PRINCIPLES OF FLEET MANAGEMENT
BUSINESS FUNDAMENTALS
VEHICLE SELECTION
ACQUISITION
FUNDING
RESALE
OPERATING EXPENSES including Fuel
MAINTENANCE
INSURANCE
"T"el-"CO"
100
What is our niche?
Businesses with fleets of 20-300 vehicles.
100
What are the four major business objectives companies pursue to create profit and utilize their cash
Generate revenue
Control costs
Increase employee productivity
Manage cash flow
100
What is the term for the amount of weight (people, AME, cargo) a vehicle can safely carry
Payload
100
CAP, CPA, and VIP are all examples of what
Confidential incentives
100
Apart from cash, what other funding options are available to businesses for acquiring vehicles
Line of credit, auto loan, auto lease
100
What resale channel acts as an intermediary between buyer and seller and charges both parties for the service
Auctions
100
What is the name of the U.S. standards requiring vehicle manufacturers to increase fuel economy
CAFE (Corporate Average Fuel Economy)
100
Oil changes, tire rotations, and fluid changes are examples of what type of maintenance?
Scheduled or preventive or routine maintenance
100
What Fleet Ops department manages claims for our clients?
Risk Management
100
What is important to seek from your client or prospect when using assumptions to estimate operational and administrative expenses?
Agreement.
200
How many vehicles does our typical client have
40-50 vehicles.
200
What are the three sources of cash to a business
Operations
Financing
Investments
200
Please Provide Models for 1/2 ton pickup trucks for Ford, Chevy, Ram
F150, Sliverado 1500, Ram 15000
200
What process produces average savings of $1,200 per vehicle
Factory ordering
200
What formula is used to calculate the rental adjustment on an open-end lease that has been terminated early?
Rule of 78s
200
Which of these options provides low convenience but high returns?
Private sales to the public
200
What are two examples of driving behaviors known to waste fuel
Speeding, rapid acceleration, harsh braking, idling
200
Fixes to the air-conditioning system, fuel system, and steering are considered what type of maintenance?
Nonscheduled repairs or unanticipated or nonpreventive maintenance
200
Why do we have a price advantage with repair shops?
The volume of business that we and our affiliate, Enterprise Holdings, provide to the repair shops allows us to negotiate rates that are 15 to 20 percent lower.
200
What is the purpose of presenting a total cost of ownership (TCO) analysis to clients and prospects?
o give decision makers a forecast of expenses for acquiring and managing a particular vehicle for a particular holding period and funding method.
300
What are the three main objectives our programs are designed to achieve for our clients?
Cost savings, control, and convenience.
300
What is considered the lifeblood of any business
Cash
300
Please Provide Models for 3/4 ton pickup trucks for Ford, Chevy, Ram
F250, Sliverado 2500, Ram 2500
300
What are the three main ways that we reduce the costs of acquiring vehicles
Relationships with manufacturers and dealers, factory ordering, and incentives
300
What are the three rate components in an open-end lease payment
Depreciation, interest charge, and management fee.
300
Which of these options provides high convenience but low returns
Dealer trade-ins
300
What cost-saving feature applies only to branded cards used at branded fueling stations
Rebates on the cost of fuel purchased at the branded stations
300
What two vehicle components wear out periodically and are very expensive to replace?
.
Brakes and tires
300
Who in our department is the worst driver
Danny !
300
What is the cost of capital?
A measure of the opportunity cost of spending rather than investing funds.
400
What benefit do drivers value most in a vehicle program
Convenience.
400
What are two examples of nonoperating expenses
Interest payments, depreciation of fixed assets, amortization of goodwill, income tax
400
Please Provide Models for 1 ton pickup trucks for Ford, Chevy, Ram
F350, Sliverado 3500, Ram 3500
400
Provide three examples of how factory ordering generates savings on the price of the vehicle
Avoiding unnecessary equipment, ordering early in the model year to avoid price increases, avoiding dealer markups
400
What form of debt allows a business to borrow money for any purpose at any time up to a maximum amount
A bank line of credit
400
For an internally managed fleet, what are the main options for selling used vehicles
Dealer trade-ins, sales to dealers, auctions, private sales to the public, sales to employees
400
What are three reasons why vehicle operating expenses tend to increase over time
Fuel economy declines; costly, nonscheduled repairs become more frequent; warranties expire at higher mileages; driver usage can increase wear and tear at higher mileages
400
Afterwarranty coverage is also known as what?
Goodwill assistance.
400
What solution options do we provide clients to help them manage the risks to their vehicles?
