Considering adding a used fleet vehicle to your operations? With used-car prices dropping and modern vehicles lasting longer than ever, now is an excellent time to evaluate this cost-effective option. However, buying pre-owned vehicles comes with critical considerations, such as potential flood damage and rising ownership costs.
A recent Wall Street Journal article highlights a significant shift in the car market, presenting both opportunities and challenges for businesses managing fleets. Falling used-car prices offer substantial savings, but risks like flood-damaged vehicles from recent hurricanes add a layer of complexity.
In this article, we’ll explore whether buying a used vehicle for your fleet is a good idea, key risks to watch for, and how effective fleet vehicle management strategies can help you navigate these changes while making the smartest decisions for your business.
• Average Price: Used-car prices have dropped 6.2% in 2024, averaging $27,000. This trend opens up savings opportunities for businesses considering expanding their fleet.
• Cost Savings: The price gap between new and used cars is at an all-time high, with buyers saving an average of $20,000 by choosing a used fleet vehicle over a new one.
• Fleet Advantage: These savings can be reinvested into other critical areas of fleet vehicle management, such as maintenance and insurance.
• Operational Risks: Flood-damaged vehicles present a significant risk to long-term performance, safety, and operating costs. For fleet managers, this could disrupt service and add unplanned expenses.
• Warning Signs: To protect your fleet, look for moisture in carpets, rust under the vehicle, mud in compartments, or musty odors—common indicators of flood exposure.
• Geographic Risk: Hurricanes in states like Florida and North Carolina have increased the likelihood of flood-damaged vehicles entering the market. Fleet owners should exercise caution and ensure thorough inspections before purchase.
1. Flood-Damaged Inventory: Vehicles with hidden flood damage often circulate out of hurricane-affected areas. Without proper vetting, businesses risk adding unreliable vehicles to their fleet.
2. Rising Ownership Costs: While a used fleet vehicle can be cheaper upfront, higher costs for insurance, repairs, and maintenance could impact long-term budgets.
3. Interest Rates: Financing costs remain high due to elevated interest rates, making careful evaluation of purchase methods crucial for fleet vehicle management.
• Many modern vehicles last beyond 200,000 miles, making high-mileage used vehicles viable options for consumer drivers. However, fleet vehicles substantially decline in resale value after 100,000 miles, so operators concerned about cost predictability and avoiding downtime typically cycle out their vehicles when mileage is within the 100,000 mile range.
• For business owners that DIY their fleet management balancing cost and reliability, the durability of today’s vehicles provides opportunities for reducing total costs without compromising performance.
• Premium Models Dominate: Automakers focus on higher-end vehicles, keeping new-car prices elevated.
• Consider Incentives: While incentives averaging 6% of the transaction price may make new vehicles tempting, used fleet vehicles often remain the more cost-effective choice.
Falling used-car prices and the durability of modern vehicles can make pre-owned options attractive for businesses that operate fleet vehicles. However, risks like flood damage and rising ownership costs add a layer of caution. By partnering with experts like Alliance Leasing, you can mitigate these risks with pre-purchase checklists and inspections, ensuring sound investments that align with your operational goals.
1. Pre-Purchase Checklist: Use Alliance Leasing’s resources to identify signs of flood damage before buying a used fleet vehicle.
2. Third-Party Inspections: Coordinate with expert inspectors for detailed reports, ensuring that your investment is protected and reliable.
