Downsizing Your Fleet? What to Know Before You Sell
There can be many reasons for downsizing your fleet. Your customers may have changed; you may be transitioning to a different type of service or freight management; or you’ve decided to change your business model. But before you start switching or selling the vehicles in your fleet either privately or through a dealer, there are considerations you need to address to make sure you’re doing it the right way.
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Is the change temporary or permanent?
When there’s a change in an industry, especially a downturn in business, it’s often common for fleet owners to cut down on their expenses by liquidating some of their fleet vehicles. That’s a short-term solution, but if that business comes back, it can be expensive and time-consuming to build up the fleet again, especially if vehicle prices have risen in the meantime. Look long-term to be sure you’re making the right decision.
Do you know your fixed and variable costs?
A surprising number of business owners only check their balance sheets every quarter. Knowing what your fleet costs to run on a weekly or even a daily basis can better help you make the right decisions, including what vehicles are costing you the most and if there’s a way to either adapt or replace them with something more profitable.
Can you repurpose the vehicles you have?
If there’s a change in what you’re carrying or the type of service you provide, can you outfit your existing vehicles to adapt to it? A midsize pickup may be able to move up into a job previously done by a full-size, or a smaller van could be upfit to carry the new product. If a larger and thirstier model is oversized for its route, see if you can substitute a smaller one. Do your homework though, and make sure you won’t be overloading a smaller vehicle, or that the cost of the upfit outweighs the fuel savings of the smaller van.
Is there a possibility you can downsize your expenses?
Automakers are regularly improving the efficiency of their vehicles, the frequency of their scheduled maintenance, their features, and in some cases, their capability. There may be a possibility that a new, or at least newer model may ultimately end up saving you money in fuel or downtime. Or could one more-capable vehicle handle the work of two that you’re currently using for the same route? Look into the possibilities of reducing your costs by improving your fleet.
Can you set aside the time to downsize?
Selling a vehicle takes time, including getting it ready to sell and meeting with potential buyers and walking them through it. Take this into account when you’re making your downsizing plans so you have time to do it properly and give your full attention to the task. Otherwise, you may end up making the wrong decisions, or not getting the best dollar for the vehicles you’re putting on the market.
Do you know the best time to sell your vehicles?
If you’re culling certain vehicles, compare them to others to know which ones to sell. Those that are closer to being out of warranty, that aren’t as fuel-efficient, or that might not have as much capability as others for the job you need are the ones that most likely need to have the “For Sale” sign on their windshields. You should also be checking what sellers are asking for similar vehicles so you know which ones in your fleet have the potential to bring you the most cash when you offer them on the market.
Is downsizing in the best interest of your customers?
It’s tempting to liquidate some of your stock for extra cash if your business changes, but is it short-term gain at the cost of long-term pain? Make sure your fleet will still be able to properly service the customers you do have. If your downsized fleet can’t handle all of their needs, they’ll go looking for someone who can, and you’ll be even worse off in the long run.
Have you identified the reasons for your change in business?
If you’re losing a client, find out why before you downscale your company to make up for it. It may be something as simple as they’re facing their own financial issues, but it might also be that your service isn’t satisfactory anymore. Set up a meeting to see if it’s an issue with your drivers or dispatchers. Perhaps it isn’t a vehicle that needs “downsizing,” but employees who don’t properly represent your company.
Is there other equipment you should be examining?
In many businesses, the trucks out front are only one component of the entire equipment inventory. Your company may also have money tied up in cars for salespeople or executives; forklifts and loading equipment in a warehouse; or trailers and possibly yard trucks to move them. Analyze this entire inventory to see where you can cut back on expenses without jeopardizing the service you provide to your customers.
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Now that you’re ready, how do you downsize?
Selling off your extra vehicles is the same as with any other: Cleaning and prepping them, taking extensive photos and videos, and then advertising them online through the marketplace to reach the highest number of potential buyers possible.
Jil McIntosh
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