Too often, a fleet will choose to own its vehicles because it is not aware of other options available to them that could be better for its operation, says Janis Christensen, a consultant with fleet management firm Mercury Associates (www.mercury-assoc.com). Because leasing contracts are long and detailed, and important factors like interest rates can turn some away, she recommends that fleets visit with a fleet consultant to learn about leases and to evaluate the costs and benefits.
Leasing companies, like Penske, Ryder and GM Fleet for example, also offer consulting and customized plans for different needs.
There are pros and cons to both owning and leasing vehicles, and it is wise to seek advice and guidance on which approach makes the most sense.
Making the "right" decision largely depends on several key factors, consultants say. These include:
- Type of operation.
- Type of vehicle.
- Specific application and miles traveled.
- Company culture and strategic goals.
Even if an option seems obvious, it is best to compare it, fleet consultants note.
FINANCES
"From a financial standpoint, high upfront costs are a clear drawback to ownership for some businesses because it means high capital expenditure paid in cash or debit,” says John Schwegman, U.S. director of commercial product, General Motors Fleet (www.gmfleet.com).
"Owning makes sense for businesses that need specialty vehicles, especially if there’s not a strong resale market, or if their vehicles rack up lots of miles," he says. "Once in service, the vehicles become assets and are depreciated over time. This can be very helpful at tax time. In a lease, the leasing company books the depreciation."
SEEK COUNSEL
It's smart to consider all factors of a fleet operation, and several leasing companies – including Penske Leasing, GM Fleet and Ryder – offer and recommend a consult. Outside fleet consulting firms, like Mercury Associates, also specialize in life cycle analysis.
For example, at Penske Truck Leasing (www.pensketruckleasing.com) – which offers full-service truck leasing and contract maintenance, sales consultants work with customers to understand business operations before coming up with a data-driven decision, says Jim Lager, senior vice president of sales, Penske Truck Leasing. They create a comparative value analysis (CVA) of leasing versus ownership to engineer and customize a vehicle and program to meet the customer’s specific needs.
“Penske shows clients the full cost of ownership, not just the obvious or visible aspects of owning and operating commercial vehicles," he says. "In addition to acquisition costs, fleet ownership expenses include ongoing comprehensive maintenance, additional administrative and/or technical staffing and vehicle repairs and replacement costs.”
