB APPROVES THINK CITY VEHICLEThe approval paves the way for the all-electric THINK City Vehicle to be sold in California, joining 12 other states and the District of Columbia that have adopted California’s zero-emissions vehicle (ZEV) requirements.

ELECTRIC MODELS DEBUT AT LA AUTO SHOWAmong the vehicles at the show were the Chevrolet Volt and the 2012 Ford Focus.

VANDERBILT UNIVERSITY MEDICAL CENTER RECEIVES EV CHARGING STATIONSPart of a pilot rollout that will install more than 15,000 electric vehicle (EV) charging stations by June 2011.

2011 FUEL ECONOMY GUIDE NOW AVAILABLEGo to www.fueleconomy.gov for a complete version of the guide.

CONFERENCE OF AUTOMOTIVE REMARKETERS (CAR) TO BE HELD ON MARCH 9-10Go to www.CARCONFERENCE.com today to register!

Use the navigator on the fl eetfi nancials.com home page to browse the latest ar-ticles from the channels. Enter a channel to view in-depth news, articles, tools, calculators and more related to that specifi c topic.

January/February’s Web Channel Highlight: GREEN FLEETLearn from the experts at Automotive Fleet the ways com-panies are greening their fl eets. The Green Fleet Channel brings you the latest in the reduction of fuel costs and alter-native energy solutions for fl eet cars and trucks.

❍ KONE Takes Fleet Eco-Effi ciency to a Higher Level ❍ Fleet Executive Helps Streamline Uniform and Career Apparel Fleet ❍ From Green to Greenbacks ❍ Executive Fleet Vehicle Programs: Important or Politically Incorrect? ❍ Wirelessly Keeping New York City Streets Clean

Industry Trendss Telematics Safety Remarketing Fuel

THE 5

THE FLEET CHANNELS

FLEETFINANCIALS.COM TOP 5 MOST POPULAR STORIES AS OF JAN. 6, 2011

What We’re Blogging About

➤ MARKET TRENDSBy Mike Antichwww.fl eet-fi nancials.com/blog/

market-trends.aspx

December 28 First-Year Bonus Depreciation Increased to 100 Percent

December 13 Legal Motion Seeks to Halt Public Release of CSA 2010 Data

November 9 The Weak Link in Corporate Sustainability is the Driver

November 1 Forecast of 2011 Operating Costs

➤ FLEET BLOGSThe Voice of the Fleet Community (www.fl eetblogs.com)

January 6Welcome the New Year with…Gas Predictions?by Elisa Durand

January 3Monthly Rantsby Anonymous Public Fleet Manager

January 1Do We Have a Domestic Energy Crisis Here?by Joseph Thompson

December 30Are Americans cutting their fuel addiction?by Steve Fowler

December 30The Great Recession Brings Challenging News for Fleet Suppliersby Wayne Smolda

Interested in starting your own blog? Go to www.fl eetblogs.com for more information.

ANTICH

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3

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5


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Letter from the Editor

First-Year Bonus Depreciation Increased to 100%

The Tax Relief, Unemploy-

ment Insurance Reauthoriza-

tion, and Job Creation Act of

2010 (H.R. 4853) was signed

into law by President Obama on Dec.

17, 2010. The legislation includes an

extension of the Small Business Jobs

and Credit Act of 2010’s “bonus depre-

ciation” allowance through the end of

2011, and increases that amount from

50 percent to 100 percent. H.R. 4853

temporarily provides 100-percent bo-

nus depreciation for investments, such

as company vehicles, placed in ser-

vice after Sept. 8, 2010 through Dec.

31, 2011. (Bonus depreciation returns

to 50 percent for investments placed

in service after Dec. 31, 2011 through

Dec. 31, 2012.)

Under the new H.R. 4853 bonus de-

preciation schedule, businesses may im-

mediately write off 100 percent of the

cost of depreciable property acquired

in the same calendar year, providing

the equipment is used in the U.S. The

equipment must be new, and original

use of the equipment must commence

with the taxpayer claiming the depre-

ciation bonus between Sep. 8, 2010

and Jan. 1, 2012.

Also, to be eligible for the 100-

percent bonus depreciation, the equip-

ment must be depreciable under the

Modifi ed Accelerated Cost Recovery

System (MACRS) and have a depre-

ciation recovery period of 20 years or

less. Typically, businesses recover the

cost of equipment and other capital in-

vestments through specifi ed MACRS

depreciation deductions. Under this

system, cars have a fi ve-year life and

the recovery deductions by year are

20 percent, 32 percent, 19.2 percent,

11.5 percent, and 5.8 percent. Allowing

companies to depreciate 100 percent

of the purchase price in the fi rst year

lowers a company’s tax liability for the

year in which new equipment (such as

a fl eet vehicle) is put in service.

In addition to the 100-percent bo-

nus depreciation, there are several other

fl eet-related provisions in H.R. 4853:

■ Biodiesel and renewable diesel tax credits. The law extends through

2011 the $1 per gallon production tax

credit for biodiesel. In addition, it ret-

roactively reinstates the biodiesel tax

incentive for 2010. The bill also ex-

tends through 2011 the $1 per gallon

production tax credit for diesel creat-

ed from biomass.

■ Ethanol tax credit. The law extends

through 2011 the per-gallon tax credits

and outlay payments for ethanol.

■ Alternative vehicle refueling proper-ty tax credit. The bill extends through

2011 the 30-percent investment tax

credit for alternative-vehicle refuel-

ing property.

Sixth Time this DecadeH.R. 4853 is the sixth time this de-

cade that fi rst-year bonus deprecia-

tion has been used as an economic

stimulus. It was fi rst introduced in

March 2002, after the terrorist at-

tacks of Sept. 11, 2001. At that time,

Congress passed H.R. 3090, known

as the Economic Security and Re-

covery Act of 2001, which provided

a 30-percent bonus depreciation for a

three-year period. In May 2003, the

Jobs and Growth Tax Relief Recon-

ciliation Act increased fi rst-year bo-

nus depreciation to 50 percent. This

temporary change in the tax code ex-

pired Jan. 1, 2005. In 2008 and 2009,

Congress temporarily allowed busi-

nesses to recover the costs of capital

expenditures faster than the current

depreciation schedule. In September

2010, the Small Business Jobs Act

(H.R. 5297) added an additional year

of 50-percent bonus depreciation for

qualifying property purchased and

placed in service in 2010.

Economists rate bonus depreciation

as one of the most productive econom-

ic stimulus initiatives. The Institute for

Policy Innovation estimated every tax

dollar dedicated to accelerated depre-

ciation results in approximately $9 of

GDP growth. Critics argue bonus de-

preciation will not substantially ben-

efi t commercial fl eets in the long run

because it is quickly recaptured when

a vehicle is remarketed. If you resell an

asset fairly rapidly, as do commercial

fl eets, you give back the bonus depre-

ciation in the form of recapture. How-

ever, bonus depreciation provision ben-

efi ts fl eets with long-life assets, such

as trucks, off-road inventory, and oth-

er specialty equipment.

“One-hundred percent deprecia-

tion does provide a bigger benefi t for

those fl eets that hold assets for a lon-

ger period of time. However, a compa-

ny that owns its vehicles would have

to give back only a portion, not all of

the 100-percent depreciation, by re-

capture. A fl eet that holds a vehicle

for three years, for example, could de-

preciate $16,000 in the fi rst year. This

compares to $10,910 over three years

(IRS Rev. Proc. 2010-18). Recapture de-

pends on the value of the vehicle when

remarketed,” said Pat O’Connor, pres-

ident of Kent & O’Connor, the legisla-

tive counsel for the NAFA Fleet Man-

agement Association. “Whether bonus

depreciation for an owned fl eet pro-

vides a tax advantage with respect to

the company’s overall capital invest-

ment strategy needs to be addressed

on a case-by-case basis.”

Let me know what you think. ■

[email protected]


BY MIKE ANTI CH

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tend to care more about the color of the

car I send them than their 15-point MVR

I just received!

I receive more “thank you” and “so

grateful for this benefi t” comments from

the drivers who I know to be 35-plus or

who have been with the company for

fi ve to seven or more years.

Nancy Barlage, CAFMFleet Manager

Regis CorporationMinneapolis

Defi nitely Caught My EyeThe editorial in the September/Oc-

tober 2010 issue defi nitely caught my

eye and was a bit shocking. (See “Do

You Know What Your Drivers are Re-

ally Doing?”) It was such a grabber that

I told several people about the editorial

over the weekend and we attempted to

dissect the issue. Primarily, there were

two issues discussed. First was steal-

ing gas and the unauthorized use of the

company car. Second was destroying

company property. Either practice vio-

lates our company’s code of ethics and

is subject to disciplinary actions, includ-

ing termination. Taking more disciplin-

ary actions may resolve the entire issue.

Personally, I see no reason why anyone

would ever destroy another’s proper-

ty. If these are disgruntled employees,

they should resign their positions and

yield their job to another of America’s

unemployed.

The issue of stealing is something

I think drivers balance with what they

can get away with. This is where fl eet

managers must be ever diligent and fol-

low up on exceptions. This often seems

like an unrewarded portion of our job,

much as auditing for a company’s fraud-

ulent checks, but the fact is that we fi nd

them and need to take actions with the

offenders. In my fl eet, I do not get dam-

age reports indicating abuse, except for

rare instances of tough terminations with

cause. These we all have to deal with

at one time or another. Stealing most

likely occurs at a minimal level, but

is tempered by our audit controls and

strict adherence to disciplinary policy

when detected.

I will also pass this article along to

one of our general managers, who has

a sizable portion of our fl eet. Let’s see

what the business side says.

Author wished to be anonymous

Worst-of-the-Worst RepsObviously, you’ve been on the Cafe

Pharma site! (See September/October

2010 editorial.) These are the worst-of-

the-worst reps, but we monitor it all the

time and check most of these things. You

know these are the same people who

fudge their expense reports and do ev-


Letters to the Editor

Entitlement is a Frequent Occurrence Entitlement is something I encoun-

ter frequently. It seems to me this atti-

tude is more generational than a result

of the slow economy. The drivers who

are in their 20s and 30s sometimes tend

to consider the vehicle an item they are

entitled to — right down to the day they

are supposed to return it, regardless of

whether they have been terminated or

are getting a brand new one! I can tell

when a new hire thinks this way; they

AF0810volvo.indd 1 7/21/10 8:13:09 AM

There is a Generational Gap Between Drivers

I can defi nitely see a generation gap between drivers in their 40s and older

and those in their 20s or early 30s. The older generation is content driving

a reliable vehicle. These folks understand the importance of regular mainte-

nance and most wouldn’t think of running on bald tires or wearing the brakes

down to metal on metal. Many will actually return a vehicle that looks like it

only has half the actual miles that appear on the odometer.

The younger drivers need constant reminding about submitting documentation

and tend to ignore periodic checks of tire tread depth. When their vehicles are re-

turned, I could easily assume a homeless person had been living in the backseat

when I see all the garbage left on the fl oor and under the seats. I had one driv-

er return his car with the center armrest and the entire backseat totally destroyed

by his rambunctious dog, and he appeared to have no shame or guilt in handing

it over in that condition.

