Light-duty trucks are Class 1 through Class 2 and are often depended on by small business fleets, including landscapers and construction operations, among others.
There are many light-duty truck options, which require additional due diligence on spec’ing, regular cost reviews, and a clear understanding of what you need the trucks to do.
Lifecycle Management Challenges for Light-Duty Trucks
Probably the biggest challenge for most fleet operators is understanding how all the different facets of a lifecycle influence each other.
“Often, there are dozens of variables in the lifecycle equation, and those variables are complexly intertwined. However, for most vocational fleets, it typically boils down to cost and reliability, and it’s about finding that ideal balance based on what’s most critical to your business,” said Ed Powell, manager of business intelligence & analytics for ARI.
Analytics should play an essential role in determining the appropriate lifecycle of any vehicle.
“Fleet managers must remember that when comparing light-duty trucks to sedans, there can be additional factors that impact a truck’s useful life. The data needed to understand these factors can be difficult to obtain and even more difficult to assess. Idle time, job use, off-road use, payload, vehicle specifications, and upfit needs are all factors that may pose unique challenges in determining an appropriate lifecycle for a light-duty truck,” said Alexander Walker, sr. data strategist for Donlen.
Gathering the right data to start with also tops the list of challenges.
“The hardest challenge is getting all the right data to best measure both fixed and variable costs. The fixed cost, what was spent to acquire the vehicle, is often close to a sunk cost, while the variable cost on individual units is rising, in general, each month as they age. Both costs can vary enough that it can be difficult to determine each exactly and strike the proper balance between those costs,” said Collin Reid, truck strategic consultant for Element Fleet.
Additionally, fleet managers are challenged to keep up with new models, options, and technical capabilities.
“Roving start of production dates continue to be a challenge as fleet managers consider which OEM makes the most sense for their fleet. Another challenge is identifying the right cycle to meet changing business demands,” said Jeff Krogen, assistant vice president of fleet strategy for Enterprise Fleet Management.
Another top concern for many fleet managers is ever-tightening budgets.
“Corporate budget constraints are concerns, including deprecation rates and financial resources,” said Eric Miller, CAFM, senior fleet consultant for Merchants Fleet.
“Concerning idle time and job use, a truck’s engine may be running a good portion of the workday to support a specific job, while the vehicle itself accrues little mileage. Here, a vehicle may be engine old and odometer young, which can lead to costly decisions if the impact of idling is not recognized and understood,” Walker said.
Where your trucks operate also impacts how long they can last.
“A vehicle’s job environment, such as an off-road, may be a cause for non-standard maintenance protocol to maintain truck health and extend its life. Filters, tires, and tire pressure may all be considered in setting up maintenance checklists,” Walker said. “Finally, a truck’s payload capacity should be understood and followed. Loading beyond capacity or including improper upfits for the job at hand can lead to early and catastrophic unplanned repairs.”
Fleet managers must balance both the lifecycle needs of the organization and the immediate goals of the company.
“Often, the immediate goal is to save capital expenditure, which often means the fleet will be allowed to age as new vehicle acquisitions are put off that year,” Reid said.
Dale Jewell, director, North American maintenance for Emkay, added, “Creating the proper lifecycle balance helps maximize the value of the assets, as well minimize the impact on a business when units are out of service.”
7 Tips for Light-Duty Lifecycle Management
With the sheer number of light-duty trucks available to fleets today, the varying ways that fleets use them, and the extremely different locations they are used in, effectively managing a vehicle’s lifecycle is a huge challenge.
Follow these tips to create an effective management plan and ensure you are considering all the right factors:
1. Analyze Financials
When evaluating a truck’s lifecycle, most organizations will benefit greatly by viewing the vehicle holistically.
“Consider capital expenditure, operating expenses, productivity (or utilization), and criticality to business operations, etc. when evaluating lifecycles. Once you compile the data, analytics allows you to compare all options — which model/asset to purchase, how long to keep it in service, etc. — and this is where partnering with a fleet management company can pay significant dividends, helping you make data-driven decisions that support your overall business objectives,” said Powell of ARI.
Seeing the whole picture is essential to proper management.
“Providing a complete cash flow analysis related to vehicle cycling, which includes modeling around anticipated maintenance, fuel, downtime, lease expense, and vehicle resale estimates to management is key. To prove out a strategy to senior leadership, a fleet manager should come equipped to show year-over-year vehicle cost projections for each vehicle in inventory,” said Miller of Merchants Fleet.
The total cost of ownership (TCO) must also be reviewed regularly to evaluate the optimal replacement timing.
“This not only applies to new vehicles going out, but to vehicles already in operation. It’s important to determine if it’s time to pull a vehicle out of service ahead of schedule to take advantage of market conditions or technological and safety enhancements. Consulting with drivers is also essential to ensure vehicles are spec’ed appropriately for their current and forecasted usage,” said Krogen of Enterprise Fleet Management.
2. Set Clear Goals
If you don’t set clear goals upfront, not only will you be unable to compare and determine progress, but it is far more challenging to get organizational buy-in.
