Vehicle Acquisition & Disposal Flashcards

Which acquisition method allows a fleet to add vehicles without a large upfront capital expenditure?

Answer: Operating lease

An operating lease transfers use of the vehicle to the fleet without requiring full purchase price payment, preserving capital.

What is the primary financial advantage of a closed-end lease for a fleet manager?

Answer: Lessor assumes residual value risk at lease end

In a closed-end lease, the lessor sets and assumes the residual value risk, protecting the fleet from depreciation surprises.

A fleet manager wants to ensure vehicle specifications meet operational needs before ordering. Which process best accomplishes this?

Answer: Conducting a needs analysis prior to ordering

A needs analysis evaluates operational requirements, ensuring vehicle specs align with actual usage before procurement.

Under an open-end lease, who is responsible if the vehicle's realized auction value is less than the projected residual?

Answer: The lessee (fleet)

In an open-end lease, the lessee is responsible for any shortfall between the actual sale price and the projected residual value.

Which disposal method typically yields the highest return for well-maintained, low-mileage fleet vehicles?

Answer: Retail sale to employees or public

Retail sales to employees or the public typically achieve higher prices than wholesale because the buyer pays closer to market value.

What document formally authorizes a vendor to supply vehicles and establishes pricing and terms for a fleet?

Answer: Master purchase agreement

A master purchase agreement outlines negotiated pricing, delivery terms, and conditions governing fleet vehicle procurement.

When disposing of fleet vehicles, which environmental regulation requires fleet managers to ensure proper handling of hazardous fluids?

Answer: EPA Resource Conservation and Recovery Act (RCRA)

The EPA's RCRA governs the disposal of hazardous wastes, including used motor oil, coolant, and other vehicle fluids.

A fleet manager is comparing total cost of ownership (TCO) for two vehicles. Which cost is most commonly EXCLUDED from a simple purchase price comparison but included in TCO?

Answer: Fuel and maintenance costs over the life cycle

TCO incorporates all lifetime costs including fuel, maintenance, insurance, and depreciation, not just the initial purchase price.

Which type of auction gives fleet managers access to the largest volume of wholesale buyers and fastest vehicle liquidation?

Answer: Online fleet/lease auction

Online fleet/lease auctions attract large numbers of wholesale buyers nationwide, enabling faster and broader liquidation.

What is 'remarketing' in the context of fleet vehicle disposal?

Answer: The process of selling used fleet vehicles to maximize return

Remarketing refers to the strategic process of preparing and selling used fleet vehicles through optimal channels to maximize residual value.

A fleet manager notices vehicles are being kept beyond their optimal replacement cycle. What is the primary financial risk?

Answer: Escalating maintenance costs exceeding replacement savings

Keeping vehicles past their optimal replacement point typically leads to sharply rising maintenance costs that outweigh any savings from deferring acquisition.

Which metric is most useful for determining the optimal vehicle replacement point from a cost perspective?

Answer: Lowest point on the total cost per mile curve

The optimal replacement point is typically where the total cost per mile (depreciation + operating costs) reaches its lowest value.

What is a 'fleet pool vehicle' in the context of acquisition planning?

Answer: A shared vehicle available to multiple employees as needed

Fleet pool vehicles are shared assets not assigned to one individual, maximizing utilization across multiple users or departments.

When issuing a Request for Proposal (RFP) for vehicle acquisition, which element is critical to include to ensure comparable bids?

Answer: Detailed vehicle specifications and evaluation criteria

Clear specifications and evaluation criteria ensure all vendors bid on identical requirements, enabling an apples-to-apples comparison.

Which government program allows eligible public fleet agencies to purchase vehicles at pre-negotiated contract prices without a separate bidding process?

Answer: GSA Fleet cooperative purchasing

GSA schedules and cooperative purchasing contracts allow eligible agencies to procure vehicles at pre-negotiated rates, bypassing individual RFP processes.

A fleet manager is evaluating alternative fuel vehicles (AFVs) for acquisition. Which factor most directly impacts total cost of ownership for AFVs compared to conventional vehicles?

Answer: Fuel cost differential and available fueling infrastructure

The economic viability of AFVs depends heavily on fuel cost savings and whether adequate fueling or charging infrastructure exists near operation areas.

What is 'fleet right-sizing'?

Answer: Aligning fleet size and vehicle types precisely to operational demand

Right-sizing matches the number and type of vehicles in a fleet to actual operational need, eliminating underutilized assets.

Which disposal channel is most appropriate for high-mileage vehicles with significant mechanical issues?

Answer: Wholesale salvage or scrap auction

High-mileage vehicles with significant issues are best disposed of through salvage or scrap channels where buyers price them for parts or metal value.

A fleet manager must document vehicle disposal proceeds for accounting purposes. Which document typically serves as proof of sale for a disposed fleet vehicle?

Answer: Bill of sale or auction receipt

A bill of sale or auction receipt provides the official record of the transaction price and buyer, supporting proper accounting and title transfer.

What is the purpose of a 'vehicle selector' or 'selector list' in fleet acquisition?

Answer: A pre-approved list of vehicles employees may choose from

A selector list limits employee vehicle choices to pre-approved makes and models that meet fleet policy and cost requirements.