In another case, I had a person proud that he still had the original tires after

75,000 miles. They were completely bald, with belts actually showing on two of

them. Because he had traction control and ABS, he didn’t think it was necessary

to replace the tires. In the close to 20 years I have been managing a fl eet, I can

only recall three instances where drivers drove their vehicle for the entire dura-

tion on the OEM tires, and in each case, it was by a driver younger than some of

the shoes in my closet.

Another incident I shake my head over is a driver who recently backed into

another vehicle. What is so surprising is not that his wife was driving the unit

on a weekend when this happened, but that the vehicle has two outside mirrors,

no large inherent blind spots, and a back-up camera that displays on the inside

rearview mirror — all features that should make backing into an object near im-

possible. No word on whether the new Justin Bieber song was playing on her

MP3 player plugged into the adaptor.

Not all older drivers are perfect, just as not all younger drivers are displaying

entitlement issues. But the younger drivers don’t remember the days of AM ra-

dios, manual windows and locks, vinyl seats, four-cylinders with 70 hp, no cruise

control or A/C, rubber fl oor mats, and a glove box with creased road maps that

gas stations gave away free. Oh my goodness, I just realized I have turned into my

parents, who would spice up their stories with how they lived through the Great

Depression and the Second World War. I can only imagine sans-a-belt pants, a

comb over, and support socks can’t be too far behind. Promise me that you will

come visit me in the home for the aged.

Tom KrausePurchasing/Fleet Manager

West Bend Mutual Insurance Co.West Bend, Wis.

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Letters to the Editor

plete package to minimize opportuni-

ties for fraud and abuse, such as you il-

lustrate in your editorial.

Submitted via e-mail by Brian Reynolds

Abusive Drivers are a Minority of Drivers

As always, great editorial in the Sep-

tember/October 2010 issue. While I be-

lieve these are real posts. I will caution,

however, that they may come from Cafe

Pharma and, as such, represent (in my opin-

ion) a low 5 percent of our drivers.


Older Reps are the Ones with a Sense of Entitlement

Our largest sales force also has the

youngest sales reps. The company re-

quires marketing experience, not in phar-

ma; in fact, they prefer that they have

no pharma experience so they can be

trained and molded to our sales mod-

el. They have been highly successful

with this model. These reps usually

come from companies that do not pro-

vide vehicles; therefore, they are excit-

ed and grateful for a company car. We

audit regularly and we give them that

message during new-hire training. Also,

when we audit, they talk about it wheth-

er it is on the pharma blog, at meetings,

or among themselves.

Having said that, I can also tell you

that our seasoned reps are the ones

with the sense of entitlement. They ex-

pect benefi ts based on longevity, not on

merit. Sales is all about rewarding for

performance, as you know, and that is

what we have done. Over the past sev-

eral years, we have used upgraded ve-

hicles as sales awards.

Of course, they try to work the sys-

tem — I’ve seen that since I started in

fl eet 25 years ago. I think that is just hu-

man nature, especially with sales peo-

ple, and it is not limited to fl eet.


Opened My EyesThe editorial, “Do You Know What

Your Drivers are Really Doing?” has re-

ally opened my eyes, especially on fuel

a “take what I can get” mentality. This

is a good reminder that we need to be

diligent as fl eet managers and protect

our company assets by utilizing all our

tools and knowledge. I am also curious

if this plays into any opinion on how to

utilize telematics, reimbursement, and

company-assigned vehicles in a com-

erything they can to take advantage of

their employers!


‘Take What I Can Get’ MentalityThe examples listed in the Sep-

tember/October editorial are not real-

ly that surprising, but seem typical of

Think the grass is greener somewhere else?

It just might be

Search for jobs in your fi eld at www.fl eetjobfi nder.com


http://www.fl

JANUARY/FEBRUARY 2011 ■ FLEET FINANCIALS ■ 11

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pilfering. Thank you, as it especially

gave me insight into the corporate car

programs, especially for the mindset of

certain pharma outside sales reps.

Submitted via e-mail by Jon

Honesty with Drivers Creates a Team Effort

I am very fortunate with my drivers

at Benjamin Moore. Working hand in

hand with the housing market creates

a rude awakening in our industry. Ini-

tially, there was a lot of pushback when

four-cylinder cars were mandated. Re-

cently, we banned minivans and deter-

mined that anyone who needed the space

in a minivan needed a cargo van. Can

you guess how many requests I’ve had

for cargo vans?

I had one of my Canadian drivers pose

the question of different car levels for

drivers just the other day. My Canadian

predecessor had created levels based on

a set dollar amount. I explained that all

drivers in the U.S. and Canada would

receive vehicles based on the needs

of their jobs. Also, that in the current

economy we need to be very cost-

conscious about the image presented

to our “Mom-and-Pop” retailers. Many

are struggling to survive. How would it

look if one of our salespeople showed

up in an executive-level car? We need

to present the correct image based on

the industry. We also need to watch the

dollars. If we can save a few dollars on

rental vehicles and/or hotels, we may

save someone’s job.

I have discovered that being honest

with my drivers about why we all need

to do more with less has created more

of a team effort. They may not be happy

about downsizing on the rental cars and

foregoing the upgraded hotel room or

upgraded fl ight status. They are defi nite-

ly NOT happy about driving those four-

cylinder Fusions after driving Chrysler

300s. However, as one employee put it,

“We still have a job, a paycheck, and

benefi ts that include a company car.

Sure beats the alternative.”

We do not charge hard dollars to our

drivers for personal use and ask that they

pay for personal use fuel out of pocket.

We base the personal use charge on the

IRS formula and include it as “addition-

al income.” Although I do not feel this is

the best way to handle this, it seems to

create the road of least resistance. One

step at a time.

There are certain industries where

the company car is considered a part of

the job and employers vie for employ-

ees by giving them better cars. Which

would you rather have: a job or a bet-

ter company car?

Rosalie FalatoS G & A Procurement Agent

Benjamin Moore & Co.Montvale, N.J.



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2011 Fleet Car & Truck Awards Presented to Ford TORRANCE, CA – Automotive Fleet, the sister maga-

zine of Fleet Financials, presented the 2011 Fleet Car

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keting Operations (NAFLRO) director, and John Rup-

pert, general manager of commercial and government

operations, accepted the awards.

The Fleet Car and Truck of the Year awards began in

2003 as a way for AF to promote excellence in the fl eet

industry. Sponsored by Automotive Fleet and Business Fleet magazines, the award is given annually and vot-

ed on by fl eet professionals. Qualifi ed fl eet profession-

als cast their votes online in September and October for

one car and truck out of 74 cars and 13 light-duty truck

nominees representing all of the major domestic and im-

port-badged vehicles.

(L-R) Ford’s Kevin Koswick and John Ruppert pose proudly with the 2011 Car & Truck of the Year awards presented by Bob Brown, Great Lakes sales manager for Automotive Fleet and Fleet Financials.

Pricing Announced for 2012 Nissan NV FRANKLIN, TN – Nissan North Amer-

ica, Inc. (NNA) announced that the

2012 Nissan NV, the company’s fi rst

entry into the commercial vehicle

market in the United States, will start

at the manufacturer’s suggested retail

price (MSRP) of $24,590, with the

maximum MSRP listed at $32,190.

All 2012 NV models are equipped

with a 5-speed automatic transmis-

sion. Scheduled to go on sale beginning in spring 2011, the NV is available

in two grades, S and SV. Additional information and pricing is available at

www.fl eetfi nancials.com/news. Search keyword: Nissan NV.

Volkswagen Doubles 2011-MY Street IncentiveHERNDON, VA – Volkswagen of

America has doubled the original in-

centive amount available for the 2011

Touareg V-6 TDI Clean Diesel from

$750 to $1,500.

Additional incentives can be

found on page 10 of the September/

October 2010 issue of FF.

The 2012 Nissan NV is scheduled to go on sale beginning in spring 2011.

The incentive for the 2011 Volkswagen Touareg V-6 TDI Clean Diesel is $1,500.

FF0111briefs.indd 12FF0111briefs.indd 12 1/7/11 1:54:10 PM1/7/11 1:54:10 PM

http://www.fl

Avoids the herd.

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behind the wheel of the all-new Saab 9-5 Sport Sedan. With

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also help keep drivers safe. But it’s our unique Scandinavian

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CAR 2011 - the place for consignors to be

CAR12-11revFPha_WT.indd 1 12/8/10 11:25:52 AM


Vol. 25, No. 1

PublisherSherb Brown

Editor/Associate PublisherMike Antich

[email protected]

Senior EditorsLauren Fletcher

lauren.fl [email protected]

Grace L. [email protected]

Assistant EditorThi Dao

[email protected]

Field EditorBob Cavalli

Art DirectorArmie Bautista

Production DirectorKelly Bracken

Production ManagerBrian Peach

(310) 533-2548

Great Lakes Sales ManagerRobert Brown Jr.

1000 W. University Dr., Ste. 209Rochester, MI 48307

(248) 601-2005; FAX (248) 601-2004

Regional Sales ManagerEric Bearly

(310) 533-2579

Sales & Marketing CoordinatorTracey Tremblay

Business and Editorial Offi cesBobit Business Media

3520 Challenger St.Torrance, CA 90503FAX (310) 533-2503

ChairmanEdward J. Bobit

CEOTy Bobit

Chief Financial Offi cerRichard E. Johnson

Editorial ConsultantHoward Rauch

ARI Acquires Auto Truck Group MT. LAUREL, NJ – Automotive Resources International (ARI) has acquired

the assets of Auto Truck Group (ATG), headquartered in Bartlett, Ill. ATG, a

work truck upfi tter, will become Auto Truck Group LLC, a wholly-owned sub-

sidiary of ARI.

ARI will merge its railroad truck upfi tting subsidiary, Fleet Body Equip-

ment (FBE), into ATG. ATG President Jim Dondlinger and his present man-

agement team will continue to lead all ATG operations, including Auto Truck

Inc. (Chicago); Fort Wayne Fleet Equipment Company (Fort Wayne, Ind.);

Layton Truck Equipment Company (Colorado Springs, Colo., and Denver);

Louisville Truck Equipment (Louisville, Ky.); and Fleet Body Equipment

(Kansas City, Mo., and Fort Worth, Texas).

GE Fleet to Purchase 25,000 Electric Vehicles by 2015 FAIRFIELD, CT – GE announced it will purchase 25,000 electric vehicles by

2015 for its own fl eet and through its Capital Fleet Services business — the

largest-ever single electric vehicle commitment.

Partnering with fl eet customers for the EV deployment, the company will

convert at least half of its 30,000-vehicle global fl eet. GE will initially pur-

chase 12,000 GM vehicles, beginning with the Chevrolet Volt

in 2011, and add other vehicles as manufacturers expand

their electric vehicle portfolios.

GE has launched an electric vehicle readiness toolkit

at www.ecomagination.com to help municipalities, cus-

tomers, and individuals prepare for wide-scale electric ve-

hicle deployment.

AT&T Deploys 2,000th CNG Vehicle in FleetDALLAS – AT&T added the 2,000th compressed natural gas (CNG) vehicle into

its corporate vehicle fl eet, a Ford E-250 van deployed in San Leandro, Calif.

The milestone deployment follows the November 2010 rollout of a medium-

duty Ford F-450 truck converted to CNG, and is part of a $565 million

planned investment announced in March 2009 to replace approximately

15,000 fl eet vehicles with alternative-fuel models through 2018. Currently, the

AT&T corporate fl eet includes more than 75,900 vehicles.

