Overall, passenger car maintenance costs per unit, per month decreased 4 percent with the average cost per mile decreasing 2 percent from 2012. These costs include unscheduled repair services, preventive maintenance (PM), tires, and replacement rentals. Early vehicle cycling, driven by favorable resale market conditions, helped hold maintenance expenses in line.
These were some of the key findings of AF's 19th annual fleet passenger car maintenance study conducted by GE Capital Fleet Services, a fleet management company headquartered in Eden Prairie, Minn. The study is based on actual maintenance expenses incurred by 36,563 passenger cars for calendar-year 2013.
"Monthly preventive maintenance costs decreased 14 percent per vehicle in 2013, while the average oil change service increased from $39 to $42. These changes were due to increased use of new engine motor oils, which improve fuel efficiency and engine protection, plus provide extended oil life; however, they cost more per oil change than conventional oils," said Chad Christensen, strategic consulting manager for GE Capital Fleet Services. "Oil service intervals drove this overall per-vehicle cost decrease, as intervals increased from 3.6 months to 4.3 months and from 7,515 miles to 8,817 miles. As a result, the average cost per mile, per vehicle decreased as the extended service intervals paid benefits for a growing number of fleets with vehicles requiring the new motor oils."
Extended Oil Drain Intervals
Contributing to this decrease has been fleet adherence to OEMs' scheduled preventive maintenance programs. This, along with improved vehicle quality, positively impacted maintenance expenses in 2013 and promises to stabilize maintenance expenses in future years.
"We have also seen additional OEMs offering free maintenance plans for a specified time/mileage period that encourages customers to go to their dealerships for the services," said Christensen.
While there have been no significant changes in the OEMs' recommended scheduled maintenance service intervals, improvements in engine design and onboard vehicle technology, along with improved oil quality, are allowing fleets to extend oil drain intervals.
"We continue to see enhancements to OEM oil life monitoring systems, which will enable the continuation of extended oil drain intervals and reduce driver downtime. There have been many improvements in the past few years that allowed for variable oil change schedules," said Jeff Sloan, senior manager, parts and service for Chrysler Group.
According to Sloan, recent data indicates that most normal driving schedules result in 10,000-plus-mile oil change intervals.
"Improvements in oil quality, along with improved engine piston ring sealing packages and PCV systems, have had a large impact on allowing longer variable oil change intervals," said Sloan. "These improvements, combined with inputs monitored by the vehicle (such as oil, coolant, ambient temperature, throttle position, idle time, trailer towing, etc.), all allow for oil change intervals to be extended to 10,000 miles on most gasoline engine vehicles and 15,000-plus miles on certain diesel Chrysler Group products; however, oil change intervals are ultimately determined by how the vehicle is used and operated by the driver."
Another factor influencing oil drain schedules is the increased use of synthetic oil, which, although more expensive, has extended oil drain intervals.
Replacement Tire Costs Increase
Commodity prices dictate the future price of replacement tires. Critical commodities are the price of oil and rubber. The cost of replacement tires is a key contributor to overall fleet operating expenses. During the survey period, the average cost of a new replacement tire increased significantly — 10 percent compared to 2012 and 22 percent from 2011.
"However, because of vehicle cycling, fewer tires were purchased and the average overall tire cost per vehicle per month decreased 3 percent," said Eric Strom, safety and maintenance product manager for GE Capital Fleet Services.
The forecast for replacement tire expenses in the 2013 calendar-year is for ongoing increases. "We expect to see a moderate increase in tire prices for same-model tires, but newer tire models may carry a significantly higher initial price point," said Strom. "Value-priced tires will be less available from the major tire companies, although the independent tire stores may have greater access to a variety of value-priced tires."
An ongoing trend impacting the cost of replacement tires is the migration to lower-profile/larger-rim diameter tires, which require more material to manufacture.
"Some fleets may experience sticker price shock when buying their first replacement tires because of the larger wheel diameters and lower profiles," said Strom.
Not only is tire size one of the variables used by OEMs to create specific handling and performance characteristics, it is also being used to increase fuel economy by decreasing tire rolling resistance.
"Fuel economy improvements will continue to be the focus with low-profile tires equipped on new vehicles being an important lever," added Strom.
Model changeover and newer vehicles spec'ed with different tire sizes will put upward pressure on tire costs. Also, limited availability of replacement tires can result in increased downtime.
One way to mitigate rising tire costs is to be more judicious in the types of tires purchased. For instance, some fleets buy "more tire" than what is needed for the fleet application.
"We have also seen frequent requests for snow tires on lighter-weight autos and those with low-profile and 'summer tread' tires. All-wheel-drive vehicles do not guarantee that snow tires may not be needed. Fleet drivers and supervisors should also have tire tread depths checked before the winter season," said Strom.
However, tire design and manufacturing is becoming increasingly sophisticated, allowing for longer tread life and lower rolling resistance to help enhance a vehicle's overall fuel economy.
