This question is always being raised by Fleet Managers so Fleet Auto News thought we’d offer some food for thought.
The typical leasing term for a fully maintained operating lease (FMOL) is 36 months and 90,000 km. It’s amazing how common this term is when there is such a diverse range of businesses and operational activities undertaken by fleets.
It does change for utes and vans. You start to see higher kilometres because these vehicles are productive when being driven, and longer terms because they are more durable and the used market will accept older vehicles.
In an IPWEA fleet discussion a question was raised by a regional council Fleet Manager. They said they were keeping passenger vehicles for two years or 80,000 km, and commercial vehicles for four years and 90,000 km.
They were wondering what other fleets are doing and which is more important – age or kilometres. The fleet manager was also interested in the best method for disposal.
Suggestions from people on the forum varied. Though you could group the responses based on the type of fleet or area the fleets were operating. Fleets in WA and QLD keep the vehicles longer. Smaller coastal based fleets rarely passed 80,000.
The limit for passenger vehicles seemed to be 100,000km. Comments suggested residual values declined dramatically after this point. One fleet manager indicated that age didn’t seem to affect light commercials and they held their value fairly steadily as they got older.
The verdict was four years and 80,000 km for passenger vehicles and five years 120,000 km for light commercials.
Utilisation (the old chestnut) was mentioned because the operational requirements of the vehicles should play a big part in determining the right term. This can be hard for line managers to predict when roles or people change during the life of the vehicle. That’s why it’s so important for utilisation to be monitored by the fleet department.
Disposal methods were also mentioned in the discussion. Auctions were the favoured method and it was recommended by one fleet manager to benchmark the results between Pickles and Manheim. Another suggestion from a council on the fringe of the city was to send the 4X4 vehicles out west to sell and the passenger vehicles to the city.
To read this discussion and more visit the IPWEA fleet management home page on the website.