“The deployment of our 2,000th compressed natural gas vehicle is

an important marker in our long-term strategy to reduce both costs and

greenhouse gas emissions within our corporate fl eet,” said Jerome Webber,

vice president of AT&T global fl eet operations. “We’re becoming less

dependent on foreign oil while signaling that a viable alternative-fuel choice

exists today, right here in the U.S.”

Through 2013, AT&T anticipates purchasing approximately 8,000 CNG

vehicles at an anticipated cost of $350 million. AT&T expects to spend an

additional $215 million through 2018 to replace approximately 7,100 fl eet

passenger cars with alternative-fuel models.

Fleet Briefs


http://www.ecomagination.com





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http://www.CARCONFERENCE.com

CCover Story

With a national prod-

uct reach, more than

60,000 employees in

300 separate busi-

nesses, and revenues

of nearly $15 billion, Atlanta-based Cox

Enterprises continues to pave the way

in the communications, media, and au-

tomotive services industries.

Originally founded in 1898 by former

schoolteacher and news reporter James

Cox, the company began its more than

110-year journey by delivery of the dai-

ly news on a borrowed $26,000 from

James’ friends and family and the pur-

chase of the Dayton Evening News (now

the Dayton Daily News).More than a century later, the orga-

nization has grown to include four ma-

jor operating subsidiaries — Cox Com-

munications, Inc.; Manheim, Inc.; Cox

Media Group, Inc.; and AutoTrader.com.

The company’s diverse portfolio fi nds

ongoing success by focusing on Cox’s

employees, surrounding communities,

and continually searching for better

ways to do business.

Cox’s corporate mission includes en-

couraging employee creativity, inclu-

sion, and calculated risk-taking. Dedi-

cated to customer and audience needs,

the media giant seizes new business op-

portunities whenever possible.

“We do what’s right for our commu-

nities, through sponsorships, donations,

and volunteer activities,” said Mark

Leuenberger, Cox Enterprises’ assistant

vice president of Supply Chain Servic-

es and Fleet Management. “These are

the values that guide us in every deci-

sion we make.”

A 12-year veteran fl eet manager for

Cox, Leuenberger manages the compa-

nywide fl eet, consisting of more than

13,000 vehicles. He also serves as chief

negotiator for all fl eet-related vendor con-

tracts and services and oversees Cox’s

supply chain services and procurement

functions, including the company’s sup-

plier diversity program. Prior to joining

Cox’s supply chain services team in mid-

2010, Leuenberger was fl eet director at

Cox Enterprises, as well as director of

fi eld service technology for Cox Com-

munications.

Diverse Portfolio Leads to Diverse FleetWhile just about every vehicle manu-

facturer is represented in the Cox fl eet,

most are Ford and GM models leased

primarily from Wheels and ARI.

Vehicle functions are broad and in-

clude Cox Communications, Inc. cable

technicians — both fi eld operations (in

home cable technicians) and network

operations (plant technicians); executive

drivers; lot vehicles at Manheim for shut-

tling customers around auction lots; sales


CENTERPRISES’(L-R) BILL GOODEN, vehicle specialist;

ROGER TURNER, fl eet acquisition manager; KIM GHEESLING, support analyst;

MATT KUHN, director, vehicle operations; MARK LEUENBERGER, AVP supply chain/fl eet;

SERINA HARDIMAN, sr. technical analyst; and CHRIS SEAY, support administrator.

FF0111cox.indd 16FF0111cox.indd 16 1/6/11 9:35:04 AM1/6/11 9:35:04 AM

COX


vehicles across all divisions; and

pool vehicles at all locations.

“From newspaper delivery

trucks to warehouse trucks, tow

trucks to broadcast vehicles for

TV stations, we operate an ex-

tremely diverse fl eet,” Leuen-

berger said.

With more than 13,000 fl eet vehicles,

selecting the right vehicles, streamlin-

ing departmental operational processes,

minimizing greenhouse gas (GHG) emis-

sions, and remaining cost-conscious are

critical missions for the Cox Fleet De-

partment. Key departmental goals for the

35-member fl eet staff include knowing

what the operational needs are, assessing

green vehicles, ensuring the right vehicles

are in place, and monitoring operating

costs. Top fl eet best practices in-

clude safety; Cox Conserves, the

company’s green initiative; and

standardization.

“Standardization is huge for us

right now because of our diversi-

ty,” Leuenberger said. “It allows

us to leverage our buying power

even further.”

Additionally, key policies and pro-

cedures for the company’s fl eet run the

gamut, but partnering with the Cox Risk

Management group remains critical for

the fl eet team to better ensure driver

safety. Not only do drivers go through

a training program, executives and sales

personnel must be trained on all vehi-

cle policies as well.

Within Cox’s four main operating

divisions, fl eet team partnerships in-

clude market-level communications,

which represents the largest portion of

the company’s fl eet.

“We have a new initiative with Man-

heim and its repair facilities,” Leuen-

berger said. “They do more auto repairs

and body work than any other company

in the country, so they are taking over a

good deal of our vehicle maintenance

and providing us a huge cost savings:

$3-4 million a year in savings.”

Because Manheim understands the

ins and outs of the auto market, Leuen-

berger leverages that knowledge to gain

key insights into what type of vehicles to

lease, when to buy, and when to sell.

Shared Services Group Brings Cox Expertise and SavingsWith such a diverse portfolio, Cox re-

lies on its large vehicle fl eet to service

customers in the most effi cient and cost-

effective way. Because the fl eet depart-

ment is a cost center, the team’s prima-

ry mission is not only providing a safe

working environment for employees, but

also driving down costs through stan-

dardizing volume purchasing and main-

tenance operating effi ciencies.

To enhance cost effi ciencies, Leuen-

berger recently merged vehicle procure-

ment and vehicle maintenance into the

Shared Services group. “Because we are

a large fl eet and a big portion of the fl eet

is purchasing, we sometimes purchase up

to thousands of vehicles per year,” Leuen-

berger explained. “I merged our buyers

into our sourcing group to leverage that

group’s expertise, including purchasing

upfi tting components and utilizing na-

tional maintenance contracts.”

While this results in acquisition

and maintenance moving to the sup-

ply chain side of the business, the op-

erational aspects of Cox’s fl eet remain

with the Operations team, allowing

them to remain focused on their spe-

cifi c expertise. “Anywhere we can fi nd

Cox Conserves’ goals include:

■ Further reduce the company’s annual companywide carbon footprint by 20 percent by 2017.

■ Save 172,000 tons of greenhouse gas emissions annually, equivalent to the pollution produced by powering 26,000 homes.

■ Inspire eco-friendly actions in its communities.

■ Harness renewable forms of energy.

■ Conserve natural resources.

AT A GLANCE

FLEET CREATES EFFICIENCIES BY UTILIZING SUPPLY CHAIN MANAGEMENT

With more than 13,000 vehicles nationwide, the fl eet team has saved millions of dollars and lowered greenhouse gas emissions by selecting the right vehicles, streamlining

operational processes, and implementing GPS. By Cheryl Knight

COXCOXENTERPRISES’ENTERPRISES’

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Cover Story


cohesiveness to manage one organiza-

tion instead of two, we’ve done that,”

Leuenberger said.

Other benefi ts of separating out core

procurement functions from opera-

tions and moving them into the sourc-

ing group include substantial savings

in purchasing costs and the leveraging

of talent, which allows for a more fo-

cused perspective.

“Having fl eet operations outside

of the supply chain group and having

Shared Services handle everything else

— including safety, components, main-

tenance, and acquisition — makes the

most sense and is a better alignment of

resources,” Leuenberger pointed out.

“This way, operations doesn’t have to

worry about maintenance and low total

cost of ownership for vehicles.”

While this new initiative is in its in-

fancy, having been implemented over

the past few months, it’s continually

transforming and growing. But so far,

not only does Shared Services run the

fl eet group more effi ciently, they do more

with less. “Leveraging our purchasing

power as an enterprise with 13,000 ve-

hicles provides us countless benefi ts

during negotiations. Being in Automo-tive Fleet’s ‘Top 20 Commercial Fleets’

gives us advantages when we negotiate

and select vehicles,” Leuenberger said.

“For instance, now we have a national

parts agreement nationwide, which re-

sulted in a big savings.”

Producing Measurable Results Important Step Along the WayBecause Cox’s fl eet fi ts into the compa-

ny’s fi nance chain, Leuenberger reports

directly to the senior VP of Finance who,

in turn, reports to the CFO. Obtaining

and maintaining executive buy-in keeps

the fl eet team operating smoothly and ef-

fi ciently. And communicating progress

both up and down the business chain re-

mains essential.

“We maintain great relationships

and listen to the needs of all of our

VPs, controllers, and whoever our pri-

mary customer might be,” Leuenberg-

er said. “In addition, it’s critical to en-

sure our executives understand what

we’re doing, so we give weekly reports

on our initiatives.”

Providing detailed fl eet data to exec-

utives also ensures a cohesive collabora-

tion, and FleetWave, the fl eet’s primary

data system, allows for a complete drill-

down on numbers and statistics.

“FleetWave gives us info that we’ve

never had before at all levels,” Leuen-

berger said.

This enables Leuenberger to show any

and all cost savings and statistical up-

dates on leasing data, fuel card data, and

all maintenance and repair orders.

“Whether linked to a different sys-

tem or hand-entered, it gets us to a cur-

rent cost of ownership for our vehicles,”

he said. “We revisit most measures on

a six-month cycle using a cost-per-mile

metric.”

This allows the team to compare

market to market, system to system,

and company to company as to what

cost per mile is on each vehicle.

Because Cox operates such a large

and broad fl eet, it has multiple mainte-

nance, fl eet management companies,

and vendors. By having a single man-

agement system, it is now able to con-

solidate data for examination.

“This is so important. Data allows

us to isolate fi nancials. The more detail

we can assess, the better we are at man-

aging our fl eet,” Leuenberger added.

He also emphasized the importance of

communicating and celebrating wins.

“When we can document savings, we

tout that.”

Cox Conserves Reduces GHG Emissions and Conserves FuelBy embracing eco-friendly and hybrid

vehicles, the fl eet is a key component of

Cox Conserves, the company’s nation-

al sustainability program. While man-

aged by Cox Enterprises, Cox Conserves

branches out across all divisions.

“The program covers the types of

vehicles we can drive, how we can save

CO2 emissions, and how to conserve

fuel savings,” Leuenberger explained.

“This infl uences our decisions in fl eet

substantially.”

One of Cox Conserves’ goals includes

further reducing the company’s annu-

al companywide carbon footprint by 20

percent by 2017. This effort is expected

to save 172,000 tons of GHG emissions

annually, equivalent to the pollution pro-

duced by powering 26,000 homes. Ad-

ditionally, Cox Conserves aims to:

■ Inspire eco-friendly actions in its

communities.

■ Harness renewable energy.

■ Conserve natural resources.

The Cox fl eet currently includes

1,400 biodiesel capable vehicles; 285

hybrids (Toyota Prius, Toyota High-

lander, and Ford Escape models); 200

E-85 gas vehicles; 14 electric security

vehicles; three natural gas vehicles; and

one pilot CNG vehicle.

Among the hybrid vehicles are nine

hybrid bucket trucks from Navistar, which

provide fuel savings of nearly 60 percent

with the gasoline engine off and the elec-

tric motor powering the vehicle. Diesel

emissions are completely eliminated

when the hybrid truck operates equip-

ment, such as overhead utility booms,

solely on the truck’s battery power.

