BACKGROUND
Every state department of transportation (DOT) owns and manages a fleet of vehicles and equipment. An important part of fleet management is the process of disposing fleet assets once vehicles and equipment age or otherwise reach the end of their useful economic life. Some states require disposal of state DOT assets to be done by another state agency while other state DOTs perform this function internally. In either case, once the decision is made to dispose of fleet assets, an important objective is to maximize proceeds from the sale.
State DOTs dispose of fleet assets in various ways. Live auctions can be held at a centralized location, with a large number of items transported from across the state to be sold at a specific date and time. Alternatively, auctions can be held at regional or local venues with limited or even specialized offerings. Such auctions can be annual events, held quarterly, or on some other schedule. On-line auctions can be held on a continuous basis, allowing the state DOT to list and sell items at any time and potentially reaching buyers from anywhere, even when travel to or gathering at a public venue may be restricted as occurred in 2020.
The process used for bids and pricing can also vary. Bids can be open and public or sealed from other bidders. The selling agency can establish a reserve or minimum bid. These options affect the information that bidders have, which, in turn, affects sales prices. Time of year for a sale is a further consideration because the seasonal nature of construction activities and macro-economic cycles can affect the number of buyers and the prices they will pay.
State DOTs also need to consider how best to market and present fleet assets. Reconditioning, repairing, or painting equipment to prepare it for sale can increase sales prices, but that increase must be balanced with the preparation costs. Some buyers may be attracted to sales where equipment is bundled into larger lots. Other types of buyers may be interested only in certain categories of equipment or vehicles (e.g., light-duty vehicles, heavy-duty vehicles, or non-self-propelled assets). Understanding the interests, preferences, and needs of buyers is important to ensure a state DOT is effectively marketing and conducting disposal sales so as to maximize proceeds.
Some state DOTs use alternative methods to manage fleet disposal including asset trade-in programs, guaranteed buyback programs, and guaranteed trade-in programs. These programs can help offset new equipment purchase costs and avoid the need for marketing to buyers. For state DOTs that use another state agency for disposal, these programs can also reduce charge back rates, potentially supporting additional highway maintenance for the same amount of dollars spent by the state DOT. However, these programs can be affected by tax requirements and other regulations that reduce their overall cost effectiveness.
Previous research has addressed the issue of timing the decision to dispose of fleet assets, based on equipment lifecycle considerations. Once that decision is made, the disposal sale process used can significantly affect sales prices, whether the process is managed by the state DOT or by another state agency. Research is needed to provide state DOTs with practice-ready guidelines on how to manage the sales process to maximize sale prices.
OBJECTIVE
The objective of this research is to develop a manual for state DOT fleet managers for selecting effective strategies for preparing, marketing, and selling surplus equipment and vehicles to maximize proceeds. The manual will be accompanied by a decision support matrix with a graphical presentation of options and considerations for the disposal sales process to guide the selection of specific strategies.
