September 7, 2023 / 5 minute read
Fleet purchases in light of today's complex market situation are tough. Automobile shortage is a serious issue that is affecting all fleets currently. The shortage is expected to persist for the next two to three years. This means that automakers are limited in their production of all vehicle classes.
Consequently, obtaining replacement vehicles for your aging fleet requires active participation in factory ordering. Failure to do so may leave you stranded without a new vehicle. Bear in mind that the dealers are also competing for vehicle allocations, just like you.
How Can a Fleet Management Company Help?
First and foremost, you have to get in the queue. Know what you need to replace and discuss your requirements with a Fleet Management Company (FMC.) It’s what they do, and they will bring new perspectives and workable options to keep you on the road. Perhaps it’s working with multiple manufacturers to acquire the fleet of vehicles you need. Whatever the case, a solid relationship with an FMC is more valuable now than ever before.
A FMC can help you choose the right vehicle that supports your unique needs—at a good price that also provides the highest return. Also, in the event that you need a last-minute vehicle from a dealer, an FMC can work with “fleet-minded” dealers to help minimize any extra costs.
Here’s a look at why factory ordering leads to real cost savings.
Fleet Management Tips: How To Pay Less For Fleet Acquisition
When you order from the factory, you will:
Get the exact vehicle you need
Get what you need, with no unnecessary extras, and nothing missing. Conversely, getting exactly what you need from a dealer is extremely rare.
This is because dealers order vehicles from the factory with a range of options they hope will sell. These are things like heated steering wheels, running boards, and tinted windows.
But what if you don’t want those options?
Well, if it’s the only vehicle on the lot, and you really need it, you’ll have to buy it, and end up paying for those options anyway. When you order from the factory, you won’t have to pay for any added features you don’t want.
Additionally, if your fleet needs pickup trucks or white vehicles, you’ll find there’s currently a shortage of models if you order from the dealer. This is because the summer is between model years, so stocks will be at their lowest until the fall.
(Related post: A Fleet Procurement Strategy to Boost Your Bottom Line)
Get the vehicle when you need it
Order the vehicle now, and have it delivered later, when you need it. For example, you can order in August, and get the vehicle in April, if that’s what makes sense for your fleet.
How does this help you save money?
Inventory planning. Ordering from the factory allows you to plan your fleet size. By knowing the exact day your new vehicle will arrive, you can make arrangements to sell your current vehicle based on seasonality peaks in the used vehicle market. You maximize your reselling return and carry less inventory.
(Related post: 5 Pro Strategies to Improve Factory Order Fleet Delivery Times)
Give all drivers the same vehicles
When you can make sure all drivers have the same vehicles, you’ll prevent any conflict that may arise from one driver having a “cooler” vehicle than the others.
Happy drivers are more engaged and productive, which—every fleet manager knows—is key to a healthier bottom line for your business.
Get the vehicle delivered to your driver’s exact location—without the fees
If you order from a dealer, you’ll have to pay the transport and dealer trade fees when they deliver to a specific location. Ordering from the factory eliminates these fees entirely.
Get locked-in pricing
This means, when you order from the factory, the OEM’s pricing is locked in to the date your vehicle was ordered. Vehicles from the dealer are subject to current pricing, and prices don’t go down during the model year—only up!
Enjoy lower markup on a factory order
Dealers charge you more because they have to pay for advertising and interest on the vehicle. When you order from the factory, you won’t have to pay for either of these.
(Related post: How to Get Fleet Vehicle Volume Discounts)
Enjoy overall lower acquisition fees
At the end of the day, dealers need to make money on the vehicles they sell. If you order from the factory, there are no related dealer fees. Factory ordering is immediately cheaper because of that one difference.
The average vehicle purchased out of dealer inventory will cost you between $750 to $1,000 more than a factory order for the same driver requirement.
Do the math with your own fleet: the savings are huge.
When Should You Order Your Fleet Vehicles?
To save the most money on your factory order, while maximizing your vehicles’ remarketing value, here’s what your ideal order cycle should look like:
(Related Post: How to Better Plan Your Factory Orders)
Should You Ever Buy From a Dealer?
There are times when buying a vehicle off the lot does make sense.
Let’s take a look at the most common scenarios:
- When you have a vehicle that becomes a “total loss” due to an accident or a serious maintenance issue
- When you have a new hire, you have to put on the road right away
In these situations, you’d need to buy and receive a new vehicle as soon as possible. And through a dealer is the best way to do that.
Buying from a dealer should be the exception, not the rule.
We hope this article has helped you understand the key cost-saving opportunities that come with factory ordering. At the end of the day, you need vehicles. So why not get the exact ones you want, when you want them, for less money?
Download Factory Ordering: Purchase the Options Your Fleet Requires, For Less. It will help you learn how to plan your factory ordering for maximum savings.
Get to Know the Author
Jennifer Chapman has been a valued member of the Canadian Fleet Management community for over 20 years. Her dedication to quality and cost-awareness is eclipsed only by her commitment to finding the best solution for her clients. Continually thinking outside the box, Jennifer is well-known for her ability to manage teams and implement process improvements, as well as advance workplace involvement in non-profit community efforts. Having obtained her CAFM and ASE certifications, Jennifer is well-poised to help fleets be successful in the 21st Century.Meet our team