GE Capital: Knowing when to trade vehicles can generate savings

GE Capital: Knowing when to trade vehicles can generate savings

According to GE Capital Fleet Services (GECFS), “accelerated and optimal replacement analyses” provided a “major cost savings opportunities” for fleets in 2012. And while those savings last year were “paced by a robust resale market,” the company pointed out that taking an analytical approach to trade cycles is always beneficial.

“Accelerated and optimal replacement analyses focus on determining opportunitiesto accelerate the service lifecycle of vehicles, and determining the optimal time to cycle vehicles in a fleet, respectively,” explained Steve Jastrow, strategic consulting services manager for GECFS. “As a result, savings opportunities can be pinpointed to decrease fleet depreciation and reduce overall maintenance and fuel costs.”

He said other programs conducted by GECFS that produced substantial cost savings for its customers in 2012 included strategic account planning and making more informed lease vs. purchase decisions.

“All told, GE Capital Fleet Services named $460 million in identified customer cost savings for 2012, with accelerated and optimal replacement analyses cited as the leading areas for those savings.”

What’s more, according to Jastrow, by analyzing customers’ fleets to maximize efficiency and reduce costs, GE Capital has identified a total of $1.4 billion in potential savings opportunities for customers in the past four years.

“Throughout the year, we conduct ongoing analyses on behalf of our customers to evaluate the management of their fleets,” he related. “In 2012, replacement analysis in particular was an area we identified as a significant opportunity for savings, due in part to the robust resale market.”

Jastrow said the largest areas of cost savings identified by GECFS during 2012 included: 

  • Accelerated replacement analyses, which “determine opportunitiesto accelerate the service life cycle of vehicles to decrease overall fleet depreciation.”
  • Optimal replacement analyses,which “determine the optimal time to cycle vehicles in a fleet to drive reduced maintenance and fuel spend costs.”
  • Strategic account planning.  “Experts provide the information, analysis, insights and actionable plans that customers need to set the stage for success.”
  • Lease vs. purchase:Determining whether leasing or owning vehicles is the most cost-efficient way to manage a specific company’s fleet.”

As to when to accelerate a trade cycle, Jastrow told FleetOwnerthat “while a given vehicle in a normal resale market might be on a 5-year/100,000-mi. cycle, in a robust resale market a fleet might consider trading it at the 4-year/80,000-mi. mark. By doing so in a strong resale market, the fleet would realize an improvement in effective depreciation.

“It makes sense,” he added, “to capitalize on the hot resale market before it goes away.” Jastrow said the market for used cars and light trucks is “not quite there yet, but as the economy is improving, we are fairly certain it is getting back to where it had been prior to the financial collapse of 2008. It’s getting back to the ten-year averages for vehicle age/mileage that existed before the economic crisis hit.”

He also pointed out that for medium- and heavy-duty trucks, the movement in the used market is “related to activity in the new-vehicle arena and there is [now] more demand for used vehicles” as well.

“Our team strives to provide systematic solutions, such as vehicle optimization and sustainability, to our customers in order to preserve their bottom line,” noted Brad Hoffelt, senior vp & gm of products and services at GECFS.  “Our goal is to arm our customers with solutions that minimize costs while simultaneously maximizing fleet operations and productivity.”

 GE Capital Fleet Services, based in Eden Prairie, MN, is a global fleet-management company with operations in the U.S., Canada, Europe, Japan, Australia and New Zealand. GE Capital offers an array of financial products and services worldwide.

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