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How to Protect your Fleet in 2021

The volatility of the automotive industry has never been higher.  The effects of the lockdowns and the slow down of production across the world has hit the auto manufacturers hard. Here are a  few things you need to understand about the auto industry & domestic vehicles manufacturers to better understand the situation we find them in.

  1. These Companies are giant massive machines that cannot make changes quickly or adapt to their current environment because they are so big. Think about how long it takes a massive oil tanker to make a simple turn and this will give you a good idea of how these companies operate.

     

  2. The industry is very reactive and is not very good at predicting the future (not many are). This means that instead of getting in front of problems they have to wait for something to break or not work in order to fix it.

     

  3. Everything is at least 6 months behind – this is important when it comes to planning. What has historically taken 2-3 months to produce is now a minimum 6 months and many vehicles are 9+ months out.

     

  4. Communication is terrible and the information is often flawed, outdated or incorrect. After decades in the auto industry we know the only constant is change and the manufacturers are not the best when it comes to communicating with their dealers and end users.  Many times, especially recently, manufacturers will declare the last day to order a specific vehicle is, for example, 12/31/2020.  The problem is that they announced this months after that date and have taken thousands of orders that will now be cancelled.

     

  5. Most people think of the plants as production facilities when in fact they are assembly & distribution centers. Production makes people think that something is made in the facilities but most auto companies don’t make any components. They simply put the parts or components together which are outsourced by the lowest bidder of a pool of “suppliers”. This is important when there is a break or failure in the parts supply chain. One small part can shut down a billion ­dollar assembly plant.

     

  6. Almost all manufactures use the same suppliers – so when a supplier of a particular component fails it affects all brands simultaneously. A previous example of this is when a magnesium plant had a fire in 2018 causing all major domestic brands to have delays with certain parts and vehicles because they all used the same plant.

     

  7. They are all high profit driven. Auto manufacturers have no interest in marginal profits – “fleet make the least”. This is why fleet and commercial programs and vehicles have been the first to get scaled back in when things get tight.  Manufacturers give larger discounts to fleet customers and in turn make less profit then selling to an individual.

2021 is looking like it will be a year where dealer inventories will be at an all time low and most manufacturers will be struggling to keep up with demand. On top of that, fleet order banks will most likely not be open for a very long period of time.

 By the time the order banks open up for many of these vehicles there will already be a several month backlog of vehicles that need to be ordered, filling up the available production slots quickly and forcing manufacturers to stop taking orders sooner.

With all this being said, what can you do to protect your fleet in these uncertain times? We have come up with a few points that we think will be pretty consistent across most industries.  If you have specific questions about your fleet or industry, let us know we are happy to help.

  1. Stay on top of your vehicles’ maintenance. With inventory in short supply, you need to try and get all of the life out of the vehicles you currently have.  If one goes down it could be 6-12 months to get a replacement.
  2.  Plan Ahead – With vehicles taking longer to get from manufacturers and order banks expected to open for a short time this year, we are advising our partners to start working on and identifying 2022 calendar year needs now. Getting orders in as soon as possible will be imperative to getting the equipment you want without delays and cancellations.
  3. Budget high -We are asking most customers to plan on a 3% increase from last year’s budget estimates as we believe this will cover the known and unknown price increases that are coming in 2021.
  4. Start working now – on desired specifications particularly in regards to specialized equipment – Crane Trucks, Dump Trucks, Ambulances, Police Cars, Etc. As these manufacturers are having similar issues and we are hearing wait times increasing by months instead of days at some vocational equipment suppliers.
  5. Be Patient -The auto makers supply is enormous and consists of several hundred thousand people all trying to get these problems and issues resolved but it will take time.

Cooper Fleet Services is here to help in any way that we can. The first thing we came up with is an online resource tool that gives you up to date information in regards to all things fleet including current production times, estimated lead times and vehicle availability. The link to this resource is below.

Fleet Resources

While you are there please sign up for the fleet newsletter which will keep you up to date with current fleet issues.

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