Kern County expects to save millions of dollars by leasing hundreds of its vehicles through a third party instead of purchasing those vehicles outright.
“This is a really great Lean Six Sigma project,” said Geoffrey Hill, Kern County chief general services officer, referring to the county’s financial savings initiative. “It saves time, it saves money, and it’s more convenient.”
By leasing vehicles from Enterprise Fleet Management instead of buying and selling them independently, county officials say they will pay a lower monthly rate than they would have paid in car payments.
In fact, they expect to save nearly $4 million over next few years.
Here’s how the county did the math:
In early 2018, the county began a five-year deal to lease 111 vehicles for its General Services and Behavioral Health and Recovery Services departments through Enterprise.
The deal was meant to be a test-run for the county before it looked to expand the program. The county says it will save $350,000 per year through the program and after a successful first year, the county expanded the leasing agreement in December.
The second phase of the deal saw the county lease 137 vehicles, which were for use by the District Attorney’s Office and the remainder of the vehicles for Behavioral Services, for an additional five years.
The county expects to save $450,000 per year, or $2.2 million over the entire term of the second agreement, bringing the total cost savings over the course of both five-year terms to $4 million.
The county has a total fleet of about 800 vehicles, Hill said.
The county also says it will be able to take advantage of fluctuations in the market, as well as save on repair costs.
“We work with (Enterprise) to determine when the best time to sell the vehicles is,” Hill said. “We could sell (a vehicle) early to maximize our return. We’re using their market knowledge, as well as their reach and their ability, to competitively sell these vehicles to maximize the county’s retention of value.”
Previously, the county had waited several years before selling a vehicle. Now, it hopes to sell when market conditions will yield the greatest result.
The county received a 2018 Merit Award for innovation from the California State Association of Counties for its leasing program, and it touts the program as a success on its list of cost-saving initiatives it has recently undertaken.
However, not everyone agrees.
John Pitre, chief operations officer of Motor City Buick GMC and Motor City Lexus of Bakersfield, worries the county won’t see the savings it expects, and he fears the taxpayers will pay the price.
“We’ve been through this many times with local businesses,” he said. “And they all end up coming back to the local market.”
He said interest rates and fees that fleet management companies charge would bump the county’s costs up to higher than what the local market could provide.
Plus, he said the county should be spending its money locally.
“At the end of the day, I don’t think it’s good for local businesses to have the county spending money with a non-local agency,” he said.
“It is a very shortsighted move for them to be buying merchandise outside the county when the county is primarily supported by the sales tax.”