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Canada's Magazine for Financing & Leasing Executives

January 21 , 2015

Company-owned fleets challenged by capital expenditure limitations

U.S.--According to a study released by GE Capital Fleet Services, companies that own their vehicle fleets report that they are challenged by capital expenditure limitations and the total cost of ownership of their fleets.

Nearly 200 CFOs and fleet managers with fleets of at least 300 vehicles were surveyed; respondents included both company owned fleets and those that lease fleet vehicles. The study found that more than half (51 per cent) of companies that own their fleets cite capital expenditure limitations as their biggest financing challenge, compared to 11 per cent of companies who lease vehicles. Two-thirds of respondents (66 per cent) cite the reason for owning their fleets as tradition, or culture.

“Many companies report that they own their fleet vehicles because that’s the way things have always been done,” says Mark Hayes, chief marketing officer, GE Capital Fleet Services. “Change management is a big concern for fleet owners; far more so than it is for companies that lease their fleets.”

“One challenge faced by businesses that own their fleets is management of total cost of ownership,” says Steve Jastrow, strategic consulting manager, GE Capital Fleet Services. “The decision to outsource certain operational activities is a complex one, as it’s often seen as a trade-off between maintaining control over fleet operations and managing activities in the most cost efficient manner.”

The study found that owned and leased fleets are concerned with the same overall challenges: maximizing driver safety, ensuring DOT compliance, and mitigating the effects of rising maintenance costs.

Other key findings highlight fleet owners’ use of third-party services. For example:

  • 33 per cent of owned fleets report using remarketing services, compared to nearly 70 per cent of those who lease.
  • Similarly, 79 per cent of companies that lease their fleets use outsourced maintenance services, as compared to 55 per cent of fleet owners.
  • More than three-quarters (78 per cent) of respondents that own their fleets reported safety as a top fleet challenge; at the same time, only 26 per cent use a driver safety service to improve in this area. By contrast, more than half (53%) of companies that lease vehicles use driver safety services.

“Companies that lease their fleets tend to be more active in utilizing programs that assist with managing total cost of ownership and safety,” said Jastrow. “While limited capex is a big challenge for fleets that own versus those that lease, either model can benefit from added services that bolster compliance, maintenance, and the overall safety of their drivers.”

To download the research summary, visit  www.gefleet.com/research.




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