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Fleet acquisition is one of the most integral parts of a fleet manager’s operation. As such, it’s important for you, as a fleet manager, to thoroughly understand the concept and discover best practices to streamline your fleet acquisition process.
In this article, we will be sharing all you need to know about purchasing the right fleet as a fleet manager.
Fleet Acquisition isn’t just about buying new vehicles. It considers several factors like the type of vehicles required, the acquisition methods, and the long-term implications on maintenance and resale value.
A good fleet acquisition plan can enhance your fleet’s performance and reduce the total cost of ownership (TCO).
As we’ve said, several factors have to be considered and one of such factors is the acquisition method. There are several acquisition methods, which we will be discussing in the next section of this article.
What are the Methods of Fleet Acquisition
By now, you have a good understanding of what fleet acquisition entails, let’s have a look at the methods as well as their advantages. These methods are there to help you make better-informed decisions regarding vehicle acquisition and also choose which would be the best approach for your business.
Outright Purchase
Outright purchase as the name implies involves buying vehicles outright and paying the full purchase price upfront.
This method has its disadvantages as it requires a significant upfront investment and may not be a good fit for all businesses. It is most suitable for organisations with stable finances looking to retain vehicles for a long period.
Leasing
Leasing vehicles is also a popular option and allows you to use the vehicles for a fixed period while making regular lease payments. It can be a cost-effective option, especially if you prefer lower monthly payments and the ability to upgrade to newer models of vehicles regularly. There are two main types of leases:
Operating Leases
Operating leases are typically short-term and off-balance-sheet. They offer more flexibility and lower monthly payments.
Finance Leases
Finance leases are long-term and include an option to purchase the vehicle at the end of the lease term.
Renting
This method is more suitable for short-term needs or when additional vehicles are required for temporary use. Renting vehicles offers flexibility but can be more expensive in the long run compared to leasing or purchasing as you keep renting and most times, the rental prices increase over time..
Partnering With A Fleet Management Company
Partnering with a fleet management company will simplify the acquisition process. These companies offer end-to-end services, including sourcing vehicles, maintenance, and remarketing of the vehicles. If you are looking to save time and resources, this method is great for you.
Now that we have successfully identified the various methods of fleet vehicle acquisition. It is important to know that organisations can employ whichever suits their objectives. They just have to consider several factors, including their financial strength so they don’t go beyond their capacity.
Next, we would be looking at the vehicle acquisition process. Sometimes, most fleet managers confuse the vehicle acquisition method for the process but they are not the same thing. They are entirely different things altogether
Fleet Acquisition Process
As a fleet manager, you must follow the proper fleet acquisition process to purchase the right fleet. These processes include:
Needs Assessment
You need to conduct a thorough analysis of your current fleet to identify which vehicles need to be replaced or added.
The decision to purchase a vehicle or not is influenced by looking at your vehicle’s performance data, considering factors like the maintenance records, the vehicle’s ages, and utilisation rates.
In essence, you need to evaluate your existing fleet’s performance, identify gaps, and determine whether you need to replace ageing vehicles or expand your fleet to meet growing demands.
Budget Planning
Everything relies on your budget. The budget should not only include the purchase price or lease payments but should also make provisions for long-term costs such as fuel, maintenance, depreciation, and insurance. This should help you understand the total cost of ownership (TCO) over the vehicle’s lifecycle.
Market Research
This includes considering new or used vehicles and comparing different models, brands, and vendors.
Look for vehicles that meet your specific needs in terms of size, capacity, fuel efficiency, and features. Go a step further to develop a detailed fleet acquisition plan that outlines your specific requirements and timelines.
Determine the Acquisition Method
Now decide on the method of fleet acquisition that best suits your needs. Whether it’s leasing, purchasing, or renting, just ensure the method you choose is one your organisation can follow through and it suits your specific needs
Vendor Evaluation and Selection
This process involves selecting the right vendor to acquire the required fleet vehicles. You have to evaluate potential vendors based on their reputation, reliability, after-sales support, and pricing to determine who you should do business with.
Send out requests for proposals (RFPs) after you have selected a few and compare responses to make your final pick of the best-fit vendor. Ensure to negotiate terms to get the best deal possible.
Purchase and Integration
Once a vendor is selected and terms have been negotiated successfully, you can proceed with the purchase. Ensure all legal and regulatory requirements are met, including vehicle registration and insurance.
A Plan should immediately be in place for the integration of the new vehicles into your existing fleet, which may involve logistics, driver training and updating your fleet management software to incorporate the new assets.
Maintenance and Monitoring
It doesn’t just end with acquiring the new vehicles and integrating them. You need to establish a maintenance schedule and continuously monitor vehicle performance to ensure vehicle longevity and efficiency.
With all you’ve read so far, I’m sure you can see that the processes for purchasing new fleets and the purchase methods are not the same. The success of the vehicle acquisition process is determined by the essentials and considerations to take when acquiring new vehicles for your fleet. Without this, the fleet acquisition process may be unsuccessful. We’ve shared this in our essential for purchasing new vehicles.
Utilising Fleet Management Software
As we have established, Fleet Purchase is an integral part of Fleet Management. However, it can get difficult, especially if handled manually.
Implementing fleet management software like Instanta Fleet management software can greatly enhance your ability to monitor and manage your fleet. Instanta helps in tracking vehicle performance, monitoring vehicle health, scheduling maintenance, tracking fuel usage, and optimising routes.
With Instanta, you get insights into each vehicle in your fleet and can make informed decisions based on the data it provides.
Effective fleet acquisition is a strategic process that involves careful planning, budgeting, and execution. When you follow the steps and tips we have highlighted here, you can ensure that your fleet is well-equipped to meet your organisation’s needs, deliver optimal performance and save cost as well.
