How to Identify an Under-Utilized Vehicle
Operational costs and competition are always on the rise, and sometimes a fleet management team may struggle to keep up. To be able to compete in this ever-changing environment – many fleet managers are turning to their telematics data to track key performance indicators, metrics that will allow them to make better decisions for their fleet.
One such metric is a vehicle’s usage rate.
As a fleet manager it’s important to understand which assets within your mix are being utilized to their fullest potential. Now, we understand that not every vehicle or asset’s usage rate will be stellar.
It’s always a good idea to keep some spare units within your fleet – as long as you’ve still undertaken measures to ensure that your fleet is the right size.
In this article, we’ll cover just how you can identify an under-utilized vehicle – and whether or not you should keep the unit or save your capital.
What is an under-utilized vehicle?
First things first, what is an under-utilized vehicle? The technical definition of the “under-utilized” term comes from Merriam Webster:
“To under-utilize is to use less that fully or below the potential usage rate.”Merriam Webster, merriam-webster.com
Whilst this may be applicable to a generic term, it can be applicable for fleet management as well. When a vehicle is considered under-utilized, often there has been an analysis done on its telematics data output – showing that a vehicle isn’t being used to its fullest potential.
Terry Kader from the City of Denton says that people, “don’t think about the purchase cost or depreciation [of their vehicles]”. Rather instead, they’re thinking about maintenance and fuel costs.
If the vehicle is parked, you’re not spending on either…right?
Well, not exactly.
The reason why, is because – like Kader stated – you’re not looking at the whole equation.
“When they have a vehicle, they don’t think about the purchase cost or the depreciation. They think about maintenance and fuel cost. If your vehicle sits, you’re not paying maintenance or fuel. ‘Well, it’s not costing me anything,’ But that’s not true. That’s not the whole equation.”Terry Kader, CPFP from City of Denton, Texas, written in an interview by Government Fleet Magazine
To be able to better understand which of your assets in your fleet mix are under-utilized, try walking yourself through a checklist. This list of questions, or must-meet metrics, can act as a guide to help you determine whether or not your vehicles are being used in the most cost-effective way.
Key questions to ask when determining whether or not your vehicle is under-utilized:
If you’re aiming to identify an under-utilized vehicle within your fleet, with the goal of potentially reducing the amount of assets in your fleet mix – here are some questions to consider when evaluating your vehicles:
- Do you know the monthly miles driven for this vehicle?
- Do you consider this vehicle to be a spare unit?
- What are the engine hours for this unit?
- Is this vehicle critical to the operation of your fleet?
- How many days per year does this unit spend in the garage?
- How many active days does this unit have per year?
- How many trips does this vehicle make per day?
- When a specific vehicle is down, do you require an outside rental to fulfill your services?
Something to keep in mind…
As you evaluate your fleet – it’s important to keep in mind that just because a vehicle may be under-utilized, it doesn’t mean you should chuck it in the [metaphorical] bin. It’s good practice to keep spare units in your fleet asset mix, the key is simply to keep this number in check.
Like I said before, too many vehicles – and it could heavily weigh on your annual budget. Too few, and you could experience service interruptions and unhappy customers.
If you would like some help with your fleet evaluation, specifically in identifying under-utilized vehicles, let us know. We would be happy to help! Schedule a demo today to speak to a Utilimarc analyst.