The Pandemic’s Impact on Municipal Fleets in Canada
By David Trott
Area Sales Manager for Enterprise Fleet Management in Toronto
The pandemic has presented several challenges for municipal fleets, making it more important than ever to focus on cost control, capital management, and the safety of employees and constituents.
Decreased Tax Revenue & Budget Constraints
Municipalities and government entities typically aren’t equipped with the capital required to replace aging fleet vehicles at the optimal time. The pandemic has only amplified this issue. With increased costs due to pandemic related measures and multiple business closures, municipalities and government entities are experiencing lower tax revenues and tighter budgets. As a result, many municipalities and government entities have pushed replacing their vehicles towards the end of the list of items to address with their existing budget.
While this certainly is a challenge, municipalities and government entities can work with a professional fleet management company to reduce the age of their fleets and put new vehicles on the road, all while staying within the budget they have. This can be done by moving away from the traditional buy and hold vehicle approach to a more flexible fleet program and strategic vehicle replacement cycle.
Using this approach allows municipalities and government entities to have newer – and safer – vehicles and achieve significant cost savings. As you can imagine, this also provides more control over fleet costs – without sacrificing on quality, safety or flexibility. Municipalities and government entities can also be more proactive about meeting their vehicle needs.
Vehicles manufacturers have been challenged to keep up with production demand after experiencing shutdowns in the spring of 2020. While manufacturers have already built out several vehicle models for 2021, the continuous demand for vehicles has impacted vehicle inventory and the supply chain. As result, manufacturers have been experiencing extended delivery times, which has created a lack of predictability and consistency in vehicle ordering for organizations with fleets.
For many municipalities and government entities in particular, an additional factor is causing delays and slowing new-vehicle orders. Uncertainty about the future course of the pandemic and how long it will continue to impact their budget has led to a longer fleet funding approval process.
The silver lining is that based on the scarcity of vehicles available, many have turned to used vehicles for fleet fulfillment. Therefore, the current commercial vehicle re-sale market is incredibly strong and offers the opportunity to sell existing vehicles at a premium. This can be a creative way in generating equity and allowing for municipalities and government entities to equity-fund replacement vehicles moving forward and increase their budgets.
Operating an Efficient Fleet
Due to the impact of the pandemic, many municipalities and government entities are expected to “do more with less,” and that includes operating their existing fleet in an efficient way.
With a trusted fleet management partner, municipalities and government entities can do just that without sacrificing what’s needed to effectively operate a fleet or keep employees safe. In fact, municipalities and government entities can replace more of their fleet on an annual basis while maximizing savings.
Through a comprehensive fleet management program that includes a data-driven fleet replacement plan, municipalities and government entities can also see maximum benefits when selling their vehicles along with higher resale values. This allows government organizations to maximize their vehicle investments and make better use of their financial resources, which means more money can be allocated to providing critical services to their communities.
As municipalities and government entities focus on balancing budgets with less tax revenue, decreased income tax and increased costs in a post-pandemic economy, it’s important to build a fleet management plan that will avoid the higher operating costs of deterring replacements or paying more in seller’s market for vehicles.
Enterprise Fleet Management is a leading fleet management provider to government organizations and vendor for LAS, AMO and Sourcewell. In addition, Enterprise Fleet Management plays a major role in helping municipalities and government entities develop customized fleet programs that meet their needs and goals, even amidst the challenges the pandemic has presented.