May12

Advantages and Disadvantages of Buying or Leasing Fleet Vehicles

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Buying or owning

If you’re planning to buy fleet vehicles, keep in mind that as a vehicle owner “you own the assets” and therefore, you also own “any damage or depreciation that accrues over time,” says UnionLeasing.com.

UnionLeasing.com weighs in on the pros and cons of buying/owning fleet vehicles: “This can be a good or a bad thing. If the vehicle maintains its value over time, you could resell it for more than expected. But the opposite is also true. You could wind up owning a vehicle with very little value in the resale market. Whatever the case, it’s important to be aware that as the owner you are responsible for both the assets, as well as reselling the vehicle at a later date.”

“Another aspect of owning is the control you have over your vehicles. You get to build exactly the fleet your business needs. This, however, also means that you do not always have the flexibility that comes with leasing vehicles. Most owners expect to use the vehicles they purchase for a 5-year period or longer, whereas those who lease tend to have a shorter vehicle turnover rate, and a greater need for flexibility, It’s also important to note that fleet leasing management companies often have programs to provide you with both the control of owning and the flexibility of leasing.”

In its Fleet Leasing vs Buying Comparison Guide, Ewaldfleetsolutions.com elaborates on the disadvantages of buying/owning fleet vehicles:

- Your company’s book value is often not in line with market value at time of disposal

- Vehicle diversity and lack of standards increase both vehicle acquisition costs and administrative cost.

- Upgrading owned vehicles is capital intensive and cumbersome.

- Purchasing intensifies vehicle fleet build-up.

- Disposal of vehicles is time-consuming, expensive and lacks the application of automotive expertise

- Buying is capital intensive

- Buying entails high budgeting and forecasting costs

- Vehicles are often retained beyond optimum life, resulting in higher maintenance costs and poor image, reducing driver morale.

- Financing affects the bottom line

- Buying is inflexible

However, owning a fleet also has its advantages depending on usage and needs. UnionLeasing.com believes small and localized companies have the advantage “to form relationships with local vendors who can provide benefits on service and maintenance.”

Service-oriented companies (e.g. roofers, painters, AC repair companies) would also benefit from buying their own fleet because there is a lot of vehicle wear-and-tear involved in their day-to-day operations and would mean lower resale values due to depreciation, adds UnionLeasing.com.

Sierra Chrysler Jeep Dodge located in Monrovia, CA in Los Angeles County is thehighest reviewed CJDR dealership in Southern California per Google Reviews. Check us out on Google or give us a call at (888) 805-2075 if you have any questions about your next vehicle buying experience. We take pride in providing a service to our community and providing people with a good experience whether it is buying cars, parts, or getting their vehicle serviced.


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