Operations

To Add or Not To Add, That is the Burning Question for Operators

Posted on May 1, 1995 by Sara Eastwood

The correct mix of vehicles in your fleet can have a positive impact on your bottom line.  However, if there is a lack of sound rationale behind your decision to invest in different types of vehicles, there could be financial hardship in your company’s future.

It takes strategic planning to successfully operate vans, sedans, and motor coaches.  Operators often tell me they can’t seem to get maximum utilization out of all of the vehicles in their fleet.  Their decision to diversify was not really a carefully thought out process, but just an impulse reaction to buy another vehicle.

Throwing spaghetti at the wall to see what sticks is an extremely costly way to conduct market research.  You must know your market and you must listen to the demand of your clients.  For example, if you are in a seasonal area, your fleet demands will differ greatly from operators who work in metropolitan areas and cities.

Take the time to outline the types of clients you have and the calls you get most frequently.  Assess your location.  If you are located near an airport, passenger vans and small buses might be right for your business.  If you are involved with the corporate market, adding sedans and a custom motorcoach should give you a sales advantage over your competition.

To ensure all of your vehicles are profitable, be careful to analyze the vehicle’s operating costs and set pricing accordingly.  For example, most operators are charging about the same hourly rate for motorcoaches as they do stretches, roughly $55 per hour.  Therefore, the only way to make money on these vehicles is to set minimum times.  A two-hour rental should not be considered on a $150,000 bus.  Target corporations and private VIPs that are looking for an all-day or multiple day rental.

Sedans work the same way.  They rent for about $50 per hour, but are not as expensive to purchase or maintain.  These vehicles are exceptional money-makers for operators.  Sedans seem to work best for operators needing “short run” vehicles for only one or two passengers.

Many operators are unaware of the laws and regulations that govern the larger capacity vehicles.  I can’t stress enough the importance of doing your homework.  There is a different driver’s license classification on buses, the maintenance is different, and you have to consider storage.

To remain healthy and competitive you must capitalize on each and every new profit center.  If that means providing more selection to your clients by diversifying your fleet, then it is in your own best interests to know all of the positives and negatives before you make the investment.

 

 

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