According to Brian Holland, president and CFO of Fleet Advantage, which provides equipment financing and lifecycle-cost management to fleets, basing the lease vs. buy decision on “functional obsolescence and for how many years trucks can be operated” is outdated.
Instead, he contends fleets should “look at economic obsolescence, which uses data and analytics to determine how many years each individual truck should be operated. We call this the ‘tipping point,’ that point in time where it costs more to maintain and fuel an existing vehicle than it does to replace it with a new, more fuel-efficient model.” Under this approach, a fleet would move to “a shorter asset lifecycle to lower their total costs by utilizing flexible leasing.”
Holland holds that leasing provides the flexibility to run newer equipment more frequently. “That provides many benefits, including lower total cost of ownership, reduced emissions, safety improvements, and better driver retention and recruitment, since drivers prefer to operate newer trucks,” he says.
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