If your business is under pressure to reduce operating costs, it’s easy to look for short-term savings. If you have one or more business use vehicles, one of the perceived ways to do this is to extend the life of your vehicles, so that you can get some more use before the costly outlay of upgrading to cars or trucks.
While this may save you money in the immediate short term, your net costs may balloon as you try to maintain aging vehicles.
Large fleet buyers, such as government departments, often dispose of their vehicles at approximately 3 years/75,000km to avoid not only the increase in service costs, as above – but also after taking into consideration the impact that high kilometre usage has on the resale value.
Delaying the replacement of your vehicle or fleet will incur planned and unplanned costs associated with maintenance as well as intangible drawbacks in terms of productivity and efficiency.
With any maintenance, it increases the likelihood that your employees will have to use another vehicle while they wait for repairs. Productivity will suffer as more of your aging vehicles are sidelined for service, which may become more complicated and costly as they age beyond a reasonable timeframe. This will result as a cost to your business through lost productivity with employees with no vehicles and operational inefficiency through lack of vehicle availability. This will result in a loss of productivity in the long run, even if it's not immediately felt in your cash flows.
By replacing your business vehicles with safer, more efficient cars, you can mitigate some of the risk for drivers. You can end up trapped in an undesirable lifecycle that keeps you with technology that has been updated and improved in newer models, or completely overhauled due to innovation.
For example, if you were a private car buyer looking at ex-fleet vehicles would you rather buy a 3-year old model with 75,000km or a 5-year old model with more than 100,000km on the odometer?
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