The Hybrid Truck Users Forum

(HTUF), of which Cox is a member, es-

timates 1,000-1,500 gallons of fuel can

be saved annually per utility-type truck.

That equates to savings of $3,000-$6,000

per truck annually. It also results in yearly

GHG reductions of 11 to 16.5 tons.

Other environmentally friendly ve-

hicle programs at Cox include:

■ Executive vehicle program: Com-

Key departmental goals for the 35-member fl eet staff include knowing what the operational needs are, assessing green vehicles, ensuring the right vehicles are in place, and monitoring operation costs.



pany leaders are required to select cars

that achieve 27 mpg or better.

■ Fuel-effi cient parking: Instead of

preferred parking for executives, Cox

reserves more than 70 prime parking

spots in its corporate parking garage

for fuel-effi cient cars.

■ Borrow-a-Hybrid program:

Employees who participate in the al-

ternative transportation program can

check out hybrid vehicles from the

company fl eet.

Leuenberger hopes to transition to

more fuel-effi cient vehicles (possibly

Sprinters and Transit Connects) as oth-

ers come up for replacement. “We’ll do

what’s best for our company and our en-

vironment,” he said. “Sustainability and

fuel effi ciency are major parts of every

decision we make, but we also have to

keep costs in mind.”

Leuenberger pointed out that he does

not want to get too far in front of develop-

ing technology. “I’ll feel more comfort-

able buying more CNG vehicles when I

know the infrastructure is there.”

Technology Initiatives Maximize Savings & Reduce EmissionsOver the past few years, Cox Communi-

cations, the company’s cable and broad-

band communications subsidiary, has

applied GPS technology to transform

the operational, customer, and environ-

mental economics of its business. This

shift of perspective has yielded signif-

icant results. “With more than 13,000

vehicles, it’s vital to stay on top of the

program,” Leuenberger said. “There

are always new products and technol-

ogies hitting the market. It’s important

for us to know which ones will benefi t

our business and customers.”

One such product is Trimble’s GPS

system, which has been installed in more

than 5,000 Cox vehicles. The company

targets savings of more than $1.5 mil-

lion in fuel costs each year from the pro-

gram. The fl eet management solutions

also enable the company to reduce its

carbon footprint by cutting more than

25 million lbs. of CO2.

The system helps achieve the com-

pany’s overall sustainability goal by

making sure idling is down and keep-

ing routes tight. In the fi rst year of sys-

tem implementation, the combined

Vehicle Diagnostics and GeoManager

solutions allowed Cox to reduce vehi-

cle idle time from more than 90 min-

utes to less than 15 minutes per day, an

84-percent decrease in several markets

where it was deployed.

The system can also locate injured

technicians and provide accident no-

tifi cations. GPS-enabled vehicles also

add signifi cant benefi ts beyond the hard,

quantifi able fuel cost savings and car-

bon emission reduction. Knowing where,

when, and how vehicles are used enables

fi eld service teams to better serve their

customers. And combining real-time lo-

cation information with post-event data

provides Cox the opportunity to better

understand its business. The initial pro-

gram launch resulted in:

■ Daily mileage dropped from 100-

plus miles per vehicle to less than 70

miles per vehicle.

■ Overall miles per gallon increased

5 percent, while vehicle repair costs

declined fi ve percent.

■ Vehicle idle time dropped by as

much as 90 minutes per fi eld ser-

vice tech per day.

■ Carbon emissions dropped by as

much as 30 lbs. per vehicle per day.

The fl eet department also benefi ts

from the company’s implementation

of the Mobile Workforce Management

Solution from TOA Technologies, al-

lowing for a reduction in miles trav-

eled per driver.

Fleet Continues to Play a Role in Cox Conserves ProgramMoving forward, Leuenberger hopes to

get an even better hand on maintenance.

“Maintenance can get out of hand easier

than anything else, and that really has a

high cost associated to it,” he said. “By

taking more ownership of our mainte-

nance, we’re going to reduce $3-$4 mil-

lion out of our costs.”

The fl eet team also aims to continue

evaluating additional opportunities to

go green. “We continue to research new

technology, and when there are sustain-

able options — both for the environment

and business — we explore investing,”

Leuenberger concluded. ■

Mark Leuen-berger (center), a 12-year veteran fl eet manager for Cox, oversees a 13,000-plus vehicle fl eet and serves as chief negotiator for all vendor-related contracts and services.

COX’S MAJOR OPERATING SUBSIDIARIES

■ Cox Communications, Inc. (cable television distribution, tele-phone, high-speed Internet access, commercial telecommunications, and advertising solutions).

■ Manheim, Inc. (vehicle auc-tions, repair and certifi cation ser-vices, and Web-based technology products).

■ Cox Media Group, Inc. (televi-sion and radio stations, digital me-dia, newspapers, advertising sales rep fi rms, Valpak).

■ AutoTrader.com (online au-tomotive classifi eds and related publications).


It’s in the news again; fuel prices are climbing and fl eet managers are looking for ways to manage that largest variable expense. Here are 10 tested strategies that work.

Sometimes we all have short

memories; it was two years

ago, in 2008, that fuel pump

prices skyrocketed to in ex-

cess of $4 per gallon, and fl eet

managers saw their fuel budgets eaten

up before Thanksgiving.

In subsequent months, prices fell

even more quickly than they rose, and

fuel expense rolled back to a more com-

fortable level. Unfortunately, that laser-

like focus on managing fuel costs, for

some fl eet managers, fell with it.

Though it may not be “déjà vu all

over again,” nationwide average fuel

prices at the pump are creeping up,

and they’re now bumping up against

the $3 per gallon mark. Whether pric-

es are rising or falling, fl eet managers


The following 10 strategies are proven to help reduce fuel:

■ Downsizing.

■ Rightsizing.

■ Vehicle cleanliness.

■ Proper tire infl ation.

■ Preventive maintenance.

■ Fuel card use.

■ Reduce cargo weight.

■ Improve driver behavior.

■ Plan/route trips.

■ Shop around/buy smart.

AT A GLANCE

must put strategies in place to manage

fuel costs, now and always. Here are 10

of them that work.

1 DOWNSIZING

It is often the fi rst thing that cross-

es management’s mind when fuel costs

begin to spike: “Why can’t we just use

smaller cars?” It isn’t a panacea, but

if done right, can be a useful weapon

in fi ghting rising fuel prices. Look for

models with both cargo and passenger

carrying capacity that can handle the

driver’s mission. Be very careful about

dropping more than one class, howev-

er (i.e., from full-size to compact, or

from 1-ton to ½-ton in a pickup truck).

Once the decision is made, it’s diffi cult

to turn back, and you’ll be stuck with

vehicles that can’t properly perform

the job, but will often end up costing

more than those they’ve replaced. Try

to grab a demo from the manufacturer,

and have a driver use it for a few months.

Get his or her feedback on how it per-

forms, and if it performs well, add the

selection for the balance of the current

model year, or to the next one depend-

ing upon the timing. Track operating

expenses carefully — not just fuel ef-

fi ciency, but tire life, maintenance, and

repair as well.

2 RIGHTSIZING

Rightsizing sounds like some kind

of business seminar lingo, but what it

refers to is the possibility there may

simply be too many vehicles in your

fl eet. This includes redundant terri-

tories, surplus vehicles, or vehicles

out of service but not sold. Not all use

fuel, but some do, which adds to over-

all fuel expense.

Check with all fi eld locations and en-

sure the number of vehicles equals the

number of drivers. Branch offi ces some-

times like to keep a surplus vehicle tucked

away for use on various company errands.

Don’t let them. It is the fl eet manager’s job

to track and manage expenses associated

with the operation of company vehicles,

not to manage how much a clerk in the

offi ce is reimbursed for taking a depos-

it to the bank, or pick up offi ce supplies.

Get rid of these surplus vehicles. Their

cost goes beyond just fuel; they must be

insured, unless fully depreciated, and

then there’s a lease or fi nance cost, tags,

10FUEL MANAGEMENTFUEL M

STRATEGIESSTRATET

PHOTO: ©ISTOCKPHOTO.COM/DLEWIS33

When downsizing vehicles, look for models with both cargo- and passenger-carrying capacity that can handle the driver’s mission.

FF0111strategies.indd 22FF0111strategies.indd 22 1/7/11 11:41:26 AM1/7/11 11:41:26 AM


inspections — do the math.

3 KEEP IT CLEAN

Don’t let cars go without regular

washing. Dirt, grime, oil, grease, and

especially salt can damage the fi nish,

but believe it or not, they add weight

as well as increase aerodynamic drag,

which reduces fuel effi ciency.

This is particularly true in the winter.

After it snows, ensure drivers clean and

de-ice vehicles from top to bottom and

bumper to bumper. Accumulated ice and

snow on a car or truck can add 100 lbs. or

more to the weight, not to mention limit

visibility, creating a safety hazard. Keep

ice scrapers and snow brushes handy, or

provide them for all vehicles.

4 TIRES

Proper tire infl ation is a critical com-

ponent, not only in maximizing fuel ef-

fi ciency, but tire life and safety as well.

Under-infl ated tires increase rolling re-

sistance, and resistance forces the en-

gine to use more fuel. Tire life can also

be shortened. Under-infl ated tires have

diffi culty “getting out of their own way”

— that is, the tread can actually bunch

up as the engine forces the wheel to turn

faster than the tread can move out of

the way. Keeping tires properly infl at-

ed can increase mileage by as much as

3 percent, equivalent to 9 cents per gal-

lon (at $3 per gallon pump price). Equip

drivers with an air pressure gauge, and

make it policy to check tire pressure

every time a vehicle is used. (Though

under-infl ation robs gas mileage, over-

infl ation is not a solution, as it will in-

crease tire wear as well as the possibil-

ity of tire failure.)

5 PREVENTIVE MAINTENANCE

Put in place a formal, serious pre-

ventive maintenance schedule, includ-

ing regular oil changes, fl uid checks,

wheel alignments, cooling system

fl ush/fi ll, and transmission fl uid chang-

es. Track driver compliance via report-

ing, and take swift action when drivers

are negligent.

A vehicle’s performance can be neg-

atively impacted when not kept in top

shape. The older and dirtier oil gets, the

harder an engine must work to circulate

it, and the more wear on the engine. Use

the proper grade of oil; if the manufac-

turer calls for 5W-30 weight oil, using

10W-30 oil can lower fuel effi ciency by

as much as 1-1.5 percent. This is espe-

cially true in winter, as an engine sitting

overnight in freezing temperatures must

work doubly hard at circulating the heavi-

er weight oil before it gets warm.

Make certain that fi lters are replaced

according to the manufacturer’s require-

ments. Air and fuel fl ow can be nega-

tively impacted when fi lters become

clogged, and don’t ignore the cooling

system; anything that makes the engine

work harder wastes gas and increases

fuel expense.

6 USE A FLEET FUEL CARD

As the saying goes, you can’t control

an expense unless you know what it is.

Today’s fuel merchants sell a great deal

more than just fuel, and the fuel they sell

provides a number of options. Unless

it’s possible to control these purchases

at the pump, the fl eet fuel expense will

inevitably rise. Fleet fuel card programs

offer the Level III data needed to man-

age this expense after the fact, and so-

phisticated controls that will help man-

age it at the pump. Among the controls

available are:

■ “Velocity” limits are controls that

limit how often, or for how much, a

card can be used.