“Be clear about why your recommended lifecycle will best meet the needs and goals of the business,” said Reid of Element Fleet. “Ensure the business knows that not having the right cycle impacts every worker in their ability to service customer needs productively.”
Powell of ARI recommends tying your cycling strategy to something concrete within your organization, considering any fundamental changes to your business that may be on the horizon.
“Identify what optimal looks like — both short- and long-term — and adjust your lifecycle strategy accordingly to help achieve that vision,” Powell added.
3. Measure the Right Data
Use data to show the best replacement cycle.
“Stagger the replacement of your fleet; it’s easier to replace 20 trucks per year than 100. Know the OEM requirements for load and tow capacity, maintenance costs, and order lead time,” said Jewell of Emkay.
Telematics data brings relevant lifecycle data to the forefront.
“Utilize telematics and the wealth of data this technology brings to understand the less obvious and hard to measure factors. These factors include ‘true’ engine idle, engine hours, and vehicle health data,” said Walker of Donlen.
4. Ensure Proper Vehicle Operation & Specification
How your vehicles are operated and used has an immediate direct impact on their useful lives.
“Adhere to manufacturer-recommended payload limits. Use the right vehicle for the job,” recommended Walker of Donlen. “Off-roading can cause vehicles to be cycled earlier in life. To make the vehicles last as long as possible, more regular preventive maintenance and inspections may be necessary.”
When ordering a vehicle, it is also essential to know what the vehicle will be used for and what specs need to be put on it.
“If incorrect specs are placed on a vehicle, it could affect its use and may need to be cycled out earlier than necessary,” Walker said.
Additionally, adhering to proper preventive maintenance schedules is vital to extending reliability.
“It is also important to consider the role the unit plays in maintaining business operations. If the vehicle serves a unique purpose, you’ll likely need additional units to function as spares or backups if unforeseen downtime begins to impact efficiency,” said Powell of ARI.
5. Stay Up-to-Date
Fleet managers also need to stay educated on the latest updates from OEMs.
“Technological enhancements are coming with every new model year, which is something that must be considered as replacement intervals are reached,” said Krogen of Enterprise Fleet Management.
6. Consider New Options
If criticality is urgent and reliability is paramount to your business, your fleet could benefit from short-cycling.
“By cycling your vehicles more frequently, you’ll have more dependable and productive assets. Your capital expenses to acquire the vehicles may be slightly higher, but this may be offset slightly by the lower operating expenses often associated with newer units,” said Powell of ARI.
On the other hand, extended cycles allow you to spread the initial capital expenditure to acquire a unit over a longer timeframe.
“Extended cycling is particularly beneficial for costly, highly-specialized units — but there are certainly some additional factors you need to consider. Most notably, you’ll likely incur higher operating costs and lower productivity as the unit ages,” Powell added.
7. Depend on the Right Partners
With so much on a fleet manager’s daily to-do list, depending on crucial partners can go a long way toward getting more from your light-duty trucks.
“Utilize a fleet management company that can bring consulting and analytics expertise to understand truck data better and make optimal data-driven recommendations,” said Walker of Donlen.
Looking at Light-Duty Lifecycle Trends
Analyzing current trends related to light-duty trucks helps paint a clear picture of challenges and changes, today and in the future.
ARI leverages a proprietary vehicle economic service life (VESL) model, which identifies the ideal length of time to keep a vehicle in service based on capital and operating expenses.
“Recently, the VESL model has highlighted a shift toward a reduced lifecycle in some truck applications. Currently, the combination of strong OEM incentives and better-than-average resale values offers fleet operators the opportunity to reduce lifecycles to as little as one or two years for some light-duty trucks. This scenario allows you to minimize your TCO while also ensuring your fleet is comprised of highly-reliable vehicles to help support your business,” said Powell of ARI.
Krogen has also noticed a benefit in the decrease in lifecycles over the past few years.
“Shorter cycles can be beneficial due to the strong demand for pickups and competitive incentives,” said Krogen of Enterprise Fleet Management. “Many fleets are selecting additional safety equipment for their vehicles. Also, increased equipment ‘bells and whistles’ can be popular for employee retention.”
Fleets are taking a more proactive approach to ensure they have “right sized” trucks for their various application needs.
“No longer is it assumed that you need one specific specification across the entire fleet,” said Reid of Element Fleet.
Reviewing utilization continues to be an important trend.
“Optimizing cycle timing to take advantage of seasonal upswings or downswings is a strategy that can be used to limit a fleet’s total cost,” Krogen said.
The resale market also continues to be hot for light-duty trucks.
“Understanding where market conditions may present short-cycling opportunities and capitalize on those opportunities continues to be a trend for many fleets,” said Walker of Donlen. “Capitalizing on new technology available in the truck space continues to trend.”
Finally, there has been a rightsizing trend, with fleets looking to smaller trucks to help reduce costs.
“Rightsizing is beneficial to a fleet if they properly spec a vehicle and determine that the work can be done on a smaller, more cost-effective vehicle. When fleets order a smaller vehicle that isn’t designed to do the job that is required of it, the vehicle can have significantly higher costs associated with it,” Walker concluded.