Full Risk Management, Physical Damage Management, Accident Management, and Accident Management/Physical Damage Management combined.
400
What is the name of the web portal through which our telematics clients can view reporting
MyGeotab.
500
In a fleet operation, vehicle and operational decisions can be organized into eight main categories. What are they
Vehicle selection, acquisition, funding, resale, fuel, maintenance, insurance, and telematics
500
What are Assets
things a business owns or controls; can be converted into cash
500
This is a BLANK Cab Truck
CREW
500
What is a bailment pool
A pool of vans and cab-chassis trucks held on the lot of an AME vendor. Clients select a vehicle, and the vendor installs the AME. Factory-order pricing applies.
500
What index do we use to calculate the base interest rate
Treasury bill
500
What are the three main ways that EFM increases the returns of the vehicles that we sell for our clients
Vehicle selection, vehicle replacement plan, and our Fleet Strategy team
500
Why do many companies adopt a buy-and-hold strategy
Owners believe that vehicles are effectively free after they are paid off; owners tend not to track or notice fuel and maintenance expenses per individual vehicle, unless maintenance expenses start to rise sharply
500
What is the impact of overservicing on maintenance expenses?
Overservicing increases expenses due to the frequency of services and exposure to upselling.
500
What is the cash-flow benefit of the way that we handle premiums?
We charge no down payment and spread the premium into monthly payments at no extra charge.
500
How does our telematics offering help reduce mileage?
.
It helps reduce the fuel expense per mile by reducing fuel-wasting driving behaviors, and it helps reduce mileage by optimizing driver routes
600
What do companies in our niche primarily focus on regarding their vehicles?
Vehicle price (cost of the vehicle).
600
What are Liabilities
money that the business owes to others (suppliers, lenders, employees, government)
600
This is a BLANK Cab Truck
Regular
600
Provide an example of an incentive that can be combined with either a retail or a fleet incentive
Association, private offer, volume discount, loyalty rebate, commercial credit
600
How is the depreciation reserve calculated using the straight-line depreciation method
Vehicle cost – residual / term.
600
What index do we use to compare our effectiveness against other sellers of used commercial vehicles
Black Book’s CVI (Commercial Value Index).
600
For an internally managed fleet, what fuel option provides consolidated billing but no controls over fuel transactions
Company credit card
600
What two other fleet expenses can be reduced by a well-maintained fleet?
Fuel expense (as a result of better fuel economy) and depreciation expense (as a result of increased resale value).
600
What process do companies in our niche typically follow to obtain auto insurance?
They hire brokers to shop carriers every year and make recommendations. Auto insurance is typically packaged with other types of business insurance.
600
Explain how in-vehicle alerts can improve driver safety.
The system beeps at drivers whenever they violate established rules (e.g., harsh braking, speeding), allowing them to self-correct instantly.
700
What are two examples of “soft costs”?
Administrative costs, driver downtime
700
Equity is ..
assets minus liabilities; net worth of the business; retained earnings plus capital stock
700
This is a BLANK Cab Truck
Extended
700
What is a fleet identification code
Codes used by manufacturers to track which fleet buyers are purchasing their vehicles; fleet ID codes are required to take fleet incentives.
700
What is Matt's Middle Name
ED
700
How many vehicles does Enterprise Holdings sell every year
More than 1 million
700
Apart from the transaction controls provided by fuel cards, what are two ways that companies attempt to manage fuel-wasting driving behaviors
Company car policies and telematics
700
What are the potential risks of underservicing?
Exposure to legal action because of negligence; safety risks; more expensive, nonscheduled repairs; voided warranties.
700
Why do some companies self-insure for physical damage?
They have large fleets and large cash reserves, so they can afford to pay claims as they occur and avoid paying premiums
700
What types of driving data are used in the safety scorecards provided by our telematics offering?
Instances of driver violations of established rules (e.g., driving without a seat belt, driving with the check-engine light on).
800
What is the shared services group that manages many aspects of our clients’ fleet operations?
Fleet Ops.
800
What is Net income
revenue minus all expenses; the bottom line; operating income minus nonoperating expenses
800
Which of the following axle ratios will likely deliver better fuel economy under normal conditions
3.55
800
What team at Fleet Ops handles for our clients the compliance issues related to acquisition
Licensing and Titling team (L&T).
800
If the monthly depreciation on a $25,000 vehicle is $350, what is the depreciation rate?
1.4% (350 / 25,000).