■ Fuel-only options prevent drivers

from adding food, tobacco, or other

FUEL MANAGEMENTL MANAGEMENT

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Keeping tires properly infl ated can increase mileage as much as 3 percent. Equip drivers with an air pressure gauge and make it policy to check tire pressire.


Fuel Management


non-fuel purchases to their visit.

■ Use limits can limit the days of

the week or hours of the day the card

can be used.

■ Geographic limits, for fl eets oper-

ating in a limited geographic area,

can pinpoint by zip code or other

means where the card can be used.

These and many other types of con-

trols can help a fl eet manager be pre-

cise as to when, where, and what types

of purchases can be made by a driver.

The Level III data that these programs

capture at the pump includes critical

odometer readings, fuel grade, self-/full-

service, vehicle number, date, time, and

merchant information, all of which will

provide a database that can be mined

for savings opportunities. Controlling

purchases at the pump, taking action

on activity after the fact, and detailed

reporting all add up the most powerful

tool a fl eet manager can have in battling

rising fuel expense.

7 PUT VEHICLES ON A DIET

Cleaning snow and ice off your ve-

hicles is one proven way to eliminate

weight and save gas. But overall, weight

is the enemy of fuel effi ciency, so it’s

a good idea to put the entire fl eet on a

diet. Excessive weight is a drag on fuel

consumption; each 100 lbs. of addition-

al weight can cut fuel effi ciency by up

to 2 percent. Conduct an audit of what

drivers must carry in the normal course

of the job, i.e., product, parts, POS ma-

terial, etc. Is all of it absolutely neces-

sary, or is some of it merely convenient,

or carried simply because “we’ve always

done it this way”? It should be policy

that personal effects should not be load-

ed into or onto a vehicle. Be sure to en-

gage fi eld management, as well as driv-

ers, in the effort. Get everyone in the

habit of keeping any excess weight out

of company vehicles.

8 DRIVER BEHAVIOR

There is nothing a fl eet manager can

do that is more effective in managing

fuel expense than guiding driver behav-

ior. Auto website Edmunds.com, in test-

ing various gas-saving techniques, con-

cluded driver behavior accounts for as

much as 37 percent of fuel consumption.

There are a number of driver practices

that should be highlighted here:

■ “Jackrabbit” starts and stops. Drivers will often pound the gas ped-

al when a light turns green, when pass-

ing slow-moving vehicles, or just when

starting out on a trip. They’ll do the

same to the brake pedal when stop-

ping. Both waste gas, expose the en-

gine and drivetrain to excessive wear

and tear, and can often result in a few

traffi c violations as well. Teach driv-

ers to accelerate smoothly, and keep

their distance so emergency stops are

minimized.

■ Speeding. Drivers know full well

they’re supposed to stay within the post-

ed speed limit; however, they often do

not. The faster a driver drives, the more

fuel the vehicle burns; although vehicles

differ, fuel effi ciency will begin to de-

cline at around 60 mph or so. It should

be policy (though it is common sense)

that drivers obey speed limits. Speed-

ing can also result in sudden stops, ex-

acerbating the waste and further in-

creasing fuel costs.

■ Excessive idling is a tried and true fuel waster. After all, when a car is idling,

fuel effi ciency is 0. If a driver is going to

be in one place for more than a minute,

two at the most, he or she should turn off

the vehicle. Excessive idling is particular-

ly acute in truck fl eets, where deliveries,

loading, and unloading are common.

■ Use the cruise control. Cruise con-

trol isn’t just a convenience; setting the

cruise control will help drivers maintain

a steady, consistent speed. These and

other driving behaviors can crush fuel

effi ciency, not to mention pose safety

risks and increase wear and tear. Ag-

gressive driving, jackrabbit starts and

stops, and a cavalier attitude toward

idling are driver behaviors which can,

and should, be changed.

9 TRIP PLANNING/ROUTING

Drivers often drive a regular route,

or at least cover a territory. Planning

trips carefully helps keep miles driv-

en down. Make sure your sales drivers

“pack” their trips — that is, don’t drive

100 miles each way to make a single

sales call. Obviously, this isn’t always

possible (when the “hot” lead comes in;

time kills all deals, as they say), but for

the most part veteran salespeople know

how to make the most out of a trip.

Also, try to have drivers avoid high

traffi c areas and rush hours. Use alter-

native roads, and drive off-hours (mid-

day, very early, or in the late evening).

Traffi c will force all sorts of bad driving

behavior: excessive braking, idling, stop-

and-go driving, all of which hurt fuel ef-

fi ciency. It also contributes to aggressive

or frustrated driving, a safety risk. Use

routing software to fi nd the most effi -

cient routes for drivers who drive them.

GPS devices can help drivers, particu-

larly when they’re in an area with which

they’re not familiar, or when they’re vis-

iting someone for the fi rst time. Reduc-

ing miles driven, and making sure that

idling and stop-and-go driving are elim-

inated or minimized, are tried and true

ways to manage fuel costs.

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Fleet fuel card controls can prevent driv-ers from making unauthorized purchas-es, such as premium gas or food items.

One of the most effective ways of managing fuel expense is guiding driver behavior. ➞


Fuel Management


that are neglected.

■ Fleet fuel card programs: Use

the tools available to you to manage fuel

costs, including a fl eet fuel card pro-

gram. Drivers will be able to get fuel

wherever and whenever they need it,

and fl eet managers will have the data

and the tools they need to track and

manage fuel expense. Use the controls

available to stop wasteful expense be-

fore it happens.

■ Lighten up: Keep excess weight

out of company vehicles. Limit person-

al items that add weight and make sure

everything in the vehicle that is job-re-

lated is necessary.

■ Driver behavior: More money can

be saved by changing driver behavior

than any other means. Drivers should

avoid aggressive driving and excessive

idling, and obey speed limits, .

■ Trip planning/routing: Driv-

ers should make the most out of miles

driven. “Pack” trips with as many calls

or meetings as time allows. Use rout-

ing software and GPS devices to keep

drivers on the move. Avoid high traf-

fi c areas and times of the day.

■ Shop around: Give drivers the

tools to fi nd lower cost retailers. Nego-

tiate discounts where possible.

Don’t wait until prices spike sky high;

make managing fuel expense a routine

part of the job, every day. ■

A Full-Time JobSometimes, it seems as though manag-

ing fuel costs is a full-time job. Since

fuel expense can often be as much as

80 percent of variable costs (depending

upon pump prices) this isn’t far from

the truth, and it is time well spent. But

fl eet managers must be careful not to

focus on fuel only when prices are ris-

ing. Managing fuel costs should always

be the single most important process in

the fl eet manager’s day, as it pertains

to variable or operating costs.

A recap of the 10 tried and true strat-

egies to manage fuel costs includes:

■ Downsize: Use the smallest, most

fuel-effi cient vehicle that can do the job.

Track expense by model, and use the

data to form the selector.

■ Rightsize: Get rid of surplus ve-

hicles and ensure every vehicle is need-

ed and every driver qualifi es.

■ Keep vehicles clean: Have driv-

ers wash cars once or twice each month.

Clean cars are more aerodynamic, light-

er, and will get better mileage.

■ Tires: Keep tires properly infl ated

and wheels aligned. Increased resistance

is the enemy of fuel effi ciency.

■ Preventive maintenance: In-

stitute a formal PM schedule, and

make certain drivers adhere to it.

Cars kept in top running condition

will get better mileage than those

10 SHOP AROUND/BUY SMART

Fuel pump prices can vary widely

within only a few miles. Buying fuel

near an airport can cost as much as a

dollar per gallon more than buying it

from a local merchant. Most fl eet fuel

card programs include a merchant loca-

tor, which can help drivers know where

the lower-priced fuel can be had.

Check with fuel locations near a

branch or regional offi ce; sometimes if

the company agrees to buy fuel there,

the retailer will provide a discount.

Some of these same merchants are of-

ten owned by a single licensee or fran-

chisee, who will do the same for multi-

ple locations. A fl eet fuel card provider

can often bill a net of such negotiated

discounts.

Instruct drivers to stay away from

full-service or mid-grade and premi-

um fuels (unless the vehicle calls for

them). Both will usually cost several

cents per gallon more than self-service

or regular unleaded. Encourage fi eld lo-

cations to communicate to each other

where lower cost fuel can be purchased.

Use the reporting tools provided by the

fuel card supplier to track and fi nd in-

dividual low-cost merchants, as well as

chains and oil companies.

When fuel prices rise, the media are full of “tips” on how to save fuel. Keeping in mind that there is no “magic bullet” to fuel savings, here are some that don’t work:

● To A/C or Not to A/C: One side says to use the A/C, that the aerodynamic drag caused by open windows robs fuel. The other advises opening the win-dows and that using the A/C wastes fuel. The bottom line: Neither strategy will have much of any effect on gas mile-age. Use common sense; don’t run the A/C when you don’t need it, but don’t sit sweltering in a hot car in the summer with the windows up, nor freezing in January with them open. Be comfortable.

● Downsizing for the Sake of Down-sizing: Don’t downsize your fl eet just be-cause some executive said, “Why can’t we just use smaller cars?” Downsizing can be a boon, but only if done right. Look into it, but only downsize to a ve-hicle that is capable of doing the job it’s meant to do. Just replacing midsize cars on your selector with subcompacts can be a disaster.

● Coast Down Hills in Neutral: You hear this one often when fuel prices spike. Don’t do it: It doesn’t save fuel, and can be both dangerous as well heck on your transmission if you sud-denly have to put it in gear.

FUEL-SAVING ‘TIPS’ THAT DON’T WORK


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Extending replacement cycles may seem a simple, short-term solution to shrinking budgets, but factors such as increased maintenance costs, impact on driver morale, loss of fuel effi ciency, and

increased downtime should be considered.

Extending vehicle replacement

cycles is a cost-cutting strat-

egy explored by an increas-

ing number of companies to

divert cash fl ow toward other

expenditures. Whether extended cy-

cling pans out for a company depends

on factors such as fl eet utilization, op-

erating costs, and the length to which

cycles are extended.

Since depreciation is the largest por-

tion of fl eet expense, some fl eet man-

agers and industry professionals be-

lieve extending the replacement cycle

by a particular period of time lowers

fl eet total costs. However, if the ex-

tension is longer-term (more than six

months), uncertainty in resale markets,

Vehicle Lifecycles


When deciding on an extended replacement cycle, senior man-agement should consider:

■ Impact on residual resale values of older units.

■ Potential costs and impacts of vehicle downtime and loss of productivity.

■ Increased probability of safety- related issues.

■ Impact on company image and driver morale.

■ Degradation of fuel economy.

■ Volume pricing discounts negotiated with OEMs.

AT A GLANCE

unscheduled maintenance, and subse-

quent downtime can more than offset

the depreciation cost saving.

Before making the decision to ex-

tend replacement cycles, consideration

should be given to the impact on residu-

al resale values; the potential costs and

impacts of vehicle downtime and loss

of productivity; the increased probabil-

ity of safety-related issues; the impact

deteriorated vehicles have on compa-

ny image and driver morale; and the

degradation of fuel economy. It is also

signifi cant to recognize that if replace-

ment order delivery is slow, potential

savings previously gained on paper may

be mitigated by these unforeseen cir-

cumstances and may not be recovered

in vehicle resale.

