Plan is to buy in bulk and save money

City aims to cut vehicle life cycle to reduce maintenance costs

City signed $34 million deal for 1,000 new vehicles

The city of Detroit is rolling out a new fleet vehicle purchasing strategy it says could secure a one-time savings of about $20 million, plus an additional $800,000 every year.

Implemented by the city's General Services Department, which oversees the majority of city vehicles, the plan involves buying new vehicles in bulk at a discounted rate, reducing their average life cycle and cutting both the number and variations of vehicles, thereby reducing maintenance costs.

While the city has been fine-tuning its fleet since the 2013 bankruptcy, it lacked a centralized system for repairing and replacing vehicles, with each agency buying vehicles individually — often at retail price — and the city left scrambling to work the costs into its budget every year, said Jan Anderson, deputy director of the General Services Department.

"This is a new, comprehensive plan and very data-driven for maximizing existing resources," Anderson said, adding that it represents a vast improvement from the years leading up to the city's insolvency when "there were no long-term deals or long-term maintenance savings."

In phase one of the new plan, the department is aiming to cut its light-duty vehicle fleet from 1,680 to 1,378, including 1,000 new vehicles.

The city signed a four-year deal with Detroit-based Jorgensen Ford Sales Inc. last year to purchase around 700 new vehicles and struck a similar deal with St. Louis-based Enterprise Rent-A-Car to lease around 300 new vehicles.

The contracts are worth about $34 million total and include custom work by Shelby Township-based Cannon Truck Equipment, Warren-based Canfield Equipment Services Inc. and Detroit-based ABS Storage Products.

Police and fire vehicles make up most of the city's light-duty fleet, with vehicles used for public works, recreation, parking and general services rounding out the rest. Anderson said she is aiming to execute the same plan for heavy-duty vehicles — the department's other fleet, which includes salt vehicles, cherry pickers and dump trucks — in the coming months. The contract for heavy-duty vehicles has not yet been awarded.

By summer, the GSD's total vehicle count is expected to be about 2,200, down 11 percent from 2015 and nearly half of what it was in 2007, and it may still inch downward.

The more compact the fleet, the more efficient, Anderson said, and the more money saved.

Over a period of 15 years, the city paid about $113 million for the 2,533 vehicles in the GSD's inventory prior to revamping its fleet strategy, Anderson said. She said she expects the total cost of the new fleet to be around $90 million, with an annual maintenance savings of $800,000. The GSD's current budget for fleet management is $17.4 million, including maintenance, purchase planning and the city's fueling systems, but not the price fuel itself.

The city's old light-duty fleet had an average age of 13.5 years, Anderson said, while its new strategy calls for cycling out vehicles every five years. To achieve that, it is purchasing about 250 new vehicles per year during its four-year deal so it staggers the cycle-out process and establishes a clear-cut schedule for new bulk purchases. About 100 new vehicles are on the road now.

Once cycled out, cars from Enterprise are returned and those from Jorgensen are sold at auction for 15 percent to 20 percent of the purchase price, with those funds being pumped back into purchasing new vehicles.

Anderson said the number of maintenance workers in the department — 89 — is not expected to shrink as a result of the new strategy, but overtime will be scaled back.