At a Glance
- Monthly preventive maintenance (PM) expenses rose 4 percent per vehicle during calendar-year 2012.
- The average replacement tire cost per month rose 15 percent, and, on a cost-per-mile basis, rose 10 percent in 2012 compared to 2011.
- Vehicle quality, from all OEMs, has been steadily improving, which has had an ongoing positive impact on fleet maintenance expenses.
- The forecast is for overall passenger car maintenance expenses to rise slightly in 2013.
Even though the first-of-the-year market activity and values have taken a slightly different turn than normally expected, there are plenty of reasons to feel good about 2013.
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Passenger car maintenance costs, per car per month, rose 7 percent for commercial fleets during the 2012-calendar year compared to those in 2011, according to an annual fleet maintenance survey conducted by GE Capital Fleet Services for Automotive Fleet magazine.
“Although passenger car maintenance costs per car per month rose 7 percent from 2011, overall costs are down 1.5 percent from 2010,” said Chad Christensen, strategic consultant for GE Capital Fleet Services. “Many fleets continued to cycle vehicles early, taking advantage of still favorable resale market conditions. This has decreased the average vehicle age and helped reduce maintenance expenses.”
One interesting finding was that the average unscheduled repair cost per vehicle, per month, and per mile remained flat in 2012 as the younger fleet age helped offset rising parts and labor costs. The study showed a slight increase in labor rates in 2012 and Christensen anticipates a similar increase in 2013.
“This was reflected in the Consumer Price Index for motor vehicle maintenance repairs, which rose 1.1 percent in 2012,” Christensen said.
This year’s survey is the 18th annual fleet passenger car maintenance study conducted by GE Capital Fleet Services for Automotive Fleet. This year’s study is based on actual maintenance expenses incurred by 32,144 passenger cars for calendar-year 2012. The passenger car maintenance costs tracked by GE included unscheduled repair services, preventive maintenance, and replacement tires.
PM Expenses Increased 4%
Monthly preventive maintenance (PM) expenses rose 4 percent per vehicle in calendar-year 2012, according to GE Capital Fleet Services, while the average oil change service fee increased significantly — from $34 to $39.
“This can be attributed to the younger vehicle portfolio and more vehicles using the new, more expensive engine motor oils,” Christensen said. “The new motor oils improve fuel efficiency and enhance engine protection, but cost more per oil change compared to conventional oils.”
The GE maintenance study also revealed that fleets are seeing fewer oil changes performed as the frequency between oil changes increased again in 2012 from 3.6 months to 3.7 months and from 7,752 miles to 8,850 miles. “Fortunately, the overall preventive maintenance impact on a cost-per-mile basis was flat in 2012 compared to 2011 and 2010,” Christensen said.
The new motor oil requirements was one of the key maintenance challenges in 2012, which has added to the complexity of selecting the appropriate oil for a specific vehicle make, model, and engine. “The repair facility should recommend the appropriate motor oil for that vehicle based on information provided through online industry tools and owner’s manuals,” said Eric Strom, product manager for GE Capital Fleet Services.
A key factor contributing to relative stability in overall passenger car maintenance expenses is that during the 2012-CY, most OEMs did not make any significant changes to their scheduled maintenance programs that would have impacted maintenance expenses.
“Several OEMs have introduced commercial fleet programs for free oil changes and rotations or routine maintenance for the first two years. However, this is not expected to considerably impact fleet costs,” Strom said.
Tire Expenses are Up 15%
The annual GE maintenance survey revealed that the average replacement tire cost per month rose 15 percent, and on a cost-per-mile basis, rose 10 percent in 2012 compared to 2011. “Higher raw-material manufacturing costs drove up the average cost per passenger tire by 8 percent,” Christensen said.
This observation was substantiated by Goodyear. “Many raw materials have been at record-high cost levels, which have impacted manufacturing costs,” added Fred Cooper, national fleet manager for Goodyear Tire & Rubber Company.
While the industry forecast is for passenger tire costs to remain stable for 2013, Strom cautioned that unpredictable raw material costs will continue to be a critical factor in determining future costs.
Art Anderson, national fleet manager for Michelin, echoed this caution about attempting to predict future prices for replacement tires. “We must always remain alert to changing market conditions, as it is impossible to predict the factors that affect tire cost, such as raw materials. However, we do know the surge in raw material costs that occurred during 2011 have abated somewhat, allowing tire prices to be much more stable in 2012. We see this trend in raw material prices continuing into early 2013,” Anderson said.
In 2013, tire composition is expected to include a mix of synthetic and natural rubber. “Natural rubber and synthetic rubbers serve distinctly different functions in the design of a passenger tire,” said Anderson. “Michelin uses both types of rubber in tire design, based on the characteristics delivered by each type.”
