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Optimal Company Vehicle Turnover Time

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  • #49112

    billy
    Participant

    I am looking for any calculators, formulas or research data regarding the best time to replace compnay vehicles (Ford F150, Explorers, and F550).  As it stands, my organization drives these vehicles up to and beyond 150K miles.  The fact is, there is currently NO rollout plan.  There are no lease vehicles, and that will not be explored becasue it would not fit our financial model/philosophy. 
    Can anyone help?
     
    Thanks!
     

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    #167252

    Taylor
    Participant

    Billy,
    I am assuming you are paying full purchase of vehicles and no payments are made after purchase, since leasing is not an option. Then you simply need to determine vehicle current value (Blue Book Trade in) + Depreciation vs. Expected Value and maintenance cost. This will tell you if it is time to rollout asset. You should contact your controller to see how many years the depreciation cycle is setup for.

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    #167256

    Mayes
    Participant

    I have heard many different opinions on the number of mile at which vehicles should be rolled out.   For example, 80K 92K but always under 100K in order to avoid the higher operating cost associated with higher mileage.
    I dont dont you but how exactly would you calculate the ideal mileage number based on the precious listing?  Not questioning your knowledge just dont quite understand how to get there?  How about an example?
    Thanks-Ray

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    #167263

    Deanb
    Participant

    Billy,Reliability may be a major factor in your analysis.Every month you can run an old vehicle you are AVOIDING the cost of purchasing new and incurring steep depreciation costs, which are usually the largest cost factor by far. Since your average monthly costs for the life of the vehicles are probably already very low vs the cost of replacement, any financial comparison will likely favor continuing to run existing vehicles. However, as you run any equipment to the limits of its practical useful life, understanding their reliability becomes increasingly important. Once a vehicle becomes unreliable, it loses its utility rapidly, and total costs (vehicle + consequential + opportunity) rise sharply.I have seen capital equipment evaluated using reliability curves to estimate useful life, MTBF, and other related metrics. Total costs might include downtime, inconvenience, disrupted processes, lost time of personnel, safety risks, and lost opportunities. Whenever these non-vehicle total costs start kicking in at unacceptable levels, then replacement is usually overwhelmingly rational. This approach might give you what you need to devise a replacement plan.

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    #167279

    Deanb
    Participant

    I doubt there is a uniform “ideal” mileage. Each vehicle will have a unique reliability behavior depending on your knowledge of the vehicle, how it is driven, and your maintenance plan.If you go to Kellys Blue Book and research any vehicle model you will find each has a price point between 75k and 100k miles where the steady declining slope of the value curve suddenly starts dropping faster, before leveling off. This is a market perception of value, which includes lemons and deadbeat owners that poorly maintain vehicles.An owner of a transportation company told me they can get 250k miles out of their vehicles on average, provided they specialize on 1 or 2 models and do preventive maintenance on many parts before they fail. Because they “know” their vehicles, they can tell when it is time to “give up” on a vehicle. Some are lemons from the get-go too. Once they shed these, what are left tend to be very long runners.Other variables: They try to have a fleet of diverse ages, spare parts and a few cars in inventory to cover commitments during maintenance downtime. These costs are predictable and justified considering the high mileage and reliability they get from their vehicles. One last point, they are always shopping aggressively for used and new deals so they can buy right. They try not to buy anything out of desperation.

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    #167280

    cheezer
    Participant

    I did a similar project about 5 years ago. We had a fleet (800+) of service vehicles and we wanted to know when to turn them over. Fortunately, we leased, so the leasing company was willing to give us data on hundreds of thousands of the vehicles they leased.
    In the end, it depended on the vehicle. More specifically, on the engine. We found we should turn the six cylinder vehicles in at 85,000 miles, but keep the V-8’s until almost 140,000 miles. (purposely not saying what brand of vehicles so I don’t start a “well, those suck” thread).

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    #167281

    Deanb
    Participant

    Engine was a big factor here too with their vehicle #1, but with 4 cylinder outlasting the 6 by about the same proportions you mentioned (omitting the brand). In their model #2, they are doing the opposite: replacing the 8 cylinder with 6’s for fuel economy, even though they won’t last as long as the 8s. Just planning engine overhauls sooner.

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