As senior management, it is criti-

cal to be aware of and fully understand

the consequences of extending vehicle

lifecycles.

Long-Term Cycling TrendsSince 2007, the long-term trend in ve-

hicle cycling within commercial fl eets

has gradually increased due to eco-

nomic pressures to realize short-term

cost savings.

Initially, declining resale values

largely contributed to extended vehi-

cle cycling. Beginning in fourth quarter

2007, the resale market started to soften

due to the economic slowdown. Used-

vehicle demand declined as the typical

buyers of these vehicles, the subprime

segment, could not qualify for loans. In

addition, vehicle owners found them-

selves “upside down” with respect to

their auto loan situation.

Fuel price increases in the same time

period also stifl ed resale values for less

fuel-effi cient vehicles.

However, the subsequent decreased

supply of used vehicles has helped miti-

gate some of these resale concerns.

Reasons Against Extended CyclingThere are abundant reasons to avoid

an extended fl eet cycle: Maintenance

costs increase, older vehicles present

more risk, and remarketing efforts

are more diffi cult with higher-mile-

age vehicles. Maintenance costs rose

in 2009 due to higher cost of replace-

ment tires, preventive maintenance

(PM), oil changes, and labor rates. It

is also predicted future production

changes will impact acqusition costs

due to emissions mitigation technolo-

gy. Repairs requiring more time, la-

bor, and cost are also likely.

Replacing a vehicle in a typical cy-

cle of 55,000-65,000 miles brings the

lifecycle cost to its maximum effi cien-

cy, with nominal maintenance surpris-

es and better fuel economy (especial-

ly in light of newly mandated CAFE

standards).

Lack of proper cycling policies can

result in catastrophic component fail-

WHY SENIOR MANAGEMENT S

EXTENDED VREPLACEMENT C

FF0111replacement.indd 28FF0111replacement.indd 28 1/6/11 1:20:27 PM1/6/11 1:20:27 PM


ures — usual-

ly unbudgeted

costs. An extended

cycle route can lead

to increased insurance

costs, major mechanical

failures, and downtime due

to unpredictability factors.

Driver productivity, more at-

tractive resale opportunity maximi-

zation, and increased safety are other

strong reasons that present advantag-

es when benchmarked against extend-

ed cycling.

The most signifi cant and uncertain

expense to control when extending ve-

hicle cycles is the impact on the main-

tenance budget. However, there is one

certainty: Maintenance expense will

go up. If it didn’t, OEMs would not of-

fer limited warranties.

Impact on Maintenance BudgetThere are few benefi ts to the mainte-

nance budget when

extending replacement

cycles — unless a com-

pany makes moderate ad-

justments to maintenance

policy and manages the pro-

gram very tightly.

Small shifts in replacement

policy may be acceptable; PM ex-

penditures may not increase, and

the probability of catastrophic failure

may not signifi cantly increase. Howev-

er, it is critical to establish and adhere

to a policy that avoids additional sets

of tires and brakes.

In most passenger vehicles, brakes

are generally replaced every 30,000-

45,000 miles, depending on the man-

ufacturer and driving habits. Tires are

typically replaced every 45,000-60,000

miles. Light-duty trucks, SUVs, and

commercial vans may follow a sig-

nifi cantly shorter cycle for brakes and

tires depending on payload, applica-

tion, driving conditions, and driv-

ing habits.

Increased PM expense for items such

as timing belts, spark plugs, etc., ensues

if cycles are not carefully planned and

executed. If replacement cycles are

extended beyond manufacturer new-

vehicle warranty periods, unscheduled

fi rst-time maintenance repairs such as

alternators, starters, suspension, and

air conditioning become more probable

and lead to thousands of dollars in

unforeseen maintenance expense. With

increased mileage, the frequency

and probability of catastrophic failures

(i.e., repairs in excess of $2,000) sharply

increase.

Extended cycling parameters slight-

ly below the next tire/brake/PM inter-

val can minimize increased mainte-

nance expense and reduce overall cost

of ownership.

Budgeting for maintenance not un-

der warranty is unpredictable, especial-

ly if routine maintenance does not fol-

low recommendations.

Older vehicles may require more

expensive repairs and face potentially

catastrophic failures. Without proper

routine maintenance, the timing of

unscheduled repairs becomes even more

unpredictable. More expensive brake

repairs and repairs to heating, cooling,

engine, transmission, and cab/sheet

metal will increase disproportionately

as vehicles age.

If senior management ultimately

decides to extend vehicle cycling,

fl eet should implement a maintenance

management program to handle the

repair negotiations and post-warranty

recovery.

Most fl eet managers and industry

professionals agree there is a cost to

downtime. Lost business from a missed

job, missed opportunity from a sales

call — however a company defi nes

downtime — can be a controversial

topic, as it is diffi cult to calculate the

rate and buy-in required to accept cost

avoidance or missed opportunity val-

ue. Downtime directly correlates with

maintenance, specifi cally the hours in-

volved with a vehicle and driver out of

production due to maintenance occur-

rences. Critical repairs tend to see high-

er downtime costs per repair.

T SHOULD OPPOSE

D VEHICLET CYCLES

Stretching the service life of a vehicle can lead to lower re-sidual resale values, increased safety risks, and lower fuel economy, among other consequences.


Vehicle Lifecycles


Impact on Company Image &Driver MoraleMany companies view fl eet vehicles as

employee perks, and newer vehicles are

seen as even bigger perks. When em-

ployees are provided older vehicles with

higher mileages, morale can suffer, es-

pecially when vehicles are much older

and experience frequent repairs.

If the driving force of vehicle change

is unique to the company (i.e., drop in

sales causing need to reduce expens-

es) and the change is not severe and

expected to be temporary, most driv-

ers likely will appreciate the situation

and be happy to do their part to con-

tribute. If the cause is more widespread

(i.e., industrywide), again, drivers will

tend to accept the change and for a lon-

ger duration.

The more severe the change and the

greater the expected length of the pol-

icy change, the greater the likelihood

of negative impacts. Vehicles can be

very personal, and for some industries,

an important infl uence on recruitment

and employee retention. The cost can

be signifi cant if the company loses its

top sales performer to competition that

offers a driver-perceived better fl eet ve-

hicle and/or policy.

The cost will not hit the fl eet’s bud-

get, but could have a dramatic impact

on the company. Likewise, should the

vehicle (or lack thereof due to break-

downs) impact the driver’s ability to

earn commissions or other compensa-

tion (e.g., route sales, services), clearly

the situation would cause morale issues

and again, the potential loss of valued

employees — not to mention the cost of

hiring and training replacements.

In addition to internal morale, vehi-

cles also contribute to consumer per-

ception of the company. The condition

of a company vehicle may be the fi rst

impression a customer or prospect gets.

If a company markets itself as a high-

quality repair business and the service

van shows up with body damage and

rust, the customer may relate the pre-

sentation of the vehicle to a lower re-

pair quality.

A company’s image could also suf-

fer as vehicles age, wear out, break

down, and at the extreme, appear un-

safe. Such an appearance can be inter-

preted as the outward signs of a less-

than-successful company.

The impact, of course, is greater when

clients, customers, partners, vendors,

etc., are exposed to the fl eet as passen-

gers or when the vehicle is on the road

or parked in their facilities. Oftentimes,

the driver and company vehicle may be

the only tangible exposure someone has

to the company, and as such, can have

a signifi cant impact on how the com-

pany is viewed by the outside world. It

is important the vehicle’s general per-

ception is aligned with the desired per-

ception of the company.

As the frequency in repairs increase,

drivers tend to care less about the ve-

hicle’s internal and external condition

than they would a newer model. The di-

rect result is a lower resale value due to

below-average condition status.

Further, if extended cycling gets to

the point where vehicles are unreliable

and proven unsafe, the liability exposure

to the company is immeasurable.

Each company and fl eet is different,

so there can be no one answer to the

question of the optimum cycle policy,

and the impact of extending a policy

will vary. Solicit input from all those

who might be affected, directly or

indirectly, including sales, service, HR,

risk management, and any other stake-

holding departments. This change should

not be considered solely on the basis of

bottom-line impact on fl eet cost.

Lower Resale Values & Irregular OrderingKeeping vehicles in service longer

results in higher-mileage vehicles sold

at auction and subsequent lowering of

resale values. In addition, competition

with newer model-year vehicles being

released, even if the older model-year

vehicle purchased has zero miles,

negatively impacts the older vehicle.

For example, if a 2011 model-year

vehicle is purchased new with no miles

when the 2012 model-year vehicles

are introduced, the older model-year

vehicle will realize a lower resale value

(approximately $2,000 for common

sedans) if both model-year vehicles

are sold at the same time in the future

with the same mileage. The reasoning

is the newer-model vehicle’s technology

and fuel economy may be better, and

the vehicle may still be covered under

the OEM powertrain warranty versus

the older model.

In addition, extending cycling based

on current cash fl ow requirements up-

sets future cash fl ow budgeting for sub-

sequent years.

Getting back on track once the bud-

get has been disrupted may be diffi -

cult, as budgets are typically set based

on prior years’ expenses. In addition,

if the economy worsens the follow-

ing year, the problem would be exac-

erbated to the point the fl eet manager

may defer the second-year cycle. Thus,

in the third year of the cycle, a much

larger number of vehicles would need

to be ordered at higher capitalized cost

to downtime.

Cash fl ow shift to maintenance and

fuel expense would also occur, as well

as lost customer-negotiated volume in-

centives from OEMs. If fl eet executives

decrease the annual order, OEM vol-

ume incentives may be impacted. For

example, if a 1,200-unit fl eet with a

36-month/75,000-mile cycle extended

the cycle to 48 months/100,000 miles,

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Morale suffers for employees provided older vehicles with higher mileages, especially when vehicles are much older and experience frequent repairs.



and the difference in the volume tiers

reduced the incentive from $2,000 to

$1,500, the impact for the new four-

year cycle could be $600,000. The loss

of $600,000 would equal depreciation

for 30 vehicles.

Impact on Fuel Effi ciencyWhen a fl eet manager extends replace-

ment cycles, he or she gives up cost

savings associated with a more fuel-

effi cient vehicle, whether for another

make and model or with a similar re-

placement model.

The impact on fuel effi ciency cre-

ated by extended vehicle replacement

cycles is two-fold:

■ New model-year vehicles continu-

ously achieve better fuel economy.

■ As a vehicle ages, the performance

of the vehicle deteriorates, decreasing

fuel economy.

Some industry data suggests vehi-

cles can lose up to 1 percent or more

fuel economy per year. Future fuel price

increases will exacerbate the cost of the

additional fuel expense.

According to the U.S. Environmental

Protection Agency (EPA) website

(www.epa.gov), large sedans have been

realizing better average fuel economy

year-over-year for the past fi ve years

due to a variety of factors, including

lighter-weight vehicles and vehicles

designed to run more effi ciently.

In addition, OEM manufacturers

are continuously developing and

introducing new confi gurations,

including more hybrid vehicles, to

add to their vehicle lineups.

Compliance with the changing CAFE

standards will continue this trend.

Leveraging New TechnologyWhen examining vehicle replacement

cycles, consider the benefi ts of newer

engine technology. With fuel the largest

fl eet operating cost, advanced engine

technologies offer opportunities to reduce

fuel spend through better mpg.

