As we bounce back from an unprecedented pandemic, uncertainty around the vehicle market remains. While it’s still a challenging time, there are some positive changes that we should expect in the 2nd half of 2022.
Past trends along with future projections leave a lot of questions lingering as to how or when we expect to see things return to “normal”. One thing is clear, factory order lead times are longer, and finding a vehicle readily available might require some patience and a bit of luck.
What can we expect this year for the vehicle market?
- Fuel prices trending upward, slow to decline
the price of gas along with other commodities have risen significantly. The price of fuel is surpassing $4.00 per gallon in some areas across the country. As a top operating expense for fleets, higher gas prices are hitting where it hurts, the bottom line. The spike in fuel prices has contributed to a higher demand for electric vehicles, but the infrastructure of vehicle charging stations is still a challenge for many fleets to fully make the switch to EV’s.
- Maintenance costs will remain high
extended replacement cycles are contributing to the uptick in maintenance repairs, since repairs tend to be higher the longer a vehicle stays in service. Along with that, shortage of key materials, and higher demand for experienced technicians is driving up the cost of maintenance. Not to mention, the time it’s taking to get parts and perform repairs, which is adding to lengthier down time, leaving vehicles out of service longer.
- Low Supply & High Demand
starting in 2020, the microchip shortage put pressure on many industries, especially vehicle manufacturers since newer vehicles have many electrical components. The scarcity of microchips could be accredited to higher demand for personal tech gadgets, such as phones and tablets with many more people at home during the covid 19 pandemic. While the microchip shortage seems to be getting better, there is still much volatility in the market. Aside from microchips and supply chain disruptions, major manufacturer plants shut down or scaled back their production, creating a scarce supply of vehicles which ultimately created higher prices for both new and used vehicles in 2021.
On a positive note– Vehicle inventory should improve after the spring in 2022. Used vehicle prices are also expected to decrease and normal depreciation for vehicles is projected.
So, what can you do to manage rising vehicle costs & volatility in the market?
- Place factory orders as soon as possible
while keeping vehicles in service longer might work in the short-term, its inevitable that these vehicles will need to be replaced. Longer service life = higher maintenance costs, greater chance of catastrophic component failure, lower fuel economy, and older safety features. As the economy bounces back, vocational & commercial fleets, especially last-mile delivery fleets will need to replace older vehicles. Currently, many manufacturers have cut off vehicle orders. It’s important to stay in close communication with your fleet provider to be first in line once ordering opens back up. And, in many cases fleet experts such as fleet companies have strong 30 plus year relationships with dealers and can find a vehicle where others could not.
- Incorporate a Maintenance Management program
With a maintenance program, regular maintenance is performed on time, and major breakdowns are avoided. This is very important for companies that are keeping their vehicles in service longer.Maintenance programs offer:
- 24/7 Support
- Wholesale Repair Rates
- Alerts for Overdue Maintenance
- Comprehensive Reports
With an effective maintenance management system, each vehicle is placed on a designated maintenance schedule to ensure that regular maintenance is performed such as oil changes, tire rotations, and more. A full maintenance history for each vehicle is maintained in our client database, so unnecessary repairs and upselling will not be approved. Maintenance coordinators will also make sure that the manufacturer honors all warrantied repairs, including negotiation beyond the manufacturer’s basic warranty.
- Give GPS Tracking a shot
Setup a free demo to see how GPS tracking addresses simple to complex fleet challenges. Reduce costly repairs and cut down on fuel costs. GPS Tracking simplifies payroll with accurate driver start and end times, while also avoiding unnecessary stops. Dispatch quickest and safest routes for your drivers. And most importantly, track the timeliness on deliveries and service calls. Better service is better for your business, which helps your business grow.
- Sign up for a Fuel Program
Are your drivers required to turn in receipts and expense their fuel? Is this taking up unnecessary time in their day? Or maybe you reimburse for mileage? Fuel is one of the biggest expenses for a fleet. Managing fuel is more than just looking for the cheapest gas price.
Fuel Card Program Offers:
- 5 cents off every gallon starting at gallon 1 – (when fueling at Exxon or Mobil)
- 24/7 customer service
- Purchase controls- Restrict certain purchases, setup daily limits and exceptions
- Accepted at 95% of Gas Stations
- Reduce administrative costs-no more collecting receipts
- Prevent Fraud
- If you would like to discuss anything with Leasing Associates, please call 1-800-449-4807 or email firstname.lastname@example.org