"Goodyear is constantly working on innovations to help meet customer needs as part of our market-basis product development. This includes Fuel Max Technology, which helps save fuel over the life of the tires, and Evolving Traction Grooves that help maintain confident traction in snow and rain as the tire wears," said Fred Cooper, national fleet manager for Goodyear.
According to Goodyear, its Fuel Max Technology uses state-of-the art science to develop compounds and constructions that help reduce energy loss as a tire rolls. Goodyear initially incorporated Fuel Max Technology into commercial tractor/trailer tires and then expanded it into tires for cars, vans, crossovers, SUVs, and light-duty pickup trucks.
Cooper added that the increase in higher diameter wheels and tires has slowed and seems to have leveled out.
"It is important to take a step back and look at the evolution of tire sizes and expanded applications. For example, there were only 111 recognized auto radial tire sizes in 1990," said Cooper. "That number grew significantly to 337 by 2012, according to the Tire & Rim Association. Of those, the majority of fitments 20 years ago were 13- to 15-inch wheel diameters, whereas in 2012 the popular sizes ranged from 15- to 20-inch diameters."
New tire technology is offsetting increased tire costs by extending tread life and helping to reduce other operating costs, namely fuel consumption.
"For fleets interested in gaining fuel efficiency by tire selection, no matter what type or brand of tire is used, drivers are urged to regularly check tread depth and condition, and especially tire inflation. Properly inflated tires will benefit the vehicle's overall performance, provide even-wearing tires for longer tread life, and help improve fuel efficiency," said Cooper.
When considering the purchase of new tires, fleets 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," said Cooper.
Just as in vehicle acquisition, price is only one component fleet managers should review when spec'ing replacement tires. For fleets that focus on "purchase-price only" when choosing tires, Cooper noted they need to remember the importance of total performance, which means considering fuel efficiency, expected tread mileage, as well as with grip and traction in inclement weather conditions.
Unpredictable raw material costs will continue to be a critical factor in determining future prices for replacement tires. Some tire OEMs are working on developing alternate material sources. For instance, Michelin currently uses a mix of natural rubber and a synthetic compound called butadiene to make tires. Butadiene is sourced from a petroleum byproduct, with approximately 60 percent used in the production of tires worldwide.
"Michelin announced plans to research and develop alternatives to the synthetic, oil-based materials and bring to market a process for producing bio-sourced butadiene, or bio-butadiene," said Kevin Stephens, North American sales manager for Michelin. "In response to finding sustainable alternative sourcing channels for elastomers, the process will make it possible to produce innovative, more environmentally friendly tires."
Key Maintenance Challenges
A growing fleet maintenance issue revolves around the "soft costs" of driver and vehicle downtime.
"Downtime issues have increased and rental costs have risen more than 20 percent on a per-month, per-vehicle basis when compared to 2012. Rental costs have increased, in some cases, as a result of delays due to replacement parts on backorder, repair provider workload capacity, repair technician shortage, and oil patch area challenges with repair provider capacity," said Christensen of GE Capital Fleet Services.
Another ongoing issue is the shortage of components and price increases for replacement parts.
"When it comes to replacement parts, technologies available to dealerships and their customers are enhancing the efficiencies of vehicle maintenance and repair work, as well as customer satisfaction," added Christensen.
"A comprehensive parts ordering solution from OEConnection, for example, gives fleet repair technicians 24/7 ordering capability from local dealerships. Free for fleet users, the RepairLink electronic parts catalog includes accurate parts illustrations, up-to-date pricing and current availability from dealerships, ensuring that repairers can quickly and easily find the parts they need," said George Hoose, product manager of mechanical solutions for OEConnection.
Other industry initiatives are in the works to help improve parts availability and order-to-delivery times. "In many ways, having the right part at the right place at the right time can be more important to a fleet's operating costs than the cost of the replacement part itself," Hoose said.
Maintenance Forecast for 2014
Maintenance costs have decreased across the board with the primary factor being increased overall vehicle quality.
The top maintenance challenges that will be facing commercial fleet managers in the 2014 calendar-year are:
- Downtime issues due to parts delays, which will result in higher rental costs.
- Higher replacement tire prices will continue to impact fleets as the larger wheel diameters are a key pricing lever. It is expected that there will be an uptick in individual oil change service pricing, although more vehicles will be using the new motor oils, so this should help hold overall preventive maintenance costs.
- Average vehicle age in miles and/or months will continue to be the key indicators of expected maintenance spend as shown by analysis and charts.
- Properly maintained vehicles can enhance resale returns and significantly reduce the reconditioning charges to make the vehicles ready for sale.
"Ideally, very little reconditioning is needed, but if it is, as a rule of thumb, every dollar we spend at the auction for cosmetic and mechanical reconditioning can pay back $3 in additional value," said Paul Seger, VP, asset remarketing for GE Capital Fleet Services.
Labor Rates Continue to Increase
Labor rates for repair shops in 2013 were higher compared to 2012, according to survey results.
