From the December 2006 issue of Entrepreneur

Online Exclusive: For more commercial vehicles information, read the online exclusive portions of this article.

What are the trends in commercial vehicles for the coming year? Safety and security features, greener engines with flexible fuel capability, more power and more hybrids are hallmarks of 2007's light trucks. Commercial vehicles are safer than ever. More structural safety features are built in, while mechanical components raise safety to a new standard. Air bags on the sides of seats, curtain-style air bags in the roofline and additional air bags for rear passengers are now standard or optional in many vehicles. The National Highway Traffic and Safety Administration is stepping up tests for rollovers, side impacts and other safety issues, leading manufacturers to respond with improved electronic stability control and other passenger safety systems.

In response to consumer demand, flexible and alternative fuels are new options on light trucks, including Ford's F-150, whose versatile power-plant runs on a mixture of gasoline and ethanol, typically 15 percent gasoline and 85 percent ethanol (E85). But unlike hybrids, fuel economy for ethanol-powered vehicles is lower than in gas-powered engines. For example, the 2006 GMC Yukon with the standard engine achieves 15 mpg city/20 mpg highway, but only 16 city/21 highway with the E85 option; however, E85 is environmentally friendlier and thus more desirable.

The number of hybrid vehicles on the market is increasing dramatically. Available hybrids now include Chevrolet Silverado and GMC Sierra pickups, the Mercury Mariner SUV and the Toyota Camry fleet sedan hybrid (Toyota is also bringing hybrid technology to its pickup trucks). The Saturn Vue Green Line Hybrid SUV is the lowest-priced SUV hybrid on the market (as of press time). The Ford Escape and Mercury Mariner hybrids achieve their best fuel economy in the city, making them good choices for urban fleets.

Meanwhile, tax breaks on Toyota Prius hybrids are slowing down. The IRS Hybrid credits , ranging from $250 to $3,150, decrease by 50 percent after a manufacturer has sold 60,000 hybrids, and eventually disappear altogether--Toyota and Lexus estimate their hybrid tax discount will cease in October 2007. The good news: Several light hybrid trucks, including the Chevrolet Silverado, GMC Sierra, Mercury Mariner and Ford Escape, will still qualify in 2007. Keep in mind that if vehicles are leased, the leasing company may claim the credit.

A new energy law gives clean diesel vehicles the same tax incentives as hybrids. On January 1, 2007, new EPA regulations require more stringent emissions standards for diesel engines, and dealers are urging buyers to purchase vehicles before that date to avoid potential price increases as manufacturers cover their costs of meeting the new standards. However, some older diesel engines can be retrofitted to comply.

Dodge adds biodiesel fuel capability to its Ram pickup trucks with Cummins diesel engines purchased for commercial fleets, using B20 (20 percent biodiesel), a clean, renewable diesel fuel. The Dodge Sprinter van uses B2 (2 percent bio-diesel), and Dodge is testing a plug-in hybrid version in a few states. The Dodge Durango SUV and Chrysler minivan hybrids are available to fleet customers only. Chevy's E85 vehicles available for fleet customers include the Express and GMC Savana vans.

Ford has redesigned its Expedition, and it has a best-in-class payload of 1,800 pounds. Toyota's Tacoma is roomier, and the new Tundra debuts next month. GMC's new Sierra was released recently. Chevrolet supercharged the Silverado SS Classic and TrailBlazer SS pickup and midsize SUV, and celebrates 2007 with all-new versions of the Avalanche, Suburban and Tahoe SUVs. Dodge debuts the new Caliber SUV. The Hummer H3 receives a Vortec 3.7-liter 242-horsepower engine, and the limited edition H2 comes with a rear-vision camera. Chevrolet's new HHR van with windowless side panels is perfect for commercial use--it has 57 cubic feet of flat floor cargo plus 5 cubic feet of underfloor storage. Mileage is a satisfying 30 mpg average. The all-electric, street-legal GEM vehicles--used for shuttles and moving cargo around warehouses, industrial sites and business parks--add a six-passenger model for 2007.

On the financial front, manufacturers of large SUVs and pickup trucks are offering no-interest loans; Dodge's incentive programs offer $500 mail-in coupons and free upfit packages on select models; and during June and July, Ford gave buyers a fuel card that guaranteed gas for $1.99 a gallon for up to six months.

Need plenty of passenger seats or mammoth cargo space? Check out the Dodge Sprinter with seating for 10 passengers and a rear door that opens at a 270-degree angle for easy loading. The Dodge Grand Caravan cargo van has a special commercial suspension and provides up to 160.7 cubic feet of cargo space and up to 5,700 gross vehicle weight rating on the long-wheelbase version. Chrysler is offering a 30-day return guarantee, although you may have to pay for that one month of use plus license and registration fees.

