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Operational Support Solution
A regional agriculture services company operating about 400 light and medium-duty vehicles needed to lower their lease payments. They were experiencing high downtime and maintenance spending, and they struggled with reducing their fuel spending. They also need to lower their residual risk given high-mileage cycling, which is 200,000 miles for gasoline vehicles, and 250,000 for diesel vehicles.
The Merchants Solution
The agricultural services company was able to leverage integrated data through TotalView to evaluate mileage accumulation and application, as well maintenance spend and how that correlated with vehicle cycles. Merchants reviewed lease structures and strategy within each segment of the fleet, and also re-evaluated vehicles and cycling parameters to better fit each application. This meant looking at the best solution for each segment of the fleet versus trying to create a blanket solution for the whole fleet. (In other cases, the “segments” might not be by application but could even be by driver or area of operation, which all depends on the larger company culture.)
By challenging the traditional lease structure used by this fleet, Merchants moved certain fleet segments to a fixed-term lease structure instead. By doing so, the agricultural company was able to reduce its lease payments by nearly $300 per vehicle. With Merchants, the company now has a custom lease that best fits and is flexible around vehicle application. By better managing maintenance and re-evaluating vehicle cycling, the company was also able to reduce annual maintenance costs by 40%. Less maintenance downtime also resulted in increased driver satisfaction since they had fewer breakdowns and less wait time to get their vehicles back and on the road — not to mention vehicles were being cycled out after 1-3 years, so drivers get newer vehicles on a more regular basis.