"Repair provider labor rates have increased moderately and we expect this to continue in 2014 as many shops held rates for a number of years," said Christensen. "We have seen significant labor, parts, and tire cost increases in select areas, such as oil patch regions."
The ongoing technician shortage is also putting upward pressure on labor rates. Staffing shortages create a backlog of work in many facilities throughout the country. The technician shortage is especially acute in the oil patch and rural areas.
Impact of Onboard Technology
One factor putting upward pressure on maintenance costs has been increased vehicle complexity.
There has also been an ongoing proliferation of onboard vehicle technology, such as infotainment systems, in-dash GPS, sensors, and safety equipment. Although there have been concerns about the impact these technologies may have on future fleet maintenance expenses, to date, the impact has been minimal.
"We are not seeing an increase in safety component and infotainment repairs," agreed Strom.
An ongoing challenge will be making drivers more knowledgeable about these onboard vehicle systems. "The dashboard information has significantly increased drivers' awareness of the vehicle's operating conditions and potential issues. The challenge is that some drivers may not have taken the time to learn the information center content and capabilities," said Christensen of GE Capital Fleet Services.
Windshields are More Integrated
The windshield is a critical safety component of a vehicle, protecting passengers in the event of a rollover and aiding in proper air bag deployment.
"What has changed in recent years is that windshields are becoming more and more integrated with the rest of the vehicle, incorporating features designed to aid with safety, comfort, and style," said Mark Klein, strategic account manager for Safelite AutoGlass.
Some examples of windshield enhancements and connectivity to other features include:
- Windshield-embedded video sensors as part of the lane-departure alert system.
- Collision-avoidance systems with a camera and radar located on the windshield.
- Automatic rain-sensing windshield wipers and heated wiper park pads.
- Sensors to help moderate the vehicle's cruise control, defroster, and lights.
- Heads-up displays to project an "overlay" of important information on the windshield.
- Night vision with an infrared camera mounted on the windshield.
- Hydrophobic coating to cause rain to run off and improve better visibility.
With the trend to smaller vehicles, automakers have increased the amount of glass to help reduce cabin claustrophobia and improve design aesthetics.
"Windshields have become thinner to lighten vehicles and to compensate for the increased amount of glass. Thickness will vary based on the make and model of vehicle," said Liza Cobb, product development manager for Safelite Glass Corp., the company's glass manufacturing unit. Cobb said individual lites — a windshield is made up of two lites of glass with a vinyl interlayer — have decreased from 2.9 mm thick to 1.8 mm or less in some imported models.
Does this jeopardize safety? Cobb said it does not. "The safety really comes from the outer lite and the interlayer. While the outer layer has decreased some over time, it's the inner layer that has seen the most significant change," said Cobb.
Impact of Vehicle Recalls
Vehicle quality, from all OEMs, has been steadily improving, which has helped stabilize fleet maintenance expenses.
However, in 2013 there were multiple recalls on several top-selling fleet vehicles. "Fleets have to deal with OEM recalls and the associated administrative processes ensuring notifications are acted upon and recalls don't remain in an 'open' status," Strom said.
The data analytics company Teradata has plans to help minimize the number of vehicles recalled by OEMs. Teradata has a business segment focused on automotive clients.
"Minimizing the impact of a recall or a warranty effort hinges on the ability of the auto manufacturer to accurately trace parts and components through the value chain, including production, suppliers, dealers, and drivers," said Monica Mullen, director of automotive and industrial manufacturing industry marketing at Teradata.
According to Teradata, a 10-percent reduction in defect to correction time can generate millions of dollars in savings.
"Consider the value of recalling fewer vehicles — instead of 2 million or 200,000 vehicles, cutting that down to 2,000 or even to just 20. This can help alleviate some of the fleet manager anxiety and fleet driver questions," said Mullen
Teradata reported automakers are harnessing the value from more than 1 trillion pieces of traceability data each year to dramatically reduce detection-to-correction time and accelerate the recall process, while also limiting recalls to only those parts and vehicles truly affected."
Teradata makes that data accessible and visible to decision makers for part and process traceability, collaborative information sharing, and advanced and predictive analytics. These capabilities are then used to determine the root cause of safety issues or to isolate production anomalies that lead to defects.
Despite last year's spike of recall "hiccups," overall vehicle quality continues to remain high.
"Vehicle quality is expected to remain very good even with the influx of new technologies including crash avoidance and other safety features," said Christensen.
According to data from the fleet maintenance survey, repair providers continue to enhance the customer experience with store amenities, promotions, e-mail service reminders, and diagnostic tools.
"Recently, Firestone Complete Auto Care stores simultaneously deployed wireless networks at all stores to provide WiFi for customers and for internal purposes," said Bill Waltzek, national account executive for Firestone. "This allows for more real-time equipment software upgrades and the ability to stay current in servicing newer model vehicles. Having a robust network also allows for better information access to our information providers, such as Identifix and Mitchell, which are invaluable in helping with diagnostics and troubleshooting."