Fleet Management Services

Signing up with a fleet management service so you don't have to hire an extra employee or double up employee duties is a popular option for entrepreneurs. Taking on the daily task of running your fleet, these strategic and tactical management programs and flexible outsourcing solutions save time--no costly overruns and specific expertise in all areas of fleet management add up to optimal fleet performance.

Though many automakers focus fleet services on maintenance and repairs, a number of companies take their services a step further. GM's Business Choice offers an upfit cash-back program, giving you money back when you purchase or lease a vehicle and install shelving, cabinets or other interior accessories to suit vehicles to your business's needs. Business Choice offers several other options to help entrepreneurs equip their GM vehicles; check them out at www.gmbusinesschoice.com .

GE also offers fleet management assistance. Its Commercial Finance Fleet Services helps you overcome your time, capital, system infrastructure and growth challenges. Enterprise car rental agency offers fleet services for companies with 15 to 125 vehicles. It customizes programs to include acquisitions, insurance, fuel cards, financing and maintenance.

Some companies specialize in fleet management services. FleetRisk Advisors analyzes driver and vehicle data from onboard telematics, a key trend in understanding how vehicles are used and reducing costs by determining high-risk situations such as driver fatigue to decrease claim-causing accidents. Mercury Associates handles large and small fleets. It analyzes your business and its organization and staffing to assess your needs. PHH Arval's truck fleet experts provide consultations on the best ways to run your fleet and maximize the service life of your vehicles. They also advise on purchasing, leasing and upfit options.

If you'd prefer to manage your fleet in-house, fuel management programs can save you time and money. Determine your potential fuel savings with the calculator at www.fleet-central.com . Even something as simple as keeping track of odometer readings and fuel, via software programs, can help your fleet become more efficient and productive.

Fleet management software such as Navtrak, a GPS-based mobile work force management tool, allows you to monitor your fleet in real time. Check out other software options at www.capterra.com, which provides descriptions of dozens of web-based fleet management solutions for general and specific businesses. FleetCommander shows graphic displays of vehicle use and status, while Andronics enables companies to locate and manage vehicle fleets of any size. ManagerPlus monitors performance based on fuel and/or oil consumption, analyzes trends and spots recurrent problems.

Another way to manage your company fleet yourself and keep an eye on fuel costs and overruns is to issue driver fuel cards. Most of the oil companies, including Arco, BP and Chevron, provide cards, along with predetermined restrictions you can place on them. Check if the cards you choose offer discounts on the fuel price at the pump. Visa Fleet's card customizes individual cards, tracks fleet-related expenses, integrates spending data directly into your company's accounting systems and handles tax compliance, regulatory reporting and cost management.

Auto Financing Programs

Like most entrepreneurs, you probably have little time for visiting dealerships one by one to find out about auto financing. Well, let your mouse sniff out the bargains, at least initially. Research on the internet is your swiftest tool when looking for the best lender deal to finance your commercial vehicles. Doing your homework by reading web-posted offerings from auto manufacturers, financial institutions, independent companies and specialized fleet service companies means you can start your search by shopping around for loans by computer. Navigating most of the sites is easier than ever, thanks to the advice, tips and links that sites now offer.

You can compare costs and values for new and used vehicles with the Kelley Blue Book and similar automotive informational guides. One of the most researched auto resources is www.autobytel.com , which offers tools to calculate your monthly loan payments, taking into account current rebates and insurance premium quotes. Even Google Finance has entered the automotive fleet business and compares leasing quotes for vehicle fleets from more than 700 financial institutions.

Chrysler/Dodge, Ford, GM, Nissan and Toyota offer various methods of funding your light truck fleets. Ford Credit's commercial lending services for both large and small fleet owners have flexible terms and rates. GM's financing and leasing division, GMAC, offers extended terms through its SmartLease plan, which allows you to pay for the portion of the vehicle you expect to use during the leasing period. Its SmartBuy program offers lower monthly payments with a balloon payment at the end of the lease, and the SmartEdge program offers different payment options, details on payment calculations and types of insurance coverage.

Check out www.nissanusa.com for a credit tutorial including credit laws, terminology and factors affecting your credit rating. When you're ready to buy or lease, Nissan Motor Acceptance Corp. helps make your decisions more affordable. DaimlerChrysler (which includes Dodge and Jeep) has launched its latest version of the Business Vehicle Finance program to customize packages for companies' car and truck needs, taking into account your balance sheets, tax liability and the intent and size of your business. GE Commercial Finance Fleet Services covers a wide spectrum of options, including ways to help you improve cash flow and spread costs out over time. It also adds daily fuel reporting to its web-based applications, My.Dashboard and My.Reports, to help clients pinpoint inefficiencies and monitor fuel prices.

