Now a few years into the COVID-19 pandemic, fleet managers are still trying to acquire the vehicles they need to do their jobs as essential workers. Angie Lauer, assistant VP of Vehicle Acquisition for Enterprise Fleet Management, answered Work Truck’s burning questions about how the company is dealing with the vehicle and chip shortage, as well as the advice she has for fleet managers to stay prepared.
Q: How has Enterprise responded to the vehicle shortage in the light- and medium-duty truck market?
A: While overall inventory in the light- and medium-duty truck market remains low, our teams are continuing to work through all channels to meet demand and support customers’ broader transportation needs. One key effort we’ve undertaken is enhancing our fleet preservation strategy. We’re able to extend the normal cycle of our fleet to ensure we have as many vehicles as possible available to meet current demand, while also ensuring our vehicle maintenance guidance and safety regimens are met.
Q: How has the microchip shortage impacted your ability to acquire vehicles?
A: Global supply chain challenges continue to be the major factor, particularly the microchip shortage. With fewer vehicles being produced, manufacturers have had to adjust their strategies resulting in decreased vehicle allocations, shortened model years, and order cancellations.
As a business, we’re challenging ourselves to think creatively while recommending innovative solutions to our clients that meet ongoing vehicle and business needs.
Q: What are the most common questions customers are asking as pertains to the vehicle shortage? How have you answered them?
A: Most of the questions we’re getting today regarding the vehicle shortage are centered around how long the vehicle shortage will last and the overall challenges the industry is facing.
The vehicle shortage is a dynamic situation that’s changing day by day. Despite early projections it would ease by summer 2022, it’s becoming clear the impact from the vehicle shortage will likely continue through the end of this year and potentially into 2023.
The latest challenges our industry faces have been associated with new vehicle availability and not being able to rotate out older vehicles. Auto manufacturers are doing everything they can and taking new routes to counter the ongoing shortage. For example, some are building vehicles and keeping them in storage until the final piece — the delayed global semiconductor chips — arrive. In addition, supply chain disruptions are affecting the ability to upfit vehicles due to parts and labor shortages which also impacts the fleet manager’s ability to get new vehicles in service.
These shortages across both vehicle manufacturing and parts and labor have a significant impact on vehicle availability and ultimately price, which is rising for both new and used vehicles. As you can imagine, even a small increase in vehicle cost can have significant financial implications when a company or organization is replacing several vehicles. As a result, fleet managers will likely need to re-evaluate their budgets for this year and next.
Q: What advice can you provide for fleet managers of work truck/vocational fleets when it comes to acquiring the vehicles they need during this time?
A: Now more than ever, it’s important to be proactive when planning vehicle needs and to allow for flexibility and a certain degree of creativity.
In the current landscape, fleet managers should focus their efforts on three areas:
- Be proactive. Staying ahead of the game and identifying vehicle needs early is something I cannot emphasis enough. As soon as the order banks open, start placing vehicle orders and have a plan for meeting your needs.
- Be open to exploring alternative options. Fleet operators should analyze their fleet and business from a different angle to see if there are any alternatives to meeting their needs. For example, when certain vehicle types aren’t available, consider other vehicle types that will get the job done. Do you need or want a pickup truck, or can a midsize SUV serve as a suitable substitute?
- Preserve your fleet. We’re recommending our clients be strategic when replacing vehicles in their fleet. That includes implementing a fleet preservation plan that extends the normal cycle of vehicles. As you’re extending the normal life cycle of a vehicle, it’s also critical to keep up with preventative maintenance to keep your vehicles safe and operational, and to avoid costly repairs or breakdowns.
Q: What are some other factors Enterprise is focused on during this time of uncertainty?
A: The fleet management industry, like every other industry, will forever be changed by the global pandemic. While we continue to navigate significant challenges like the ongoing vehicle shortage, we’re also focused on carrying the momentum forward.
Market Growth: There’s lots of growth opportunity in this industry and much of the market segment is still untapped. More companies are becoming interested in working with a fleet management partner so they can focus on what they’re best at, which is operating their business. A high priority for us long‐term will be to focus on bringing in more clients who are non‐users of fleet management.
Electric Vehicles: While the EV transition is still in its early phases, we’re preparing for when the time comes, especially as more businesses, municipalities, and organizations are setting new sustainability targets. Understanding when EVs make the most sense for a fleet’s situation and which vehicles being produced will fulfill the right needs will play the most significant role in these vehicles becoming widely adopted in the fleet management space. We know EVs will continue to play a significant role in the future of transportation. This is validated by several use cases, including a study we recently did in partnership with Geotab where we analyzed more than 91,000 of our existing vehicles to see what the EV suitability was today versus 2025. We found that right now, about 13% are EV suitable—a percentage that rises to 45% (or $167M in cost savings) by 2025. While EV adoption won’t happen overnight, we’re continuing to build awareness and understanding with consumers and stakeholders to drive long‐term viability of the market.
Technology: We’re always evaluating the latest and greatest technologies – and when we identify one that can help our customers achieve their goals, we invest and integrate that into our offerings, and commit to giving customers the tools they need to succeed. We’ve already invested tens of millions of dollars in IT solutions over the last several years to deliver the best client experience, and we’re excited about the opportunity to continue to enhance our technological capabilities.
We still face challenges as the pandemic continues, but I have no doubt we’ll continue to overcome them and see better days ahead across our industry.