Hard & Soft Cost Impacts of Extended Vehicle Cycling
Lengthening vehicle replacement cycles significantly affects such bottom-line
important issues as fleet maintenance budgets, fuel economy, resale values, safety and ergonomics issues, company image, and driver morale.
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Part two in a two-part series on vehicle replacement examines the impact of extended cycling on fleet maintenance, fuel economy, safety/ergonomics, resale values, company image, and driver morale. Also included are the effects of extended cycling on vocational fleets.
Impact on Maintenance Budget
There are few benefits to the maintenance budget by extending replacement cycles unless an organization makes moderate adjustments to maintenance policy and manages the program very tightly. Small shifts in replacement policy may be acceptable; preventive maintenance expenditures may not increase, and the probability of catastrophic failure is not significantly increased. However, it is critical to establish and adhere to a policy that avoids additional sets of tires and brakes.
In most passenger vehicles, brakes generally are replaced every 30,000-45,000 miles, depending on the manufacturer and driving habits. Tires are typically replaced every 45,000-60,000 miles. Light-duty trucks, SUVs, and commercial vans follow similar schedules, but may follow a significantly shorter cycle dependent upon payload, application, driving conditions, and driving habits.
Increased preventive maintenance expense for items such as timing belts, spark plugs, etc., ensues if cycles are not carefully planned and executed. Unscheduled first-time maintenance repairs such as alternators, starters, suspension, and air conditioning become more probable and lead to thousands of dollars in unforeseen maintenance expense if vehicle replacement cycles are extended beyond manufacturer warranty periods. With increased mileage, the frequency and probability of catastrophic failures, i.e., repairs in excess of $2,000, sharply increase.
Prior to 2008, the number of maintenance transactions, and dollars associated with those repairs, was flat or in a decline. Since 2008, i.e., the period in which fleets began to extend replacement cycles due to the downturned economy, industry maintenance transactions and dollars spent have increased by 20-30 percent on average. As fleets continue the extended replacement cycle, these numbers are expected to grow exponentially. In fact, the trend suggests that maintenance transactions and associated dollars will grow to 28-38 percent on average in 2010.
Thus, if cycling parameters are extended to slightly below the next tire/brake/preventive maintenance interval, increased maintenance expense may be minimized and overall cost of ownership may be reduced. When fleets extend replacement cycles, consideration should be given to the impact on residual resale values; the potential costs and impacts of vehicle downtime and loss of productivity; the increased probability of safety-related issues; the impact deteriorated vehicles have on company image and driver morale; and the degradation of fuel economy. It is also significant to recognize if replacement order delivery is slow, the potential savings previously gained on paper may be mitigated by unforeseen circumstances and may not be recovered in the resale of the vehicles.