As fuel prices increase, the impact

becomes greater. With CAFE standards

rising by 30 percent over the next fi ve

years, the effect of vehicle replace-

ment acquisition costs will continue

to increase.

(CAFE data is the sales-weighted

average fuel economy, expressed in

miles per gallon, of a manufacturer’s

fl eet of passenger cars or light trucks

with a gross vehicle weight rating

(GVWR) of 8,500 lbs. or less, manu-

factured for sale in the U.S., for any

given model-year.)

To combat rising fuel prices, com-

bining a right-sized model with an in-

creased focus on mpg can aid with se-

lector list evaluation.

Fleets taking advantage of new engine

technologies by timely replacement and

moving to a smaller class of vehicle have,

on average, realized a 10-percent reduc-

tion in both fuel spend and carbon emis-

sions resulting from mpg improvements.

Safety and ErgonomicsAs computer technology has increased

exponentially, innovations regarding ve-

hicle safety have come along with it. Pi-

oneering features (such as traction and

stability control, side air bags, etc.) on

the most high-end vehicles just fi ve or

10 years ago are now standard on even

the most basic vehicles and across all

vehicle classes.

The list of benefi ts from increased

vehicle safety in newer vehicles in-

cludes side air bags, anti-lock brakes,

stability control, tire pressure monitor-

ing systems, etc.

Operating fl eet vehicles for longer

cycles means drivers operate vehicles

without the advanced safety features of

current model-year counterparts.

Even in vehicles without a system

integrating all the entertainment

functions, signifi cant improvements

have been made to features such as

navigation systems. These include

capabilities such as real-time traffi c

alerts and touch-screen monitors, all

designed with the intent of keeping the

drivers’ eyes on the road.

Alternatives to ExtendingVehicle LifecycleWhen facing a limited budget for vehi-

cle replacements, alternatives are avail-

able to simply extending the lifecycle

of the vehicle.

Dollars can be stretched further by:

■ Leveraging remarketing op-portunities. There are opportunities

for leveraging the current slow econ-

omy as part of the cycling plan. With

the decrease in new vehicle sales, the

result is a shortfall of used vehicles.

This decreased supply presents a rare

opportunity for fl eet managers to take

advantage of a stronger-than-expect-

ed used-vehicle resale market.

■ Body transfers and refurbs. Some

fl eets refurbish specifi c types of chassis

to improve overall lifecycle expenses.

Body swaps are more common and nec-

essary when the upfi t is more custom-

ized than the chassis. This strategy can

decrease capital expenditures.

■ Route optimization. When

applicable, fl eets may reduce miles

driven by reassigning vehicles with

remaining life as replacements for

aged units.

■ Long-term rentals. Vehicles

without extensive upfi tting can be sub-

stituted with long-term rentals — at

least until the next year’s budget al-

lows replacement. This tactic reduc-

es major maintenance expenses on

vehicles that have reached the end of

their lifecycle.

Proper fi nancial analysis will al-

low you to identify the specifi c circum-

stances when these options make fi s-

cal sense and are appropriate to your

fl eet operation. ■

PHO

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Newer model vehicles often provide the convenience and benefi t of in-vehicle technology, such as built-in navigation systems.


http://www.epa.gov

Vehicle violations now represent 1-3 percent of total fl eet costs. Traffi c violation revenues are beingused by many jurisdictions to balance budgets. In an era of budget defi cits, fl eets are

discovering a sharp uptick in driver violations. By Mike Antich

Over the years, many ju-

risdictions have come

to rely on the revenue

stream of traffi c viola-

tions to balance budgets.

These jurisdictions engage in aggres-

sive enforcement of traffi c and park-

ing violations. A case in point is New

York City. Last year alone, New York

City issued 2 million parking tickets

to commercial vehicles.

Vehicle violations represent 1-3

percent of total fl eet costs and vary

by fl eet depending on the cities and

Cost Management


■ Many municipalities have come to rely on the revenue stream of traffi c violations to balance budgets.

■ New technology and decreased government tax revenues have triggered an increase in new toll, parking, speeding, and camera violation regulations at many municipalities.

■ When identifying employees who are repeat violators, the 80/20 rule applies. For some fl eets, as much as 85 percent of the violations are incurred by 15 percent of the drivers.

■ Vehicle violations represent 1-3 percent of total fl eet costs.

AT A GLANCE

states where vehicles operate.

Sometimes driver violations are

egregious. It is not uncommon for

some drivers to incur as much as

$6,000 in tickets on an annual ba-

sis. The cheapest ticket in New

York City is $35, and if the ticket

goes into default, the amount doubles

until it caps out at $135. Some scoff-

law drivers believe parking tickets are

the cost of doing business, especially

in New York City. Sometimes the cost

of a ticket for double parking is less ex-

pensive than parking in a garage. Oth-

er times it is expedient because of the

lack of parking. At the height of the

workday, it is not uncommon to fi nd

garages fi lled. Another reason viola-

tions are on the radar screens of fl eet

managers is due to the aggressive en-

forcement by municipalities and oth-

er jurisdictions.

In today’s ever-changing market

of growing technology and shrinking

government budgets, new toll, parking,

speeding, and camera violation regula-

tions are popping up everywhere.

Violations have increased with red

light and speed cameras being installed

in many areas of the country.

“The municipalities are going to

great lengths to enforce the payment

of these violations. As a result, we

have seen signifi cantly more vi-

olations go into collection sta-

tus and actually handed over to

true collection agencies,” said

Eric Crooks, director of opera-

tions, license and title for Lease-

Plan USA.

There is an increased effort by ju-

risdictions to go after unpaid tick-

ets, typically as far back as 10 years.

“We are also seeing some municipal-

ities starting to tie collection of past

due violations to renewal of other ve-

hicles in a client’s fl eet, business li-

cense renewal, collection of taxes,

etc.,” said Crooks.

Prompting this resurfacing of old

tickets is that many states have com-

bined delinquent ticket data into a

single database. Many jurisdictions

within a state operate independent of

the state DMV. Now these jurisdic-

tion databases are being merged into

the state DMV database, making it

easier to identify and collect on un-

paid tickets.

“There are quite a few varying fac-

tors as to the increase in violations.

The main factor is the current state of

the economy, which is forcing munic-

ipalities to look for alternative means

to generate revenue. In the past, there

were many municipalities that would

I N A S LO W EC O N O M Y,

I N C R E A S E

DRIVER

CROOKS

VIOLATIONS

FF0111violations.indd 32FF0111violations.indd 32 1/7/11 11:40:42 AM1/7/11 11:40:42 AM


not pursue each and every unpaid vi-

olation. But, more and more, they are

looking at missed opportunities and

going to greater lengths to collect on

those unpaid violations, with some mu-

nicipalities even going back up to 20

years,” said Crooks.

Expansion of Camera UseRed light cameras are used in approx-

imately 481 communities in the U.S.

and speed cameras are used in more

than 58 jurisdictions, according to

the Insurance Institute for Highway

Safety (IIHS). According to Ameri-

can Traffi c Solutions (ATS), approxi-

mately 5,000 photo enforcement cam-

eras are in use, increasing at a rate of

25 percent every year.

Additionally, with technology ex-

panding, it has become very easy to in-

stall and monitor drivers through cam-

eras at intersections, toll booths, HOV

lanes, etc. “It gives cities more access to

what is truly happening on the streets

and highways. Most of the cameras

being introduced are in high traffi c

areas and are designed to supplement

the work of local police having to per-

form routine traffi c stops. So, it is also

viewed as a way to maximize the city’s

police resources, which are dwindling

in some cases,” said Crooks.

The expansion of camera use means

an increase in violations. Red light

violations cost anywhere from about

$50 up to $150. “I think this trend is

here to stay and will continue to grow

with the technology becoming easier

to install and for municipalities to

implement,” said Crooks. “In many

instances these violation cameras are

for safety reasons, but there are areas

that will see this as a revenue-generating

stream. In this uncertain economy,

that makes it a very attractive option

for struggling budgets.”

Increased Violations from Automated TollboothsLast year, more than 40 percent of all

fl eet violations were toll violations. As

more automated toll systems are intro-

duced nationwide, the volume of vio-

lations promises to increase. Typical

reasons for toll violations are expired

credit cards, dead transponder batter-

ies, not transferring the transponder to

a replacement vehicle, or failure to re-

port the replacement vehicle’s license

plate number to the toll authority. These

simple mistakes can be costly. For in-

stance, if an employee drives through

fi ve tollbooths on the way to work and

the same fi ve back home, during the

course of a month, that driver has in-

curred a minimum of 200 toll viola-

tions without knowing it. It is not un-

common for drivers to accumulate

hundreds of dollars worth of toll vio-

lations and penalties.

When you drive through a desig-

nated E-ZPass lane, an antenna in the

tollbooth reads the tag’s ID number

to automatically deduct the toll, along

with an administrative fee, from your

pre-paid account. If something blocks

a unit from receiving the transmitted

signal, it will not transmit back its ID

number. For instance, a wire grid in

a windshield, such as an instant de-

icing system, can act as an electron-

ic shield, preventing the E-ZPass unit

from working properly, in which case

it is necessary to mount the tag on the

license plate. Some drivers are con-

cerned that mounting the E-ZPass tag

on the windshield or license plate will

make it vulnerable to theft. However,

unless an E-ZPass is mounted exact-

ly as shown in the installation instruc-

tions, it may not be “read” by the toll

booth antenna.

Number of Toll Roads IncreasingThe number of miles of toll roads is

expected to double over the next 10

years, according to ATS. Toll roads

have become the answer as munici-

palities look for ways to either gener-

ate revenue and/or pay to build new

roads. Toll violators can be charged as

little as the cost of the toll, but the fi ne

could also be as high as $50.

“Also coming down the pike are more

toll roads and prime-time toll road us-

age fees. In order to minimize conges-

tion as well as add convenience for driv-

ers, high occupancy lane usage fees may

also be introduced,” said Crooks.

Possibility of Congestion FeesAccording to Crooks, another trend

that could come to the U.S. is for cit-

ies to increase the toll fee during cer-

tain times of the day — mainly rush

hour. The goal is to help ease conges-

©ISTOCKPHOTO.COM/JOE_POTATO

Ten years ago, toll violations were an insignifi cant expense for fl eets. Today, it is the second fastest growing cost for fl eets. The proliferation of automated tollbooths has dramatically increased the volume of toll violations.


FF0710green.indd 1 6/28/10 3:56:12 PM

Cost Management


High Occupancy Lanes Not Just for CarpoolsLanes once designated for carpools

only may be opened to single occu-

pants in the future, for a fee. High

occupancy/toll lanes (HOT lanes)

are a road pricing system that gives

drivers in single-occupant vehicles

access to high-occupancy vehicle

lanes (HOV lanes).

Tolls are collected either by

manned tollbooths, automatic num-

ber plate recognition, or electronic

toll collection systems. Typically,

these tolls increase as traffic densi-

ty and congestion within the tolled

lanes increase. The goal is to min-

imize traffic congestion as well as

add convenience for drivers. Many

cities are toying with the idea, but

no fees have been determined for

this road pricing system. And much

like intersections, they will be mon-

itored with cameras and violators

will be fined. ■

by many cities will accelerate tick-

et issuance.

“By outsourcing street parking

monitoring, cities save a signifi cant

amount of money, so it’s a no-brainer.

Enforcement is at maximum effi cien-

cy by privatizing as well, resulting in

even more violations given and then

collected,” said Crooks.

