Why Buying or Leasing Your Fleet Will Not Fix All Your Problems
Maintaining a modern, emission compliant fleet poses many financial and operational challenges that previously did not exist. These new challenges require Fleet Management to seek out creative and new tactics to help control rising expenses and downtime. One method that is gaining in popularity is the truck lease program. While a lease program has its benefits, this article will demonstrate that there are a lot of factors you need to consider when shopping a lease.
The biggest issue that most fleets face today are related to emission systems failures, which result in costly repairs and lengthy downtime. These repairs include things like DPF failure, DPF cleanings, EGR, turbo, and DOC failure, along with constant check engine lights and lost efficiency. These types of repairs, downtime, and lost efficiency can easily cost a fleet upwards of $1,000 per month, per truck. As fleet size grows, so do the logistical nightmares and expenses of trying to manage a fleet that requires constant downtime.
Comparing Apples to Apples?
More and more fleets are finally realizing that dealerships and OEM’s are proving to be of no help when it comes to truly improving fleet efficiency. While dealerships may provide a valuable repair and sales service, there seems to be a general lack of proactive and preventative efforts to reduce those repairs. And why would there be?
Recently, lease companies have recognized this issue and have pushed their efforts to fill the gap. They offer attractive lease agreements that promise to manage the headache of Aftertreatment failure for the fleet…but at what cost?
When comparing a lease to purchasing a new truck, a typical lease agreement has the potential to save a company money up front. Most leases do not require large down payments, and new lease trucks usually come with the latest available technology features and add-ons. The biggest factor when leasing is that some agreements include all the maintenance and repairs that will inevitably occur.
On paper, this can be very attractive to fleets. In reality though, this type of lease is not actually saving a fleet any money. Money is just being spent on paying the lease company to manage the repairs and maintenance, rather than having to manage those things themselves. Additionally, depending on your own accounting practices, not having equipment depreciation by leasing, may or may not be a benefit.
The Unescapable Cost
Not having to manage repairs and maintenance may have value for some fleets. Just don’t be fooled into thinking that you are saving money through a lease. The cost of repairs and maintenance is factored into your monthly agreement, and then some. Lease companies don’t have magic trucks, they just have new trucks. The repairs and untimely breakdowns will still occur. The inconvenience of downtime will still be there “ When unexpected downtime occurs there are direct costs, such as lost revenue and penalties or fees on missed appointments, towing, temporary rentals, over time, and also indirect costs such as lower employee morale” -Mike Antich Automotive Fleet Magazine . The lost fuel economy and performance will still happen. In general, but not always, new trucks don’t experience failure at the same rate as older trucks. If you are lucky, you might get 1-2 years of “good” use out of a new lease truck. In a 5-year lease agreement, that might be a good start compared to quarterly repairs on your older trucks. Rest assured, failure will begin to happen. The only difference is that instead of having to go through your dealer for support, you go through the lease company. And to their credit, some lease companies are better prepared than dealerships to provide competent service support. Also, depending on how well a fleet can negotiate their lease agreement, things like replacement vehicles and towing may be included. Another important factors to consider when leasing is will the leasing company allow you to make any of your own efficiency improvements, or if you have to go through them (i.e. pay for) for any changes or improvements.
Optimization Changes Your TCO
Aside from the cost of leasing, and the fact that they don’t actually eliminate common emission system related failure, leasing a new truck does nothing to improve the rest of your existing fleet. Leasing is only a relevant option when comparing it to purchasing a new truck, or if you are just starting out. If your fleet consists of hundreds, or even thousands of older trucks, you still have to deal with managing your own maintenance and repairs on those trucks.
The truth is, leasing new trucks is just another band-aid solution to the growing maintenance and repair problem the industry is facing. You’re not saving money with a lease, you are just spending it on maintenance and repair management. If you are looking for a real, comprehensive, affordable, and permanent solution for your entire fleet, then it is time to consider LDT Optimization. Don’t just “manage” failure, eliminate it. An Optimized fleet improves both reliability and efficiency while providing a measurable reduction in repair and downtime costs. Imagine the overall savings your fleet can experience when for the price of one new truck, you can optimize over 30 trucks! Contact InTu Mobility today to learn how optimization can start saving your fleet money.