Even though truck sales in general are declining, sales to state and local governments will remain even with last year. Municipal fleets won't feel the money crunch or tightening emissions crunch until late 2007 or 2008—and later.
The main issue this year is how to handle increasing operating costs. Though fleet managers can't control product prices, the stock market, or the U.S. Environmental Protection Agency's emissions standards, you do have control over how you budget.
To afford these costlier low-emissions trucks, municipalities may want to consider financing or downsizing their fleets. By financing, municipalities can afford the trucks they want and pay over time, instead of paying with cash. Downsizing your fleet may seem like an unrealistic option, but conservation is the buzzword these days, and selecting fewer vehicles with higher fuel economy may be the way to go.
The fuel market is versatile. Alternative fuels, such as E85, are available almost everywhere, though often at a higher price than their gas or diesel counterparts. Biodiesel and other agricultural-based fuels are readily available, especially in the Midwest.
GPS-enabled devices are cheaper. Telematics will become more popular now that products based on global positioning system-enabled cell phones are coming down in price. Fleet information management systems are affordable for more departments, making it easier to collect—and then use—the vast amounts of data that fleets generate. These Internet-based systems can make the fleet management process more collaborative and understandable to those outside the fleet department (read: elected officials).
Expensive fuel. Although new products, like biodiesel and E85, are available, their higher cost makes them prohibitive for some departments. E85 prices soared when methyl tert-butyl ether was removed from gasoline, no longer making gasoline a bargain compared to alternatives. If oil prices continue to hover around $60 or $70 a barrel, fleet managers may have to re-think the use of each and every one of their trucks.
Tougher emission standards. Though many fleet managers are dodging the emissions bullet by not purchasing any new model trucks in 2007, emissions standards will tighten even further in 2010, causing manufacturers to increase their prices even more—some say up to $15,000 for vehicles with Class 8 engines. This year's round of toughened emission standards pushed several agencies into purchasing new trucks, which caused a jump in capital costs.
Although these cleaner diesel vehicles cost more, they're lasting longer. Life cycle costs shouldn't change dramatically, even though some managers experienced sticker shock when purchasing ultra-low sulfur diesel vehicles.