Illustration by Armie Bautista.

Illustration by Armie Bautista.

As resale prices in the used-vehicle market have returned to historical norms, most commercial fleets have reverted to traditional vehicle cycling parameters. Today, fewer companies are accelerating vehicle replacement schedules (shortcycling) to minimize depreciation by taking advantage of the stronger-than-normal resale prices. Consequently, the average age of commercial fleet vehicles has been trending higher with the concomitant maintenance incidents found with older, higher-mileage vehicles. As a result, overall fleet car maintenance costs increased for the 2014 calendar-year compared to those in the 2013-CY.

“Passenger car maintenance costs per unit per month increased 9 percent, while cost per mile increased 13 percent from 2013. These costs include unscheduled repairs, preventive maintenance (PM), tires, and replacement rentals. A reduction in early vehicle cycling appears to be responsible for most of the increase, which has caused costlier repairs at higher mileages and sometimes another set of tires,” said Chad Christensen, strategic consultant for GE Capital Fleet Services.

At A Glance

  • Passenger car maintenance costs per unit per month increased 9 percent, while cost per mile increased 13 percent from 2013.
  • Extended oil change intervals helped offset higher cost per incident as the miles between oil changes increased to 9,255 miles.
  • Replacement tire costs increased 15 percent per vehicle in 2014, while the average cost of a passenger tire increased only 2 percent to $136.
  • Expect to see labor and parts costs rise in 2015 as operations expenses increase partially driven by auto technician shortages. 

Another factor putting upward pressure on fleet maintenance expenses was the huge volume of recalled vehicles, which caused a double-digit percentage spike in rental replacement expenses in 2014 compared to the prior year.

“Monthly maintenance rental costs significantly increased 17 percent per vehicle in 2014 due to increased safety recalls. Replacement part delays were another key factor driving up rental costs,” added Christensen.

The lack of availability of replacement parts has been an ongoing issue that was further exacerbated by the number of vehicles recalled, which contributed to longer rental periods for replacement vehicles. “This lack of parts availability creates more downtime, increased rental costs, and driver inconvenience,” said Eric Strom, safety & maintenance product manager for GE Capital Fleet Services.

In addition, labor rates, on average, increased in the 2014 calendar-year compared to CY-2013, with further increases anticipated in 2015. “We expect to see labor and parts costs rise in 2015 as operational expenses increase, partially driven by auto technician shortages. The Consumer Price Index continues to show year-over-year cost increases in the motor vehicle maintenance and servicing category,” added Strom.

These were some of the key findings of AF’s 20th 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 for 29,648 passenger cars for calendar-year 2014. This three-part special report will examine the results of the passenger car maintenance study with separate articles focusing on extended service intervals and passenger car replacement tires.

In particular, there are five fleet car maintenance trends that were the primary influencers of maintenance costs in calendar-year 2014, said Strom. These trends are:

  1. Extended OEM required maintenance service intervals.
  2. Impact of OEM safety recalls.
  3. Growing utilization of telematics.
  4. Less focus on purchasing the lowest priced tires; however, passenger car tire expenses increased in the 2014 calendar-year compared to 2013, primarily due to vehicles being kept in service for longer periods. 
  5. Onboard driver notifications of maintenance services needing attention.

Impact of Recalls

The greatest fleet impact of vehicle recalls has been with rental expenses for replacement vehicles to keep the driver on the road while the recalled vehicle was being serviced at the dealership.

Compounding the impact of recalls are parts shortages, which lengthened turnaround time as vehicles sit idle waiting for replacement parts to arrive.

“Fleet drivers have experienced greater parts availability issues with backordered parts increasing rental and downtime costs. Some fleet drivers have not been able to drive their fleet vehicle because of safety concerns and the replacement vehicle may not match the cargo-carrying specs of the driver’s vehicle,” said Strom. “Safety recalls have also affected driver confidence in their vehicle and required more time scheduling repair appointments.”

Efforts have been implemented to provide more transparency and information to fleet drivers about recalled vehicles.

“Technology tools exist for fleet and branch managers to view specific make-model vehicle types that have ‘open’ safety recalls ( and offer an e-mail alert subscription. Fleet management companies, such as GE Capital Fleet Services, have also begun to incorporate safety recall data into their Web-based tools,” said Strom.

Despite the widespread recalls, overall vehicle quality in 2014 continues to remain high. The introduction of new technologies into new models is contributing to ongoing high-quality levels.

“OEM offerings, including remote access to vehicles, have reduced costs and driver downtime for lockouts and drivability issues related to diagnostic trouble codes. Telematics technology has also helped change driver behavior and reduced maintenance and fuel costs by monitoring and reporting extended idling, speeding, harsh acceleration, and hard braking,” said Christensen.

Replacement Glass Cost Trends

Vehicle glass replacement costs are increasing as more technology is being incorporated into windshields.

“Technology integration in glass parts has doubled since 2009, a trend that is expected to continue,” said Mark Klein, strategic account manager for Safelite Solutions. “Windshield size has increased 14 percent in the past five years, from approximately 12.8 square feet to approximately 14.6 square feet. This is due to panoramic vehicle designs and the desire to have added visibility as a safety feature,” said Klein.

According to Klein, unique glass parts have risen by 26 percent in the past five years.

Maintenance Forecast for 2015

The forecast for fleet car maintenance expenses going forward into 2015 is positive with the anticipation that costs will remain flat.

“We expect to see increased vehicle reliability because of new motor oils, engine and transmission component engineering, onboard diagnostics informing drivers of issues, and faster OEM response time to component failures,” said Strom.

This observation is seconded by Diane Scharafin, senior manager, strategic partnerships for Carfax.

“A large component of reducing fleet maintenance costs includes having extensive insight into maintenance performed. Having a more complete picture of a vehicle’s unique service history can help ensure future preventive maintenance is performed in a timely manner and may reduce costly repairs caused by missed services,” said Scharafin. “As a result, fleet managers can potentially increase residual value and build confidence amongst prospective buyers when vehicles are remarketed.”

Also, new trends are emerging as to how the fleet industry will source replacement parts in the future.

“An industry trend of significance to fleet professionals is how professional technicians are looking for more product information on automotive replacement before making purchases. They are increasingly turning to publicly available websites, such as Amazon, RockAuto, Parts Geek, and others, to find the information. These findings come out of the Auto Care Association’s most recent study, E-tailing in the Automotive Aftermarket,” said Kathleen Schmatz, president & CEO for the Auto Care Association.

The study found that 85 percent of consumers research automotive replacement parts online, commonly searching for pricing, availability, and technical details. “The vast majority of these consumers (82 percent) are still making their purchases at physical locations after they find the product information online, but, increasingly, consumers are taking advantage of competitive prices and fast shipping times to complete the purchases online,” said Schmatz. “More surprisingly, and, of particular interest to fleets, is the study found that 65 percent of professional technicians are ‘highly likely’ to mimic this consumer behavior and look for product information outside of their traditional B2B network,” added Schmatz.

The study projects online replacement parts sales to grow 17 percent per year, double in five years, and then double again in another five years, making it the fastest-growing retail sector in the automotive aftermarket.

“By 2023, the Auto Care Association conservatively projects e-tailing to make up a 20-percent market share of all replacement parts purchased,” said Schmatz. “Also of interest to fleet professionals is a technology standard that improves the efficiency of the repair business. The standard is called iSHOP and was created by the Auto Care Association,” said Schmatz.

The iSHOP standard enables computer-based diagnostic and repair equipment and information servers to share data about the customer, vehicle, work order, and service and repair history, as well as parts and labor information, seamlessly throughout the service environment.