As fleets continue to deal with higher-than-expected inflation and supply chain disruption, the Element Fleet Management’s latest report emphasizes three key trends impacting fleets.
Major highlights from Q3 “Trends by Element” report include:
Global EV adoption: The U.S. has passed the 5% tipping point observed in other countries, indicating the start of mass EV adoption. The key factors bolstering the EV adoption include EV growth, battery innovations, and Original Equipment Manufacturer (OEM) investments in EV production. Another trend driving the electrification movement is high fuel price, resulting in some EVs now achieving cost parity with internal combustion engine (ICE) vehicles due to the high cost of gas at the pump.
Global supply chain: As anticipated, the microchip shortage is moving towards resolution. However, other supply chain constraints such as the difficulty moving units between plants, upfitters, and dealers, as well as the volatile commodity prices due to the war in Ukraine, will continue to affect vehicle availability and increase order-to-delivery (OTD) cycle time. Also, the increase in freight rates (a domestic issue) by 50% since 2019 due to a shift from services to goods consumption, and a shortage of truck drivers, have further aggravated the vehicle delivery process.
Maintenance: Inflation is likely the most significant factor impacting businesses everywhere, including fleet maintenance. In addition to inflation, the combination of labor shortages and parts delays has further increased maintenance costs. Vehicles are being held for a longer period, resulting in more frequent and costly repairs. In the current scenario, a 10% increase in vehicle age would likely result in a 15% to 20% increase in vehicle maintenance.
Trends by Element is a quarterly report that analyzes the latest fleet trends in the U.S., Canada, and Mexico, emphasizing the three to four most relevant topics.
For further analysis of the North American market and recommendations for fleets, view the Q3 Trends by Element report HERE.