July 14, 2021 / 3 minute read
This past year has been an interesting, and challenging, one for every business. This coming year will remain just as dynamic.
Case in point: acquiring vehicles for your fleet is not as easy as it used to be, and many businesses (whether they realize it or not) are at serious risk for not getting their required 2022 fleet vehicles to keep their aging fleet current.
Getting your vehicles from dealerships isn't so straightforward anymore, which is why we’re really encouraging businesses to factory order their vehicles—AND get those orders in early.
In this article, you’ll learn some risks of relying exclusively on dealerships during the coming year, and how factory ordering will help mitigate your risk, while keeping your fleet current and operational.
Why Relying Just on Vehicle Dealership Stock is Risky
During any given year, dealerships are given a certain allocation of vehicles to place in their lot and sell. In past years, dealer stock was more abundant than it is today. COVID-19 led to the temporary shut down of vehicle manufacturers in the spring of 2020, which created a significant production backlog. When you factor in the current semiconductor chip shortage that is affecting manufacturers across the board, there is going to be a serious new vehicle supply shortage.
The combination of factors has reduced the amount and variety of vehicles that dealers have available. Since dealers typically prioritize the consumer market over the fleet market, businesses don’t have as good of a chance of getting the vehicles they need from a dealer right now, and into 2022/2023.
If you are successful in finding vehicles at a dealership, they’ll likely come with some additional trim levels, or packages that you don’t need—resulting in increased (and unnecessary) costs for you. In some cases we’ve seen this additional cost reach over $10,000! At the very least, you’ll likely pay a few grand more than you were planning to for each vehicle.
You don’t want to be in a situation where you have to choose between purchasing a vehicle that’s thousands of dollars more than what you budgeted, or renting a vehicle for the foreseeable future in order to keep your business operating.
So what’s the solution?
Factory Order Vehicles Early to Get What You Need
At Foss National Leasing, we’ve long been proponents of factory ordering vehicles. The reasons are many. A factory ordering fleet program allows you to:
- Get the exact, fit-for-purpose vehicles you need, without unnecessary trim or add-ons. Many manufacturers also offer fleet pricing, which reduces your acquisition costs.
- Improve your chances of getting the fleet vehicles you need when you order early.
- Increase the likelihood of getting your vehicles delivered when you need them, to your exact location.
- Plan your vehicle inventory more effectively, so you can better cycle your fleet—thereby reducing your total cost of ownership.
Every year, we encourage our clients to order from the factory. This year, we’re encouraging it more than ever, because fleet vehicle production is going to be more limited than in the past. Getting your orders in early will give you the best chance of getting the vehicles that you need, especially if you need commercial fleet vehicles—like bigger vans and pickup trucks—which have had the biggest production impact this year.
So what constitutes “early”?
Ideally, you should start your vehicle order/selection process in July (and even earlier when possible). Plan to order vehicles in August, or as soon as the manufacturer opens the ordering for a vehicle line (and once specs are loaded). When orders are placed early, many manufacturers will allow you to schedule when you want the vehicles delivered throughout the year.
If you leave the ordering much later than that, the vehicle manufacturer may come back and tell you they’ve already reached their allocation limit and they’re not able to fulfill your order.
In general, it’s good practice to get into the habit of factory ordering your vehicles early, even when things eventually return to normal. This past year has shown us that things can destabilize quickly and unexpectedly, so it never hurts to be proactive.
Factory ordering your vehicles provides significant benefits for your business. You’ll get the exact vehicles you want, when you want them—and in today’s vehicle shortage climate, this peace of mind is invaluable.
For help in planning your factory orders and your vehicle replacement strategy, don’t hesitate to reach out to the team here at Foss National Leasing.