Fleet Leasing

Vehicle Replacement Strategy

Vehicle Replacement StrategyVehicle replacement strategy is a tricky concept you must master to enjoy an optimized fleet. Luckily, Merchants Fleet Management is here to help companies and government agencies benefit from a tailored, customized replacement strategy. In terms of costs of ownership, your replacement cycle can determine whether you come out ahead or behind at the end of your lease term. Let our team of experienced professionals calculate your prime strategy. You will have peace of mind in the knowledge that your fleet is using the optimal cycle for cost-effective management.

Gain Control Over Your Vehicle Replacement Strategy

When you introduce a disproportionate number of new vehicles into your fleet in a short period of time, it can throw off your average fleet age. This can lead to increased maintenance costs and expensive inefficiencies down the road. Waiting too long, on the other hand, can saddle you with older, maintenance-intensive vehicles. There is a perfect balance you can strike with your replacement strategy that will give you the best returns on investment.

Merchants Fleet Management is in the business of helping organizations come up with this balance. Sign a leasing agreement that matches your needs, and enjoy a sustainable fleet. Discover the Merchants Fleet Management difference. We use a tailored fleet leasing philosophy in everything we do, recognizing the importance of coming up with individualized solutions for each client. There is no one-size-fits-all vehicle replacement strategy. Our team will work closely with you to come up with a plan that is customized for your exact needs. When you partner with us, you’ll never have to worry about replacing your fleet vehicles too soon or too late again.

How to Calculate Your Optimal Vehicle Replacement Strategy

There are several techniques you can use to accurately calculate the ideal replacement cycle for your fleet vehicles. Merchants Fleet Management has consultants that will work with you to come up with the best vehicle replacement strategy for your particular business. It is always best to work with an experienced professional to figure out your replacement strategy, as it is a complex and delicate process.

Calculations involve predictions, forecasts, assumptions, and analysis of available data. The terms of your lease will decide your fleet unit cycle. Merchants Fleet Management always puts our clients in control of leasing terms, and therefore in control of your replacement cycle. See your options for leasing agreements with us. The fundamental questions you must ask when calculating your ideal cycle are:

  • Is my team fully using the vehicle(s)?
  • Does the vehicle(s) have the proper specifications?
  • If my team is not fully using the vehicle(s), do I need to replace it?
  • Does the vehicle(s) require frequent repairs or maintenance?

You will have to conduct a vehicle lifecycle analysis to understand the best time to replace your vehicles. The “best time” is the point that results in the optimal overall cost over the vehicle’s lifecycle. You will establish vehicle age or mileage criteria that serves as the point of replacement. If your repair costs exceed the threshold amount you’ve calculated, it’s time to replace. A vehicle replacement strategy is not an easy thing to manage, but it can be when you partner with Merchants Fleet Management. We have the solutions and brainpower you need to understand your cycle.

Why Come Up with a Vehicle Replacement Strategy? 

You may think the best vehicle replacement strategy is to simply wait until a vehicle goes out of commission to replace it. When leasing a fleet, however, this anti-strategy can hurt rather than help you. There is a time-proven point in a vehicle’s lifecycle when it is most cost-effective to replace it with a newer model. Fleet managers have analyzed their operations and come up with this point, which is typically around three years after the date of leasing. However, many companies are reaping benefits of short cycling, or short-term leasing. Learn about our short-term leasing program.

Every organization is going to have a different vehicle replacement strategy. This is because the point in time where it is best to replace a vehicle depends on the type of vehicle, amount and type of usage, and vehicle applications. You must work with a professional to understand your unique cycle. The point of a replacement strategy is to achieve an even, balanced fleet aging cycle. The many benefits of an optimized cycle include:

  • Predictable resale value. If you’re returning to the market with about 20% of your fleet each year, you control the effects of supply and demand. You enjoy better resale values since you aren’t taking too many vehicles to market at once. You can develop a consistent pool of used vehicle buyers and maximize resale value. Of course, this is only an issue if your leasing terms give you ownership of the vehicles.
  • Minimized repair and maintenance costs. You don’t have to worry about getting hit with several repairs and vehicle breakdowns at unpredictable times. With a regular cycle, you’ll know more or less what to expect from repair and maintenance costs. Plus, you’ll replace older vehicles before they experience costly breakdowns.
  • Happier drivers. Your fleet drivers will appreciate a steady vehicle replacement strategy, as it will always put them behind the wheel of a newer, more efficient, and more comfortable rig. Happier drivers mean better productivity, the ability to attract new talent, and better employee retention.
  • Better fuel-saving technologies. Newer vehicles will come equipped with more advanced fuel-saving components, giving you the benefits of constantly being at the cutting edge of vehicle technology. In the long run, you can significantly slash your fleet’s fuel expenditures.

The list of benefits that come with a solid vehicle replacement strategy is long and varied. The best way to open the door to these advantages is to partner with Merchants Fleet Management. We are experienced professionals in the fleet leasing and management field, and have everything you need to come up with a tailor-made replacement schedule. To get started with your premier leasing, insurance, and/or fleet management solutions, contact us today. We’ll meet with you to discuss your fleet’s needs in detail. For more information about establishing a vehicle replacement strategy, call (866) 653-2737.

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Merchants Fleet Management specializes in commercial fleet management solutions for companies with 10 or more fleet vehicles.

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