Lease Vs. Purchase Analysis of Alternative Fuel Vehicles in the United States Marine Corps

Abstract

Having endured an economic downturn and impending budget cuts, should the United States Marine Corps (USMC) continue to lease the majority of its Alternative-fuel Vehicles (AFVs) from the General Services Administration (GSA) or should it consider purchasing AFVs as a viable option? This thesis will examine what, if any, benefits there are for the USMC to either purchase or lease AFVs. More specifically, it will attempt to determine what the USMC's optimal acquisition decision should be (lease or purchase), given potential changes in purchasing patterns over time. This analysis will afford decision-makers the ability to make strategic financial decisions based on anticipated changes in the size of the USMC's Garrison Mobile Equipment fleet, as well as anticipated changes in market conditions regarding vehicle purchase prices, incremental costs, and salvage values. To answer these questions, this thesis will analyze historical data (2004 to 2009) for the largest populations of AFVs in the light-duty category and then apply a model that will compare the two alternatives based on their relative net present values. An aggregated view of several different light-duty AFV categories will then identify whether leasing or purchasing would be the most preferred.