Fleet utilisation calculator

Utilisation is the number most rental operators quote and the number fewest of them define the same way. Two fleets can both report 70 percent and be running completely different businesses. Before the figure above is worth anything, it is worth knowing exactly what went into it.

What this calculates, precisely

There are four quantities, and the arguments all come from mixing them up.

• Fleet days are your fleet size multiplied by the days in the period. Twelve vehicles across thirty days is 360 fleet days, whatever happened to them.
• Off-road days are vehicle-days where the vehicle could not have gone out even if someone had walked in wanting it: in for service, waiting on a part, damaged and with an assessor, out of certification, unregistered.
• Available days are fleet days minus off-road days. This is the fleet you actually had to sell.
• Hired days are the vehicle-days that were on hire.

Utilisation here is hired days divided by available days, because that is the number you can do something about between now and next month. The calculator also shows hired days over total fleet days, because that is usually what a financier or an investor means by the word, and it is the harsher of the two. If your workshop is busy, the gap between them is wide, and the gap itself is a useful reading.

RevPAD and ADR are not the same number

ADR, the average daily rate, is revenue divided by hired days. It tells you what you achieved on the days you were earning. RevPAD, revenue per available day, is revenue divided by available days, so it spreads the same revenue across the days that earned nothing too.

ADR is a pricing number. RevPAD is a business number. Watching only ADR is how an operator convinces themselves a quiet month went well: the rate held up, so the pricing must be right. RevPAD is the one that notices the vehicles were parked. When ADR is healthy and RevPAD is poor, the problem is demand or availability, not price, and discounting will make it worse.

What counts as a good number

There is no single answer, and anyone who gives you one without asking about your fleet mix and your season is guessing. Published industry figures put a great many operators in the fifties and sixties, with the seventies and low eighties treated as a working target.

Treat that as a reference point rather than a goal. A fleet at 90 percent through a peak fortnight is probably turning work away and underpricing. A fleet at 55 percent in the deep off season may be exactly where it should be, if the alternative was selling days at a rate that does not cover the cleaning. The useful comparison is not against an industry average. It is against the same month last year, and against your own other vehicle classes.

Read it by class, not by fleet

This is the part that took me longest to learn running my own fleets, and it is the one thing I would pass on if I could only pass on one. A fleet-wide utilisation figure is an average of things that have nothing to do with each other. The compacts and the 4WDs are different businesses with different seasons, different customers and different downtime, and averaging them produces a number that describes neither.

The first time this calculator is genuinely useful is the second time you run it: once for the whole fleet, then once per class. A fleet sitting at 68 percent very often turns out to be one class at 85 and another at 45, and the decision that follows is about the class at 45, not about the fleet. Sometimes that decision is to reprice it. Sometimes it is to stop replacing those vehicles when they cycle out.

Two habits worth adopting

Count off-road days honestly. The temptation is to quietly leave the vehicle that has been waiting three weeks for a windscreen out of the off-road column, because it flatters utilisation. It does, and it also hides a workshop problem that is costing more than the utilisation number it is protecting. If your off-road days are a large share of your fleet days, that is the finding, and utilisation is a side issue this month.

Pick a period and keep it. Monthly is the usual choice and works well enough. What matters is that you do not compare a thirty-day month against a peak fortnight and conclude something about the trend. If you run the same period every time, the number becomes a series rather than a snapshot, and the series is where the information is.

What to do with a low number

Utilisation is an outcome, not a lever. You cannot raise it directly; you can only change something upstream and watch it move. Broadly there are four places to look, and it is worth knowing which one you are in before spending anything.

• Demand. Not enough people are trying to book. That is a distribution and marketing problem, and it is the one most operators assume they have.
• Conversion. People are trying to book and not finishing. That is usually a booking flow, a deposit rule or a response time, and it is far cheaper to fix than demand.
• Availability. The vehicles are not there to sell, because turnaround, cleaning or the workshop is holding them. Off-road days will show this.
• Fleet shape. You own the wrong vehicles for the demand you get. This is the slowest to fix and the most expensive to ignore.

The idle-days line in the result exists to make the fourth column of that decision concrete. If the idle days at your own achieved rate come to a number that would change what you do, the problem is worth real effort. If they come to less than the cost of the effort, the honest answer is that your utilisation is fine and something else deserves the attention.

A note on what this does not know

This is arithmetic on numbers you supply, and it inherits whatever is wrong with them. It does not know your seasonality, your one-way movements, your repositioning costs, or the hire that ran three days over and was never re-invoiced. It cannot tell you whether a vehicle was idle because nobody wanted it or because it was blocked on your own board by a booking that had already been cancelled. It will not catch a double-count if you record both a vehicle-day and a booking-day for the same hire.

What it does do is force the definitions to be explicit, which is most of the value. Once you and whoever you argue with about utilisation are using the same denominator, the argument gets much shorter.