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Recent Price Trend - Fleet Management Services
The price of fleet management services has increased at an estimated annualized rate of 1.6% during the three years to 2017, primarily on the back of rising demand. Local and state government investment has been growing due to falling unemployment and rising wages, which has expanded the tax base. This trend has raised demand for fleet management services, as many local and state government agencies conduct various services using fleet vehicles and therefore use market services to manage their fleets. The resulting increase in demand has caused suppliers to raise the price of their services, thereby hampering buyer power.
The number of businesses has also been increasing during the past three years, which has been expanding the pool of potential buyers of fleet management services. Many new businesses need fleet vehicles to perform their daily operations, such as visiting clients and delivering goods. As the number of businesses has risen, demand for fleet management services to help buyers manage their fleets in a cost-effective manner has increased. Suppliers have responded by raising service prices. However, corporate profit has dipped slightly in the three years to 2017 because declines in oil prices have shrunk profit margins for oil companies and weighed down corporate profit levels overall. Lower corporate profit has restricted investments made by some companies in fleet management services, but due to the limited industries that are affected, lower corporate profit has not had a large impact on demand or price.
Price volatility for fleet management services has been low in the three years to 2017. Steady overall increases in demand and substantial competition have kept price shifts minimal. Low price volatility has allowed buyers to budget for and project future costs more accurately. In addition, buyers are able to make purchasing decisions more deliberately, as there is little risk in drastic price shifts that could greatly increase costs. Still, buyers should seek contracts to lock in prices as soon as possible, because the longer a buyer waits, the higher prices are likely to be.
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