Although auto manufacturers usually recommend financial institutions with auto-related services, you can also turn to independent financing services to lease or buy. OPEN from American Express comes to the rescue with a $100,000 term loan or line of credit with no collateral or required minimum balance. If you are already a business card member and have been in business for at least two years, you'll qualify for special rates.

Warranties and Service Programs

By paying attention to auto maintenance and service and analyzing the resulting data, you can minimize repair bills and ongoing expenses and extend the life of your vehicles. To save time, money and effort, check out service plans offered by auto manufacturers for new vehicles, fleets and certified pre-owned units. Many include a mix of services, including accident management, online account access and registration renewal.

Do you know the difference between a warranty and a service contract? Typically, the warranty provides free comprehensive product coverage for a period of time, and the service contract provides certain services for a specified period of years or miles. Chrysler and Dodge have several service plans available for vehicle protection, including Dodge's Maximum Care and Added Care Plus. Dodge's BusinessLink program for trucks and vans affords priority service to members with no enrollment fee. Chrysler's ServiceNet is a national maintenance program. For in-house care, GM's OnStar provides a handy diagnosis of key vehicle components, such as an engine check and remaining oil life. Results are e-mailed to your office.

GM's warranty provides roadside assistance and courtesy transportation or transportation expenses while your car receives warranty repairs. Its GM Protection Plan guards against unexpected vehicle repair costs and handles claims, and the Goodwrench Services include maintenance reminders.

Ford has upped its powertrain limited warranties and roadside assistance programs on its 2007 Ford, Lincoln and Mercury vehicles. The company's Quality Fleet Care maintenance program includes centralized billing and monthly repair reports, and it handles preset client-approved spending limits. The Extended Service plans include emergency roadside assistance and a premium maintenance package to cover frequent-wear items such as brake pads, clutch disc, belts, hoses and shock absorbers.

GE Commercial Finance Fleet Services, which specializes in light truck programs for small businesses, guarantees that savings with its MaintenanceSelect plan will exceed your program fees and reduce expenses on repair pricing. GE's Your Office @ Fleet program lets you manage your fleet from your desktop, and their latest tool helps fleet managers monitor fuel prices.

Auto manufacturers require you to buy or lease a minimum number of units to qualify and enroll in their plans. Toyota requires 10 or more units in service to qualify for its commercial fleet maintenance plan. Eligibility for Nissan's and Chrysler/Dodge's maintenance programs requires the purchase or lease of five or more vehicles, or having 15 or more vehicles operated by your company.

Online Exclusive: Insurance and Saving Gas

Get Covered
The best insurance for your business-and how to get it for less.

All businesses need property/casualty insurance coverage, and the biggest portion of it might be for your transportation needs. There is good news, however: According to the Insurance Information Institute, 2006 signaled the smallest increase in insurance rates in six years, at one-sixth the rate of inflation. This gives reason to hope for the same in 2007.

If your drivers have good safety records and you own safe vehicles, you could see savings of $25 to $50 per vehicle on your policy. Switching to smaller vehicles can also decrease premiums, because they aren't as expensive to insure and repairs cost less. Hybrids usually earn insurance discounts, too. Safety features such as electronic stability control, traction control, antilock brakes and additional air bags all affect insurance costs.

The Insurance Institute for Highway Safety evaluates a vehicle's crashworthiness. Among the safest 2006 minivans are the Kia Sedona, Honda Odyssey, Toyota Sienna and Ford Freestar. Well-rated small pickups include the Toyota Tacoma, Chevrolet Colorado and Nissan Frontier.

Auto theft also affects rates. Installing theft protection systems and security devices such as tracking systems can keep policy premiums down. According to a June report by the Highway Loss Data Institute, among the most frequently stolen vehicles are the Cadillac Escalade SUV and Dodge Ram 1500 quad cab.

Auto insurers consider several others factors when estimating coverage: distance and type of driving, claim records, number of accidents, number of speeding tickets and other citations, and the age, gender and experience of the driver. A younger employee may lack experience, thus costing more to insure. Driver training and classes on defensive driving (even how to handle road rage) are also often taken into account.

New vehicles are more expensive to insure than used ones, so check out Certified Pre-Owned programs to compare premiums before purchasing your business fleet. Leasing? New car leases require full fire, theft and collision coverage-coverage that may be dropped on older, used vehicles.