Bill Waltzek, national account executive for Firestone, added: “Natural rubber cost indexed at its highest level in the first quarter of 2010. While recent rubber costs have receded in 2012, they remain at historically high levels. The current 2012 rubber-cost trend has relaxed some of the pressures that would drive increased tire pricing into 2013.”
In addition to raw material costs, another factor affecting the tire prices is the lower profile/larger rim diameter tires, which require more material to manufacture, according to Waltzek.
The industry-wide trend to larger diameter OEM tire sizes is a key factor that has driven up tire prices in the past decade. “The increase in OEM automobile wheel diameters has driven up a fleet’s costs for replacement tires,” said Strom.
According to Michelin’s Anderson, the 14- to 15-inch diameters represented 35 percent of the tires in 2002 and 10 years later, the 17- to 18-inch wheel diameters represent almost 60 percent. Anderson added, “Through our work with original equipment manufacturers (OEMs), we see the trend of higher wheel diameters staying in place for passenger cars in the foreseeable future. Car manufacturers continue to evolve technologies to improve the handling characteristics, driving experience, and fuel efficiency offered by their vehicles and tires have been a major lever in this process.”
Another factor driving up the price of replacement tires is the limited availability in the retail market.
“Fleets have also experienced challenges with new tire sizes introduced by a car manufacturer and limited same tire size replacement aftermarket availability,” said Strom.
Likewise, Anderson commented on this same challenge. “Tire size is one of the choices vehicle manufacturers make to create the handling and performance characteristics they want in a vehicle. Often, this leads them to equip vehicles with a totally new tire size that has no current presence in the market. Typically, in this case the OEM will have the only available tire for the replacement market. As a vehicle ages and the tire replacement market demand grows, other tire manufacturers will typically add these sizes to their own lines. It can take up to three years for an adequate replacement market to emerge. This type of situation will likely continue in the future, as vehicle manufacturers strive to offer technologically advanced vehicles that require new tire specifications to achieve their optimum performance.”
Also, the National Highway Traffic Safety Administration (NHTSA) published a final rule in 2010 specifying the test methods to be used for a new tire fuel-efficiency consumer information program (TFECIP). “As a result, tire manufacturers are innovating in the areas of reduced rolling resistance, lowered weight, and the use of more sustainable products and processes designed to increase fuel economy for vehicles to meet increasing demands,” Waltzek said.
One factor that could put downward pressure on future tire prices revolves around the Chinese Tire Tax Tariff, which was lifted last year. “Although we saw reduced tire store inventories for lower-priced, house brand tires in 2012, this could change in 2013 if the Chinese Tire Tax Tariff remains lifted,” Strom said.
Waltzek of Firestone agreed. “The lifting of the Chinese Tire Tax Tariff could potentially increase third-tier manufacturer tire products coming to the U.S.,” he said.
One silver lining is that new tire technology is offsetting increased tire costs by extending tread life and helping to reduce other operating costs, namely fuel consumption. “Tire manufacturing innovation is addressing fuel savings with low-rolling assistance traction in snow, rain, and other features,” Strom said.
According to Cooper, Goodyear is developing “air maintenance technology” that will help ensure that the optimum tire pressure is maintained and, as a result, could mean substantial savings at the fuel pump.
Cooper also added several additional recommendations on how tire selection can be used to optimize overall fuel economy. “For fleets interested in fuel efficiency as it relates to tires, they should first look at how tires are designed for specific purposes. Tire development has traditionally involved working within a ‘performance triangle’ that includes traction, tread wear, and rolling resistance. Improving a performance attribute within one area of the triangle can affect performance in another area,” he said. “For fleets who focus on ‘purchase price only’ when choosing tires, they need to remember the importance of total performance, whether that means fuel efficiency, expected tread mileage, and grip and traction in challenging weather conditions.”
Vehicle Quality Remains High
Vehicle quality, from all OEMs, has been steadily improving, which has had an ongoing positive impact on fleet maintenance expenses.
“Vehicle quality is expected to be further enhanced, which is good news for fleets by requiring fewer warranty-covered repairs,” Strom said. “While fleet managers are keenly watching vehicle pricing, EPA mileage ratings, and the resale market, vehicle safety test results are also being incorporated into many fleets’ annual vehicle selector decisions.”
One factor contributing to recent quality improvements is due to changes to the crash test star ratings conducted by NHTSA. “The side crash, front crash, and rollover tests measure the likelihood of injury or death. The tougher test standards have pushed several OEMs to make design changes,” said Strom. “The other recognized testing agency, the Insurance Institute for Highway Safety (IIHS), tests for damage to the vehicle structure and impact to the occupants.”
