Synthetic Oils, Higher Labor Rates Increase Preventive Maintenance Costs

Editors Note: This article is part of a three-part package that addresses fleet maintenance costs. Read related articles covering maintenance costs and tire costs.

Preventive maintenance (PM) expenses in calendar-year 2018 increased to $12.04 cost per unit per month higher compared to $10.96 in CY-2017, a 9% increase primarily due to higher labor costs and the increased use of more expensive synthetic motor oils. The proliferation of smaller displacement engines in fleet applications has put pressure on OEMs and fleet managers to use synthetic oil, which provides 50% better engine protection to maximize engine life.

“Cost of oil changes continues to increase due to more usage of synthetic or synthetic blend oil,” said Mark Lange, CAFM, managed maintenance analyst for Element Fleet Management.  “Oil change costs continue to rise primarily driven by the adoption of synthetic/synthetic blend oils.”

Most manufacturers have extended oil change intervals and switched to more expensive synthetic oils, which is increasing the cost of each preventive maintenance service.

Another reason for higher PM costs has been an increase in labor rates. Hourly wages in the U.S. in 2018 were higher, on average, than those in 2017. In addition, the economy is growing stronger in certain regions and there is pressure on employers in labor constrained industries to offer higher salaries to be competitive in a tight labor market. In particular, the ongoing shortage of automotive technicians exerting upward pressure on labor rates, especially in high-cost-of-living metro areas.

One additional factor is that oil pan capacity has increased for some models necessitating the use of more quarts of oil than what was used in the past.

An additional variable adding to the cost of draining oil is new, more expensive oil filters. Cartridge oil filters have become more common and may cost more than the typical spin-on filter.

These were some of the key findings of AF’s 24th annual fleet passenger car maintenance survey conducted exclusively by Element Fleet Management. The study is based on an analysis of actual maintenance expenses incurred during calendar-year 2018 by more than 100,000 passenger vehicles, which include cars, SUVs, crossovers, and minivans.

Extended Oil-Drain Intervals

Improvements in engine design and onboard vehicle technology, along with improved oil quality, are allowing fleets to extend oil-drain intervals. In addition, there continues to be enhancements to OEM oil-life monitoring systems, which enable extending oil-drain intervals and reduce driver downtime. The onboard oil monitoring system of some models, which reflects actual driving patterns, often allows for even longer oil drain intervals.

“Fleet managers are more accepting of OEM oil monitoring/notification for oil change due,” said Lange. “We continue to see adoption of OEM oil life monitoring and oil change due notification which has extended client’s drain intervals.”

However, more stringent motor oil requirements by OEMs have put upward pressure on PM costs. With motor oil, the higher cost of the synthetic oil often offsets the savings of extended service intervals.

On average, oil drain intervals are lengthening and will accelerate as older fleet models are retired from fleet service.

Forecast of Preventive Maintenance Costs

The ongoing trend of increased PM costs per service will continue as older fleet vehicles requiring conventional oil are taken out of service and replaced with models that require synthetics.

“We should continue to see an increase in the average cost of a PM in the coming years about 2% annually,” said Lange. “Oil will continue to evolve and be improved/enhanced with additives to improve lubricity/fuel economy increasing the cost.”

The higher quality synthetic motor oil allows the intervals between these services to lengthen, which is offsetting some of the additional per-transaction costs. In addition, greater time and mileage between oil changes has translated into reduced driver downtime and shop visits.

Another variable to future pricing is the trend in crude oil prices, from which conventional motor oil and synthetics are refined.

As vehicles are kept in service for longer periods, operating at higher miles, it will impact PMs. Due to longer vehicle lifecycles, there will be a need for more enhanced PM schedules. According to Lange, more PM maintenance will most likely be needed to extend useful vehicle life as fleets are keeping vehicles in service longer at higher miles.

Danger of Longer Drain Intervals

One common misconception by drivers is that PM only involves oil changes. Oil changes aren’t the only PM. Nowadays, tire rotations are often more frequent than oil changes. It is important to have vehicles PM’ed on a schedule. What’s important to remember, especially in the commercial and vocational markets, is that tires may need to be rotated more often than the oil is changed.

Extended oil drain intervals have the potential to lead to increased maintenance expenses or major repairs if the driver is not “in tune” with their vehicle. Brakes wearing metal to metal, low oil levels, engine failure, and incorrect tire pressure causing premature tire wear caused by drivers not addressing TPMS light.