Mileage Plus
No time is better than now for saving on gas. Here are some tips for getting better mileage.

Until the federal government finalizes proposed plans to reform auto manufacturers' fuel economy standards, making light trucks more fuel-efficient, what can you do to reduce those big gasoline bills? Here are some tips.

  • Find out from the dealer if your vehicles can function using a lower-grade, lower-priced gas. Some cars and trucks may lose 5 percent of their horsepower but can gain more fuel efficiency.
  • Advise your drivers to go easy on the gas pedal and use cruise control to maintain a constant pace at the speed limit. Gas mileage decreases rapidly at speeds over 60 mph.
  • Service your vehicles regularly to replace clogged filters and worn components. Follow the service manual's maintenance schedule for optimum results.
  • Map out and combine deliveries and business trips through the fastest, most efficient routes to avoid doubling back.
  • Empty the trunk or bed of unnecessary cargo. Excess weight can reduce your fuel efficiency. An extra 100 pounds could reduce mpg by up to 2 percent.
  • Excess idling wastes gas, especially in vehicles with the type of large engines that power light trucks. Instead of idling while you defog or defrost the windows, buy a windshield cover and invest in high-quality ice scrapers.
  • Use the overdrive gear to save gas and reduce engine wear.
  • Check out www.gasbuddy.com for the lowest-priced gas in your area. For example, in Toledo, Ohio, and Charlotte, North Carolina, 15 gas stations and their addresses are listed for each city.
  • Air conditioners can eat up gas, because they add an extra load to your engine, causing it to work harder. Some A/C systems have an economy mode that keeps the compressor from engaging as often. Correlate your air conditioning to your speed: At lower speeds (under 40 mph), it is more fuel-efficient to open the windows and turn off the A/C, according to AAA. Use the Auto Climate Control and set it as low as is comfortable.
  • Under-inflated tires can cost a mile or two per gallon, and gas from your fuel tank can vaporize if the gas caps are loose or missing.
  • Keeping the tailgate closed with the truck bed covered can reduce drag.
  • Check out the Environmental Protection Agency's green vehicle guide at www.epa.gov/greenvehicles to compare fuel economy estimates and help you determine which truck is best for you.
  • Consider a fleet management program to monitor your drivers' driving habits and how your vehicles are operated.

 

Online Exclusive: Smart Tips

Shop Online
One task that's easy to do from your laptop is shopping for your business vehicles online. Many websites link directly to auto manufacturers with dealer addresses and information on prices, rebates, reviews, ratings, delivery estimates, fleets and warranties. Comparison charts let you shop around for the best deals, and www.edmunds.com has tips on how to avoid online buying fraud. Other reputable sites include www.autobytel.com, www.autousa.com, www.carsdirect.com and www.kbb.com.

Go, Gadgets
What's the latest in add-on and optional technology? An innovative lane-change alert and blind-spot warning system is available on some vehicles including the Volvo XC90 and Audi Q7 SUVs. Improved GPS systems on vehicles can provide door-to-door driving directions or data on upcoming traffic problems. Stability and traction control, all-wheel and four-wheel drive and back-up cameras with onscreen viewing are add-ons. Flashing red arrows in side-view mirrors warn other drivers of lane changes, and tire pressure-monitoring systems reduce truck breakdowns (properly inflated tires also help save fuel). OnStar on GM's light trucks helps locate stolen vehicles, and XM satellite radio has advance traffic and weather information. A future trend, reports www.cars.com, is fingerprint scanners on doors for keyless entry.

Great Incentives
Incentives and rebates continue to roll out, from drastic discounts including manufacturer-employee pricing to seasonal cash-back programs. Incentives on commercial fleet purchases are strong: At press time, Toyotas ranged from $500 on the Sienna minivan to $1,500 on the Sequioa SUV and $1,250 on the Highlander Hybrid SUV. On Toyota's Tundra and Tacoma pickups, the incentives are $500. Dodge's On The Job program offers incentives and cash allowances for small businesses and special job applications.

Something Used
Buying a Certified Pre-Owned (CPO) vehicle can save you a bundle of money, and most are eligible for dealer incentives. But compare before you buy, because in 2007, many light truck manufacturers are equipping their new models with more efficient, fuel-economy engines.

Hummer is selling 2006 CPO models that are less than 48 months old with fewer than 50,000 miles; Toyota's CPOs have fewer than 85,000 miles on the clock; Nissan's are five years and younger with a maximum of 60,000 miles; and Chrysler/Dodge backs its CPOs with an eight-year/80,000 mile limited warranty. Compare CPOs at www.auto.msn.com.

Jill Amadio is Entrepreneur's "Wheels" columnist.