Maintenance Forecast for 2013
The forecast is for passenger car overall maintenance expenses to rise slightly in 2013, according to GE. “Stabilization of tire pricing will help offset increased labor costs and added cost of more expensive vehicle component technology,” Christensen said. “Oil change intervals will continue to be extended and the individual cost per oil change will increase, but the cost per mile should remain steady and drivers will have less downtime.”
Vehicle replacement cycle timing is also a paramount factor in forecasting passenger car maintenance costs. “Skipping one or two cycling periods can create havoc for a bell-curve of vehicle cost data. Replacement tires, brakes, and major component repairs can occur in addition to the added downtime and fleet driver lost productivity,” said Christensen.
Strom cited the trend to keep abreast of the new technologies and providing technician training as a major focus for many single-repair facilities and large national chains, such as Sears Auto Centers. According to Robert Santor, director of commercial sales for Sears, “Our investments include new technician training modules, new diagnostic equipment, and more ASE master certified technicians.”
Santor added, “In addition to our new alignment equipment that performs a free alignment check in about 90 seconds, we launched a new automatic text messaging service to drivers when their repairs have been completed. We also added electronic work order authorization, which has eliminated phone calls, improved data quality, and gets drivers back on the road faster.”
Other national providers have inquired about the use of text messaging with drivers and are working towards incorporating this feature during the service check-in.
“Enhancing the driver’s experience has also received attention with Chrysler as they are bringing new technology to the service advisor desk,” Strom said.
For instance, Mopar has designed a state-of-the-art tablet-based tool called wiADVISOR. “This revolutionary tool brings multiple processes and data streams together for a seamless, improved experience for the customer, as well as for the service advisor,” said Chad Schwenker, regional service & parts manager for Mopar Fleet. “It integrates and automates the work processes, data collection, and data handling, which dealerships have desperately needed. The wiADVISOR tool transforms the scheduling, write-up, and service sales experiences. Immediately after plugging into a customer’s vehicle dash port, it provides VIN-specific maintenance menus for use with customers along with vehicle system vitals that alert the service advisor if the vehicle has available open recalls, flash software updates, and/or if diagnostic trouble codes (DTCs) are detected.”
As of press time, the wiADVISOR rollout has started in many Chrysler-Jeep-Dodge and Ram dealerships and is scheduled for completion in 2013. According to Mopar, the customer experience is improved by making the customer-service advisor interactions:
- More efficient: Efficiencies of data management and collection enable quicker scheduling and write-up tasks, which creates more time for service advisors to care for the customer’s concerns — as well as review additional needed services.
- More transparent: Enabling the customer to see all relevant information on the tablet builds service advisor credibility and customer trust.
“Some dealerships are using tablets to take photos of worn or damaged components and sharing the photos with the customer so they can better understand the need for the repair,” Strom said. “The estimated repair costs are also displayed so the customer has the complete picture.”
Firestone’s Complete Auto Care is expanding its internal WiFi network in its stores to allow improved access to repair, parts, and other technical information in real-time. “We are also expanding our vehicle diagnostic programs and we have a hybrid education program and certifications in place for our store technicians,” Waltzek said.
Impact of New Technology
The introduction of new technology will continue to impact fleet maintenance in areas previously not imagined. “For example, new technology is reaching beyond the traditional drivetrain and fuel enhancements and is affecting the vehicle windshields,” Strom said.
Mark Klein, strategic account manager for Safelite Solutions, offered several examples of how new technology is changing windshields.
“The windshield is no longer just an independent part comprised of a vinyl interlayer sandwiched between two pieces of glass. As new cars become smarter and features evolve, the glass is also becoming a smarter, more integrated component of vehicles and their overall safety system,” Klein said.
Another relatively new technological feature that is affecting the windshield is the lane departure warning (LDW) system, which often incorporates a video or infrared sensor mounted behind the windshield glass. According to NHTSA, 68 percent of 2012 model-year vehicles crash-test rated by NHTSA contain an LDW system. The number of vehicles incorporating an LDW system is expected to reach more than 22 million units worldwide by 2016.
“Many other features impact auto glass, including head-up displays, antenna systems, moisture-sensing attachments, heated wiper park pads, and light sensors,” Klein added. “There are also a number of variables in the actual glass that impact maintenance costs, such as heat reduction, theft resistance, and acoustic interlayer. A given vehicle may have several of these features.”
So what does all of this new technology mean to the future of vehicle maintenance as related to windshields?
“In some cases, it means a more enjoyable experience for the driver. In others, it means improved safety,” Klein said. “It also means the complexity and importance of properly manufacturing and installing glass safely is on the rise, impacting costs as well.”