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Presented by: Catherine Blazer - Senior Account Executive Adam Cline - Finance Manager Bryan St. Eve - Director of Flee PowerPoint Presentation
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The Importance of Fleet Management to The Bottom Line. Presented by: Catherine Blazer - Senior Account Executive Adam Cline - Finance Manager Bryan St. Eve - Director of Fleet Management. Presenter . Catherine Blazer

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slide1

The Importance of Fleet Management to The Bottom Line

Presented by: Catherine Blazer - Senior Account Executive

Adam Cline - Finance Manager

Bryan St. Eve - Director of Fleet Management

presenter
Presenter
  • Catherine Blazer

Catherine is a Senior Account Executive with Enterprise Fleet Management; she has been with Enterprise for over 12 years. Catherine started her career with Enterprise in the rental division, and was promoted to Fleet Management in 2006.  

Catherine is on the board of Construction Financial Management Association (CFMA), serves on committees for Associated General Contractors (AGC), and is a member of the Kentucky Association of Highway Contractors (KAHC).

presenter1
Presenter
  • Bryan St. Eve
  • Bryan has been with Enterprise for over 11 years, and with the Fleet Management Division for 10.  Throughout his career he has held accounting, sales and management positions in Dallas, St. Louis, Denver, and Louisville, all with Enterprise Fleet Management.  
  • Bryan is a native of St. Louis, MO, and received a BBA in Finance and Economics from Southern Methodist University in Dallas, TX; he currently serves as Director of Fleet Management for EFM in Louisville, KY.
presenter2
Presenter
  • Adam Cline
  • Adam is currently a Finance Manager for Enterprise Fleet Management.  He has been with the company for 12 years, and with the Fleet Management Division for 10.  With Enterprise, he has held leadership positions in the areas of acquisition, tax and title compliance and accounting.  
  • Adam has worked at the corporate office and in various field locations.  Adam is a native of St. Louis, MO, and received a BBA in Finance and Business Administration.
agenda
Agenda
  • Dollars and cents of buying, selling and operating a fleet of vehicles
  • Basics of vehicle Fleet Management
  • The importance of a flexible fleet and managing risk in a cyclical or seasonal business
  • Replacement Analysis
  • Industry issues involving vehicle fleets
  • Questions to ask to determine if Fleet Management makes sense for your client’s business
food for thought
Food for Thought

For a standard $25,000 Ford F-150, what is the total approximate cost to operate over 8 years/200,000 miles?

  • $50,000
  • $75,000
  • $100,000
answer
Answer
  • Pre-Tax cost is $105,338
example buy and hold assumptions
Example – Buy and Hold Assumptions

Vehicle cost $24,938

Sales Tax of 6% or $1,496

Interest Rate of 4.00% for 4-year loan

25,000 miles per year (all business)

Hold for 8 years or 200,000 miles

Fuel economy of 20.00 MPG with some degradation

Fuel price of $3.50 with 5.00% inflation

No inflation is considered for non-fuel expenses

Sells for $1,000 after 8 years

Insurance costs of $1,200 annually or $9,600 in total

Preventative maintenance based upon provider’s schedule (5,000 miles)

Normal costs related to vehicle breakdowns were considered

$250 annually for administrative time and effort

slide11

Total Cost for 50 Vehicles – 8 Years at 200,000 miles

$5,266,900

  • Total Cost

$658,363

  • Average Annual Spend

52.7¢

  • Cents Per Mile

$2,870,000

  • Present Value
understanding the basics of fleet management
Understanding the Basics of Fleet Management

Expertise in the Automotive Industry with Emphasis on Cradle-to-Grave Vehicle Processes

reducing and controlling costs
Reducing and Controlling Costs
  • Vehicle selection to fit the needs of the business
  • Vehicle buy and vehicle incentives
  • Selling the vehicle
  • Competitive funding and options
    • Open-End Lease
    • Closed-End Lease
  • Maintenance and repair plans
  • Monitor and control operating costs such as fuel
  • Proper replacement patterns
  • Productivity gains from time savings
slide16

Characteristics of Closed-End and

Open-End Lease

  • Closed-End
    • Traditional “Lease” structure:
      • Contract is for a set period of time and set amount of miles.
      • Generally a lower monthly payment, but subject to over miles and wear and tear penalties
  • Open-End (our most recommended structure for commercial use)
    • Flexibility of ownership
    • Market Value financing
    • Client takes advantage of resale
example of open end lease
Example of Open-end Lease
  • A $20,000 vehicle is leased to a customer for 36 months with 2% per month depreciation.
    • At the end of 36 months, the lease will have a residual of $5,600 representing the balance that is not depreciated in the lease.
      • $20,000 times 2% times 36 months = $14,400
      • $20,000 minus $14,400 = $5,600
  • If the vehicle sells for $6,000, the customer receives the $400 difference ($6,000 minus $5,600)
  • If the vehicle sells for $5,000, the customer pays the $600 difference ($5,000 minus $5,600)
example managed fleet assumptions
Example – Managed Fleet Assumptions

