Fleet managers often either extend or renew their fleet cycle after a number of years as the mileage increases over time. Maintenance costs also usually increase as the vehicles get older and so does depreciation, meaning a potential loss or more expenses on your fleet.
After around three years, you may find your vehicles are out of warranty, which means any repairs will need to be funded by your business.
With these extra costs, it can be quite difficult to work out what option is cheaper; replacing your fleet or extending the fleet cycle.
Due to the coronavirus pandemic and the implications it has caused for many businesses, a lot of fleets are considering extending their fleet cycle to save money. However, extending your fleet cycle can sometimes come out more expensive than actually replacing the vehicles.
There are a few details you should review before making the decision to extend your fleet cycle.
When do you start to see signs of age?
Usually, depending on the mileage, you will start to notice signs of age after four or five years. You might start to see costs increase for services, maintenance and repair for your fleet.
This tends to be after the standard three-year warranty that is offered on new vehicles by the manufacture runs out. And once the manufactures warranty expires, all repair costs come down to your business.
Some fleets even replace their vehicles as soon as after three years. Depending on the usage of your fleet, usually by this time, the mileage on your vehicles will be anything from 30,000 miles to over 100,000 miles over three to five years.
After this amount of mileage, you can expect expensive repair and maintenance costs for your vehicles to run smoothly and safely.
The issues with extending fleet cycles
When your fleet hits the three to five-year mark you have to decide on whether to replace your vehicles with newer versions or to extend the fleet cycle.
Extending your fleet cycle would mean a prolonged period with older vehicles operating as your fleet.
Although it may seem cheaper to extend your fleet cycle, it could actually work out more expensive. If you examine the costs of services, maintenance and repairs over time, you may notice that the costs rise quickly as vehicles age and are used more.
After so many miles, you’ll likely need to replace tyres, brake pads and parts and also may need expensive one-off costs on timing chains or other engine work. With all these costs mounting up for each vehicle, it may work out cheaper to purchase or lease new vehicles.
What you should do with your ageing fleet
If you’re unsure of what to do, look at the mileage of your vehicles. If the mileage is over 30,000 and your fleet drive long distances, arrange a maintenance check to see the condition of the vehicle and if the vehicle needs major components replaced, it may be too expensive to keep on.
Monitoring your vehicle’s health and overall costs will help you to estimate the lifespan of the vehicle. This will help you to decide whether to extend your fleet cycle or to look at renewing or upgrading your fleet.
Speak to a leasing provider or get advice from your fleet mechanic to give you an idea of the overall costs to your business. You can then weigh up your options and consider what the most cost-effective solution is.
With coronavirus impacting many businesses, it is playing a heavy role in decision making. The idea is to not look at immediate costs now but to focus on what will be more efficient and cost-effective for your fleet in the long run. It may even be worth looking at the types of fleet you use and if they are cost-effect and sufficient enough for your business.
If any changes have impacted to your fleet in previous months, please also make your fleet insurance company aware. Whether it’s the number of vehicles that operate in your fleet, or if you replace the vehicles in your fleet, this will affect costs. Making adjustments to your fleet can either make your insurance payments go up or down, depending on what changes have been made.
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