On the positive side, currently many

parking meters are cash only. These will

be changed out in favor of those that

accept credit cards, which will make

parking easier for drivers.

The City of Chicago was an early

adopter of the outsourcing of parking

meter enforcement and has had great

fi nancial success since inception in ear-

ly 2009. The private company the city

uses expects to take in more than $73

million this year — more than triple the

city’s annual $20 million before the me-

ters were privatized, according to an ar-

ticle in the Aug. 12, 2010 edition of the

Chicago Sun-Times newspaper.

tion, which is why they are commonly

referred to as “congestion fees.”

For instance, London charges con-

gestion fees and has experienced sever-

al benefi ts as a result, according to the

Transport for London website. Since

congestion charges started, traffi c is

21-percent lower than pre-charge lev-

els, or 70,000 fewer cars a day. Also,

there has been a 6-percent increase

in bus passengers during charging

hours. The revenue generated from

these charges has raised a signifi cant

amount of money for the City to in-

vest back into improving transporta-

tion in London as well. Fleet drivers

pay a daily charge of 7 pounds (or al-

most $11). However, drivers can pur-

chase a monthly or annual charge at a

discounted rate.

Cities Privatize Parking TicketsThe privatization of street parking —

selling the rights to issue and manage

parking tickets to a private party —

It is important for fleet managers to implement a policy that ensures

any violation a driver incurs will be billed back to the driver.

“Many fleets today do not have this type of stipulation in their fleet policy, so I think it is an inte-gral part of managing these costs. More importantly, once you estab-lish the policy, you have to stick to it for every driver in your fleet. To ensure compliance, communicating the set policy to your drivers and having them sign off on it is vital,” said Eric Crooks, director of opera-tions, license and title for LeasePlan USA. “In order to keep driver viola-tions under control, it is important to ensure your drivers’ information is kept current in our records. That way, the violation will be mailed to the correct address and paid be-fore late fees are tacked on that cost the client unnecessary money.”

A growing trend is for fleet man-agers to go after drivers for reim-bursement of fines and late pay-

ment penalties, where in the past they had not. Fleet managers are paying more attention to viola-tions, especially those managing sales fleets, where by the nature of the work, violations are more like-ly to occur. The one exception is ex-ecutive fleets, which continue to be “verboten” territory for parking and toll violation enforcement.

The 80/20 Rule AppliesMany fleets do not have a written

fleet policy specific to driver reim-bursement of parking ticket and toll violations. As jurisdictions become more aggressive in collection of un-paid fines, more fleet managers will be forced to deal with this issue be-cause the dollar cost for these vi-olations will creep up to where it will catch senior management’s attention.

Some fleets deduct parking and toll violations from a salesperson’s expense report. Other fleets require drivers to write a personal check re-

imbursing the company. Besides re-couping lost revenue, a side bene-fit to reimbursement of violations is a decrease in the number of future tickets. Fleet managers who adopt a driver reimbursement policy for violations report a significant de-crease in the volume of violations. Drivers who know they will be held financially accountable tend to be more careful or pay a ticket before it becomes delinquent.

When identifying violators, in-variably, the 80/20 rule applies. In some cases, it is even higher. For some fleets, as much as 85 per-cent of the violations are incurred by 15 percent of the drivers. Many of these are the top salespeople, whose violations are ignored, creat-ing an inequality in policy enforce-ment. Are they any different than the driver who blows an engine be-cause he or she never changed the oil? Why should one be treated dif-ferently than the other? The answer is they shouldn’t.

WHAT CAN FLEET MANAGERS DO?


AF0

5-39

.10

AT BOBIT BUSINESS MEDIA, WE’RE KEEPING THINGS

You can feel confi dent that within our magazines, websites and trade shows, Bobit Business Media is doing our share to maintain a “green” working environment.

As individuals and as a company, we are dedicated to maintaining green initiatives and strive to be good

citizens of this planet. Finding new and innovative ways to reduce our carbon footprint is always a priority for Bobit Business Media.

AT BOBIT BUSINESS MEDIA, WE RE KEEPIN

Here are a few of the ways we’re keeping GREEN:

RECYCLED PAPER PROGRAM: • 5,000 lbs

per month

RECYCLED CANS & BOTTLES PROGRAM: • 40 lbs per month

WINDOW TINTING: reduces energy loss • by 75%

VARIABLE SPEED CONTROL ON HVAC • UNITS: 7500 kWh saved per month

RETROFITTING OLD T-12 FLUORESCENTS TO • NEW T-8S: 3400 kWh saved per month

EFFICIENT BOILER/HEATER: • 3000 thermssaved per month

PARTNERING WITH OUR PRINTER: developed • a “green” game plan, saving paper,

ink and energy

RECYCLED TONER CARTRIDGES AND • BATTERIES PROGRAM

AND OUR• ENVIRONMENTALLY FRIENDLY

Digital EditionsAF0

5AF0

539-39.1010

HHeerree aarree aa ffeeww ooff tthheeee wwwwaayyssss p gwe’re keeping GRREEEN:

RECYCLED PAPER PROGRAM: • 55,0000 llbsper month

RECYCLED CANS & BOTTLES PPROOGRAMM: • 40 lbs per month

WINDOW TINTING: reduces eeneergy losss • by 75%

VARIABLE SPEED CONTROLL ONN HVAC•UNITS: 7500 kWh savedd per month

RETROFITTING OLD T-12 FFLUOORESCENTTS TO •NEW T-8S: 3400 kWh ssavedd per monnth

EFFICIENT BOILER/HEATEER:• 30000 theermssaved per month

PARTNERING WITH OUOUR PRINNTER: develloped•a “green” gameme plan,, saving papper,

ink and energyyene

RECYCLRECYCL ONER CARTRIDCLED TO IDGES AND • BATTE GRAMERIES PROGRAM

AND OOUR• ENVIRONMENTALLY FRIENNDLYY

Digitital Editions

We care about the environment and are setting a positive example.

FF0710green.indd 1 6/28/10 3:56:12 PMFF0111violations.indd 35FF0111violations.indd 35 1/7/11 11:40:51 AM1/7/11 11:40:51 AM

Automotive Financials


Average National Fuel Price Per-Gallon Trend Gas Diesel

overall average

Key Interest Rates As of 12/31/10

Prime 90-Day LIBOR2-Year Gov't. Bonds1-Year Treasury Notes30-Day Commercial Paper

3.25%0.30%0.60%0.26%0.25%

Dec. 09

$2.87

Jan. 10

Average Fuel Economy of Intermediate Cars

$2.60

$2.78 $2.71

Feb. 10

$2.92

Mar. 10

$2.64

$2.82$2.77

Apr. 10 May 10

$2.84

$3.04

$2.84

$3.07

June 10

$2.71

$2.96

July 10

$2.71

$2.93

Aug. 10

$2.71

$2.96

Sept. 10

$2.95 $2.96

Nov. 10

$2.84

$3.14

Oct. 10

$2.78

$3.06

-94DAYSO

TD M

OST

IMPRO

VED

■ Top 10 Most Improved Order-to-Delivery Times ■

2010 Ford Escape Hybrid ..............................61 .....................................155....................................... -942010 Toyota Tundra .....................................102 .....................................133....................................... -312010 Toyota RAV4 .........................................95 .....................................121....................................... -262010 VW Jetta ..............................................63 .......................................85....................................... -222010 Ford Expedition ....................................64 .......................................86....................................... -222010 Audi A4 ...............................................67 .......................................81....................................... -142010 Toyota Highlander ..............................111 .....................................124....................................... -132010 Chevrolet Cobalt ...................................44 .......................................56....................................... -122010 Chevrolet Equinox .................................69 .......................................81....................................... -122010 Toyota Sienna ......................................82 .......................................92....................................... -102010 Volvo S60 ............................................53 .......................................63....................................... -10

MAKE/MODEL ............................................. ............................. 2009-MY .......................... CHANGE 2010-MY OTD (DAYS) OTD (DAYS) (DAYS)

TOTAL UNITS:167,412

<24,000 MILES 24,001-48,000 MILES 48,001-80,000 MILESCENTSPERMILE

CENTSPERMILE

DOLLARSPER

MONTH

DOLLARSPER

MONTH

CENTSPERMILE

DOLLARSPER

MONTHGASOLINE 0.0956 $183.28 0.0947 $191.53 0.0905 $201.60 OIL 0.0031 $5.21 0.0047 $4.93 0.0036 $3.43TIRES 0.0035 $5.39 0.0099 $9.69 0.0116 $15.59MAINTENANCE/REPAIR 0.0046 $9.26 0.0130 $19.19 0.0212 $52.41 WARRANTY RECOVERY (0.0002) ($0.09) (0.0007) ($0.76) (0.0004) ($1.11)TOTAL OPERATING COSTS 0.1066 $203.05 0.1216 $224.58 0.1265 $271.92

22.0

21.5

21.0

20.5

20.0

19.5

19.0

20.0

20.7

21.0 21.0

21.3

MPG

2006 2008 2009 20102007

2010 Operating Costs - Intermediate Cars

Who, besides the employee, is allowed to use a company

vehicle for personal use?

● No one● Employee’s spouse● Employee’s spouse & licensed children● *Other

*Other includes: domestic partner, spouse onlyin emergency, any household member over 21,

and any licensed family member over 25.

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FF0111financials.indd 36FF0111financials.indd 36 1/6/11 9:32:04 AM1/6/11 9:32:04 AM

Partners at Work

Read the full story and more at:

www.arifleet.com/partnersatwork

ARI Strategic Consulting Team

With exceptional insight into our partner’s vehicle usage, we helped this fleet support a corporate initiative.

For this education publisher, big, gas-guzzling vans are old school.When a long-time partner in education publishing made it a company-wide priority to reduce its

carbon footprint, it turned to ARI for a custom fleet solution. Noting that education is evolving

away from bulky hardcover textbooks in favor of DVDs and eLearning modules, ARI’s Strategic

Consulting team suggested suitable alternative vehicles as well as stricter driver policies to lessen

fuel consumption and reduce emissions. Average MPG improvements translated into $200,000

in fuel savings and a 581-ton reduction in CO2 emissions. Some might call it “writing the book on

green fleets.” We call it, “partners at work.”

L-R: Tracy King, Fleet Administrator; Joe Korn, Business Analyst; Elisa Durand, Assistant Manager, Environmental and Fuel Strategies

FF0111financials.indd 993FF0111financials.indd 993 1/6/11 9:32:07 AM1/6/11 9:32:07 AM

http://www.arifleet.com/partnersatwork

With ten Vincentric Best Fleet Value in America awards, Toyota vehicles have won more Vincentric awards than any other fl eet automaker.

With low maintenance costs and high resale value, selecting Toyota for your fleet means you win, too.

Call 1-800-732-2798 or visit fleet.toyota.com

Options shown. Based on Vincentric’s 2010 Fleet Analysis. ©2010 Toyota Motor Sales, U.S.A., Inc.

FF1110toyotafleetwinwin.indd 1 9/22/10 10:22:52 AM

FF0111cover.indd 994FF0111cover.indd 994 1/6/11 9:26:47 AM1/6/11 9:26:47 AM

fleet financials january/february 2011

Documents

ford fleet

fleet financials issn

fl eet team

fl eet managers

amt h e

t i o njanuaryfebruary

percent of total fl

b o b i t p u b