Vehicle cost $23,938

Sales Tax of 6% or $1,436

Interest Rate of 3.35% for 4-year lease

25,000 miles per year (all business)

Hold for 8 years or 200,000 miles

Fuel economy of 20.00 MPG with slight degradation

Fuel price of $3.50 with 5.00% inflation

No inflation is considered for non-fuel expenses

Sells for $1,300 after 8 years

Insurance costs of $1,200 annually or $9,600 in total

Maintenance plan put in place to control service intervals and avoid unnecessary services

Normal costs related to vehicle breakdowns were considered

$50 annually for administrative time and effort

business peaks
Business Peaks
  • Hiring workers and need vehicles fast
    • Tend to acquire from dealership inventory
    • Will overpay because of unnecessary equipment and lack of dealer inventory

Business Valleys

  • Idle Vehicles = Idle Capital
    • Tend to sell in “fire-sale” mentality and may not get a good price
vehicles in service
Vehicles in Service

12

Time in Service

the value of replacement1
The Value of Replacement

One of the important elements of Fleet Management is knowing the economics and the customer’s business goals of when to replace vehicles

This example did not assume replacement options

Fleet management companies do not recommend 200,000 mileage patterns for a Ford F-150

Fleet Management Companies monitor the following items:

Used vehicle prices

Maintenance and downtime considerations / customer service issues

Fuel and fuel economy standards

Appearance and branding

Vehicle incentives

The structure of the lease term provides an automatic trigger to analyze the hold versus replace decision

food for thought1
Food for Thought

Do you know how often your clients replace their company vehicles?

  • Every 3-4 years
  • Every 5-6 years
  • Every 7-8 years
  • Longer than 8 years
buy and hold fuel cost
Buy and Hold – Fuel Cost

25,000/year – 6% Inflation - $3.75/GallonStarting MPG in Year 1 – 13mpgStarting MPG in Year 5 – 14mpg25,000 Miles/Year

considerations
Considerations

Having an expert opinion to evaluate the industry trends and consult on business needs in order to plan for ahead for the future

food for thought2
Food for Thought

Do you know what the average price of fuel was in 2001?

  • $1.15
  • $2.65
  • $3.00
answer1
Answer

$1.15

slide38

National Fuel Price Analysis

Average Unleaded Fuel PPG 2001-2012

Source: U.S Energy Information Administration

slide40

CAFE Mandate: Double Fuel Economy by 2025

54.5 MPG in 2025

5% annual increase in MPG for cars

3.5% annual increase in MPG for trucks

Fuel – Long Term Requirements

an analogy to the finance profession
An Analogy to the Finance Profession

Fleet Management is similar to a Tax Professional

A company can do it alone without professional advice

But it’s likely to cost you more

Tax Professionals implement proper cash flow planning techniques and ensures all of the proper deductions for a constantly-changing tax code

A vehicle fleet manager designs a flexible fleet and strives for the best economics for a given business

putting it in perspective
Putting it in Perspective

Looking at the Ford F-150

51 different choices (this does not mean different colors, interiors, etc.)

Acquisition prices range from MSRP of $24,000 to $53,000

Small changes can quickly add over $1,000

Looking at all Vehicles

There are roughly 2,200 different series each model year

Keeping updated on year-to-year changes is no small task

an analogy to the finance profession1
An Analogy to the Finance Profession

Fleet Management is similar to a Tax Professional

A company can do it alone without professional advice

But it’s likely to cost you more

Tax Professionals implement proper cash flow planning techniques and ensures all of the proper deductions for a constantly-changing tax code

A vehicle fleet manager designs a flexible fleet and strives for the best economics for a given business

other hot topics in the industry
Other hot topics in the industry

CNG / Electric / Hybrid / Diesels

Smaller Vehicles / Lighter Vehicles

Computerized Dashboards

Oval Car Bodies to Reduce Drag

CVT: Continuously Variable Transmissions

Rising commodity costs – rubber for tires and maintenance in general

Redesigned and release of commercial vehicles: Ford Transit and Transit Connect, Dodge Promaster, Nissan NV, etc.

slide46
Is an additional source of capital important to their business?

Do they know the total spend for the fleet?

Is it difficult to dispose of vehicles during a business downturn?

Do they have idle vehicles at different points in time?

Is vehicle downtime a significant detriment to their business?

Who approves maintenance invoices and what experience does that person have with the automotive industry?

At what mileage intervals are the vehicles being serviced for oil changes?

Do they track maintenance expense on a vehicle-by-vehicle basis?

What is the plan if fuel prices continue to rise?

Is the business equipped to analyze the new products (i.e., Hybrids, compressed natural gas, electric, etc.) that are coming to market?

Questions to Ask to Determine if Fleet Management Makes Sense for your clients:

slide48

For more information on fleet consultation

Please check out our website www.efleets.com

or call

877-23 FLEET