Sale-Leaseback: Advantages and Opportunities

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The term “sale-leaseback” is exactly what it sounds like: a financial transaction where a company sells an asset then leases it back so they can continue to use it but no longer owns it. So for instance, that means a company would sell their vehicles − cars, light-dutys, trucks, equipment − to Donlen and in turn, we lease those assets back to the same company.

So what’s the advantage of a sale-leaseback?

donlen-ryan-grodzki-ff-large“Plenty,” says Ryan Grodzki, a Donlen Client Consultant. “From a cash-flow perspective, leasing fleet vehicles is typically more attractive than owning when you analyze the total cost of ownership.

“The other aspect is the infusion of cash that a sale-leaseback offers,” he went on to say. “Selling your vehicles at fair market value puts that money in your pocket right now. Additionally, that infusion can help offset future fleet expenses such as fuel, rental, or maintenance.”

Looking at opportunities

There isn’t a “one size fits all” scenario when it comes to sale-leasebacks. Ryan and the other Client Consultants approach each sale-leaseback as an opportunity to work with each customer to meet their specific requirements.

“It’s important to first understand our customer’s unique application and utilization. And we also need to assess where their fleet stands now,” Ryan said. “We look at the makeup of the fleet, the age of the assets, and how they will be used to determine the best course of action for the sale-leaseback.”

For example, Ryan recently consulted with a customer with 200 vehicles in their fleet. They historically purchased their vehicles outright, and had a fleet consisting of several different manufacturers and types of vehicles.

Donlen Lease vs Own Example Analysis

“We’re not just saying ‘ok, give us your vehicles and we’ll lease them back’,” Ryan said. “We’re looking at every hole and opportunity to help them improve their fleet in the process.”

Using Donlen tools to illustrate fair market value (FMV) for each asset, Ryan provided a lease versus own analysis to the customer (See Example, right). “Ultimately, we need to decide the best course of action, the one that will provide the best outcome,” he said.

Lifecycle and depreciation

There are many variables to a sale-leaseback. For instance, where the assets are in the lifecycle may weigh into the decision.

“It might not make sense to lease back the oldest assets with limited remaining serviceable life. Focusing on the youngest vehicles could have more impact,” said Ryan. ”A customer can depreciate a vehicle that has four or five years of life left over a longer time.”

To Ryan and the Client Consultants, pairing the optimal vehicle with the optimal financial structure is of utmost importance and part of the sale-leaseback analysis. Many times, that means taking a vehicle-by-vehicle approach to depreciation.

“Recently, we provided analysis for a 2000 vehicle fleet,” Ryan went on to say. “The ages of the vehicles were all different, so obviously the depreciation is different for each one. We went line by line and set the appropriate depreciation for each vehicle so that the customer would have the best result in the sale-leaseback. This is an instance where Donlen’s Open-End TRAC (Terminal Rental Adjustment Clause) Lease is the perfect solution.”

The first step

“Whether a fleet has 200 or 2000 vehicles, there are a variety of solutions across a variety of timeframes that will work for any application,” said Ryan. “The first step is to let us look at the numbers. We believe that once you see what can be achieved in the long term, a sale-leaseback may be a great opportunity for your fleet.”

Ryan can be reached at 847-412-5390.


FleetWeb® Tips

Use the Vehicle Trend Analysis tool in FleetWeb to help identify cycling times for your vehicles. View resale performance against the segment benchmark and examine the remarketing auction price trends in real-time.

  1. Type “Vehicle Trend Analysis” in the search field in the upper right corner
  2. Select the year, make, model, and trim level for the vehicle you’d like to analyze
  3. Click “Add Trim”
  4. Add any other vehicles you’d like to compare at the same time
  5. Select your trend period: either 6 or 12 months
  6. Click “Submit” in the upper left corner
  7. Get a PDF of the results by typing in your email address and click “Send as Mail”


Hertz Value Lease® Deal of the Week

Hertz Value Lease2013 Chevrolet Equinox LTZ*

  • Estimated Mileage: 14,074
  • Exterior Color: Silver
  • Hertz Value Lease Base Price: $26,439

*Vehicle was available at the time of posting to FridayFleet. The exact vehicle may not be available after this date. Photo of vehicle is for illustrative purposes only. Contact your Donlen Account Manager to learn more about Hertz Value Lease vehicles that may be right for your application.


Driver’s Corner

Tire blowouts happen more often in summer due to several factors, including heat and extra wear and tear due to higher travel during the warmer months. There are other factors that can cause blowouts, including improper tire inflation, overloading the vehicle, and of course, adverse road conditions such as potholes. Best advice: check your tire pressure often, be sure to never load your vehicle past the manufacturer recommendation levels, and beware of road hazards. For more detail on these, check out >


And finally…

And finally, how does your morning start? With coffee, you say? But never time to make it? Well, your troubles are over. Hanpresso is an espresso machine – for your car. Place it in your cup holder, plug it into the cigarette lighter, add water, a coffee “pod” and voila! Espresso on the go. I think I’ll keep making my java the old-fashioned way for now. We’ll let you judge for yourself (Check it out here >) Big question is: Think you’ll ever get around to making coffee in your car?

Have a nice weekend. Safe travels.

Have questions or comments? We want to hear from you.

Originally appeared in FridayFleet on August 23, 2013


About Donlen
Donlen is the industry’s leading provider of integrated financing and management solutions for corporate fleets. Utilizing a highly consultative and strategic approach, Donlen helps fleets reduce cost, improve utilization, and increase driver productivity. Donlen’s innovation has been honored with the Computerworld “2012 Honors Laureate for Economic Development” and the “2012 InformationWeek 500 List of Top Technology Innovators Across America.” Their workplace excellence has been recognized on the IAOP “The Global Outsourcing 100®” list for seven of the last eight years, and as one of the “101 Best and Brightest Places to Work For in Chicago” each year from 2007-2012. Founded in 1965 and headquartered in Northbrook, IL, Donlen is a wholly owned subsidiary of The Hertz Corporation (NYSE: HTZ). For more information about Donlen, visit www.donlen.com.