5 Questions to Ask to Reduce Vehicle Expenses

Managing company vehicles can be just as challenging because there are many details to stay on top of and expense areas to manage. This results in businesses experiencing higher operating costs than they should. If your business is like most, the person in charge of the vehicles has many other responsibilities that they need to focus on.

Ewald Fleet Solutions is engaged with many businesses and guides them through situations similar to these questions. We do fleet management for a living so you don’t have to. Our ongoing involvement reduces vehicle expenses and saves time in managing company vehicles. Contact us for a free evaluation to learn how we can save you time and money.

1. Is it better to lease or own a company vehicle?

Whether you should buy or lease your company vehicle will depend on the vehicle you’re interested in and your business circumstances. 

If you run your vehicles into the ground (not best practices), owning is probably the best choice. On the other hand, if you prefer to operate a newer fleet of vehicles, implement a life cycle plan to reduce maintenance costs, and not tie up capital in vehicles, leasing provides an excellent option.

Advantages of Leasing 

• Brand-new car for relatively low monthly payments 
• Control true depreciation expense. “Pay for what you use”
• Fleet management oversight and negotiations for service and maintenance
• Flexibility at the end of the lease (purchase, refinance, or giving it back)
• If you lease through your business you could get better deals and taxes are typically  less

Advantages of Buying

• You can have no monthly payments if purchased outright.
• You can sell or trade it in at anytime
• You have no mileage restrictions

2. Is there a penalty if a leased vehicle is turned in early?

There is no penalty for ending an open-end lease early.

Penalties for turning your leased vehicle in early will depend on the type of lease you have. If your lease is closed-end, you may have to pay an early termination fee to the financial company. This will typically be 50% of the total remaining cost left. Some companies might make you pay the entire remaining balance of your lease agreement. 

If you have an open-end lease and want to turn your vehicle in early, there are often no penalties. It would be similar to if you owned it. 

In either situation, you should compare the current termination value/book value to the current market value to determine how you are positioned.

3. How Do you determine which vehicle is the best choice for your business?

When considering what vehicle you should get for your business, you should consider environmental factors, your long-term needs, fuel costs, and your vehicle usage. Do the research for each model and year you’re looking at.

Many businesses skip this step altogether and simply stay with the same manufacture or model vehicle. The problem with not doing due diligence is that there may be a less expensive or more productive option.

The first step is to list the absolute requirements for the vehicle application. This could include cargo space, leg room, safety features, fuel mileage, maintenance performance, company image guidelines, etc. With this list, you are able to match up all the vehicles that qualify and make a decision based on price and fit. This should be an annual process as models and incentives change.

4. How long should a vehicle be kept in service?

Employers are legally obligated to ensure their vehicles are in good working condition. Regular maintenance is important so the vehicle remains mechanically sound. Ewald Fleet Solutions recommends performing routine vehicle checks, regular maintenance and mileage checks.

Important Company Vehicle Safety Features

If you have vehicles intended for work purposes, it is your company’s responsibility to ensure they are in good working order and have these important safety features: 

• Safe way to get in and out
• Effective brakes
• Windows and mirrors provide good visibility 
• Safe and comfortable seats and seat belts
• Protection in bad weather 
• Protection to prevent injury if there is an accident or rollover

How do I reduce my repair and maintenance costs?

Creating a scheduled process for recording retention and review is a great way to keep your maintenance and repair costs down. Putting a driver spend limit and approval process in place may help make sure the car stays in good condition longer. Any preventative maintenance will go a long way in ensuring your vehicle meets safety standards. 

Not keeping up with regular vehicle checks could mean costly repairs and maintenance down the line. Every vehicle and specific application will have a unique life cycle. The key is to track maintenance costs through a fully managed maintenance program. A maintenance program provides electronic data capture and provides a robust reporting package. This is so operating costs can be factored along with market value performance to trigger cycling opportunities.

5. Is a fuel card that offers a pump discount the best deal?

Universal pump price fuel cards are charged the price displayed on the pump. Cards that provide pump price discounts are often captive oil companies or franchise cards. With swings in pump prices of 10-15 cents per gallon, you could be paying more than the discount will offset. Prices can also change depending on where you refuel your vehicles. The benefit of these pump fuel cards is their extensive network coverage for smaller fleets.

A universal fuel card allows your drivers to shop for the lowest fuel price at over 98% of service stations nationwide. Universal fuel cards also offer brand flexibility which means price flexibility. With this card, drivers aren’t limited to a specific brand or station. 

Ewald Fleet Solutions offers a fuel card program to simplify the management of your company’s fuel costs. These fuel cards are accepted nationwide at over 98% of gas stations. Contact us today to learn more about how we can save you money.