PJ McMahon of Mc-Mahon Automotive Group, a small fleet lessor in suburban Philadelphia, relayed a common fleet scenario these days: A construction company looking to defleet five one-ton pickups on open-end leases could be looking at a $5,000 hit per vehicle at auction because pricing is so bad. That's $25,000 the company—in financial straits already—will lose that it didn't budget for.
The wholesale market is stagnant. Sales forces have been downsized. Delivery runs have been cut. Construction equipment lays idle. Fleet vehicles sit in parking lots because companies have laid off employees. How does anyone cope? And as gas prices have receded to realistic levels, at least temporarily, does anyone still care about greening their fleet?
Green Mandates Tough to Meet
Be grateful you're not a public fleet trying to meet EPAct regulations, which stipulate that 75 percent of new on-road vehicle acquisitions must be alt-fuel. (Hybrids don't count.) Domestic auto manufacturers are more worried about keeping the lights on than putting alt-fuel vehicles on the road.
"I can't buy vehicles right now that meet our needs and meet EPAct regulations," says one fleet manager of a public university.
A construction company in California is sweating the state's proposed on-road diesel regulations. If the regulation passes the state legislature, fleets will have to bring all diesel vehicles up to 2010 emissions standards. That means buying new compliant vehicles or retrofitting the present ones with diesel trap oxidizers at upwards of $15,000 per truck. There's a promise of grant monies to help cover the cost. But what will happen to prices when the wholesale market will be flooded with those older trucks?
"As businesses, we don't need this burden right now," the construction company's fleet manager says. "We're hurting as it is."
Smaller and Fewer Means Greener
While the government forces ill-planned mandates down our throats, there are more subtle and cost-effective ways of going green.
Consider used vehicles as a form of recycling. Used rental vehicles with 15,000 miles are sitting at auction like the Island of Lost Toys, and there are deals to be had. Cargo vans with 18,000 miles are going for $10,500. If your lessor is not ready and willing to lease used vehicles to you, switch leasing companies.
And if you still plan on buying new trucks, avoid the upmarket trim levels with leather and all the bells and whistles, unless you plan on driving those vehicles into the ground. Mc-Mahon says that those trucks "at one time were hot at the sale are not being fought over anymore at the auction."
McMahon says that instead of testing the depressed wholesale market a lot of fleets are doing one- and even two-year lease extensions on their present vehicles. Keeping vehicles on the road longer through strong preventive maintenance is another way to go green.
Charlie Feder of Rossmoor Pastries has made the auctions work for him to go green. He bought 11 CNG (compressed natural gas) vans at auction from city governments for next to nothing, installed his own CNG pump with heavy government subsidies, and pays $1 a gallon for fuel.
Russ Cass of Piemonte Fleet, one of the nation's largest fleet dealers, suggests doing a "size audit" of your fleet vehicles. While your construction crews need their F-350s, does your field supervisor really need a fuel-thirsty King Ranch? Does he need a truck at all? You may—no, will—experience some driver pushback. But you could implement a yearend bonus in exchange for the fuel (and CO2) savings gained with the smaller vehicle.
Ironically, the economy is driving fleets to be green with less fleet vehicles, fewer miles driven and smaller cars. Downsizing may be the least "sexy" green option, but the most prudent of them all.