800
How many remarketers sell our vehicles
More than 700
800
Apart from our products and services, what is the main way that we control operating expenses
Replace the vehicle sooner, before operating expenses rise significantly
800
What type of company would likely establish an in-house service center to perform maintenance and repairs on its fleet?
A company with a large, centralized fleet and other machinery and equipment that would benefit from the on-site facility
800
What carrier underwrites our auto liability product?
GREAT QUESTION
800
How does our telematics offering improve driver productivity?
It uses tools such as the following to minimize unproductive stops and lengthy or congested traffic routes:
Real-time vehicle tracking
Driver activity monitoring
Geofencing
900
What department in St. Louis facilitates factory orders?
NVA (New Vehicle Administration).
900
A Company's Current ratio is ..
current assets divided by current liabilities; a current ratio of 1.2 to 2 is considered acceptable
900
What are the different passenger configurations of a van?
6,7, 8, 12, 15.
900
Provide two examples of manufacturer incentive requirements
Purchase volume, garaging address, association membership, fleet mix, customer type, eligibility period
900
An owner with large cash reserves is considering whether to finance or pay cash for three $30,000 vehicles. The owner’s rate of return on cash is 6.5 percent, and the rate of interest on an auto loan or lease is 4.5 percent. Which option is the owner likely to take and why?
The finance at 4.5 percent because it is less expensive (30,000 × 3 = 90,000; 90,000 × 4.5% = 4,050; 90,000 × 6.5% = 5,850).
900
How does our Fleet Strategy team increase returns when physical auctions are used
We use our local relationships and volume of business with auctions to position vehicles on the lanes that will maximize exposure to buyers; we personally represent the vehicles
900
Name two WEX reports that help clients monitor and manage fuel transactions
Vehicle Analysis Report, Exception Report, Financial Summary Report
900
What Fleet Ops department administers our maintenance programs
National Service Department (NSD).
900
What is the process of pursuing and collecting from at-fault parties?
Subrogation.
900
Why do finance professionals prefer to evaluate payment streams in present value terms?
.
It provides a more accurate measure of the impact on cash flow
1000
What department in St. Louis manages vehicle maintenance for our clients?
NSD (National Service Department).
1000
Solvency is
the ability of a business to meet its financial obligations with the cash available
1000
What are three examples of common After Market Equipment
Ladder racks, toolboxes, truck caps and shells, truck bedliners, van bin packages, decals, towing and trailering equipment
1000
What are two limitations a self-managing fleet can experience when acquiring vehicles from the same dealer
Limited to vehicles from one manufacturer, so better alternatives are not considered; dealers can’t provide the full range of fleet management services; vehicles may have more options and equipment than the company truly needs; dealers may not be providing as fair a deal as believed by the client.
1000
What is the effective interest rate on a quote with an interest charge of $53.27, a management fee of $22.98, and an AOB of $15,940.23
The effective interest rate is 5.74% ($53.27 + $22.98 = $76.25; $76.25 × 12 = $915; $915 ÷ $15,940.23 = 0.0574).
1000
What two things are our remarketers measured on
Their ability to sell vehicles as fast as possible for as much as possible
1000
If fuel is $2.80 per gallon, by how much does the annual fuel expense increase on a vehicle that drops from 15 to 14 MPG and averages 20,000 miles per year? (Round up to whole numbers.)
$269 (20,000 ÷ 15 = 1,333; 1,333 × 2.80 = 3,732; 20,000 ÷ 14 = 1,429; 1,429 × 2.80 = 4,001; 4,001 – 3,732 = 269).
$269 (20,000 ÷ 15 = 1,333; 1,333 × 2.80 = 3,732; 20,000 ÷ 14 = 1,429; 1,429 × 2.80 = 4,001; 4,001 – 3,732 = 269).
1000
What maintenance program allows our clients to pay a fixed monthly amount regardless of the actual maintenance expenses?
Full Maintenance
1000
For total loss settlements on open-end lease vehicles, what covers the difference between book value and fair market value?
.
Guaranteed auto protection, or GAP
1000
Suppose your plan, which includes maintenance ancillaries and a shorter cycle, is $150 more expensive in average annual spend than the client’s current plan, which is a 96-month buy-and-hold. How would you justify your plan to the client?
The difference in total dollars is marginal—only $12.50 more per month (150 ÷ 12 months). In exchange, the company receives all the benefits of fleet management: improved decision making on the fleet, reduced operating expenses, significantly reduced administrative effort, enhanced company image as a result of newer vehicles, increased employee safety and morale, and improved company focus on core business responsibilities.