By Mike Antich
Overall vehicle quality continues to improve across the board with each succeeding model-year. This claim is substantiated by fewer warranty claims compared to past years. In addition, OEM extended powertrain warranty coverage has helped to reduce expensive component costs for higher-mileage vehicles. Also, the widespread use of sensitive diagnostic equipment is increasing the instances of first-time repair resolution, minimizes labor time and the use of fewer unnecessary parts to repair a vehicle.
Although quality is at an historic high, vehicles are also becoming more complex, especially with the proliferation of new onboard technologies, such as in-dash GPS, a multitude of sensors, safety equipment, and increasingly sophisticated infotainment systems. These systems tend to be very reliable, but when things do go wrong, they tend to cause more complex maintenance problems, which drive up labor costs. One area where new technology may impact maintenance costs is with windshield repair. Some models are now equipped with rain sensors and auto high-beam control, which increases windshield replacement costs.
Upward Trend in Parts Prices & Labor Rates
The price of parts is expected to rise as raw materials and manufacturing costs increase. In addition, there continues to be shortages for certain parts. The periodic shortage of replacement parts is impacting maintenance expenses by extending vehicle downtime and increasing rental costs. One reason for the parts shortage is that many repair shops can no longer afford to keep a large inventory of parts at their locations, as was commonly done in the past. Instead, they order required parts daily, as needed, dictated by repairs. This has increased repair downtime by hours and in many cases days waiting for parts deliveries. In addition, hourly labor rates have increased for each of the past three years. Many repair shops have raised hourly labor rates to cover internal expenses and to make their regional rates align with market conditions.
Replacement Tire Prices to Increase
Another maintenance category experiencing upward pricing pressure is replacement tires. During 2011, tire prices increased at a higher rate than inflation, particularly for commercial trucks, and this is expected to continue in 2012. One reason for the price hikes for replacement tires is due to increases in the cost of raw materials, especially the higher cost of oil, a primary ingredient used in manufacturing tires. In addition, the world's rubber supply is more constrained due to increased global demand, which is putting upward pressure on commodity prices. Another noteworthy trend is the decreased availability of less expensive off-brand or house-brand tires. Also, automotive OEMs continue to increase the size of tires on new-model vehicles, which has resulted in higher replacement tire costs. Larger diameter tires can add $100 to $200 in additional expense per set of tires.
Ongoing Trend to Extended Oil Drain Intervals
One OEM maintenance trend is to extend recommended oil drain intervals, which is decreasing preventive maintenance expenses. In addition, more fleets with passenger cars and light-duty trucks are using onboard oil change monitoring systems to extended oil drain intervals. According to GE Capital Fleet Services, between 2010 and 2011, the average months between an oil change shifted from 3.2 months to 3.5 months and the average miles interval went from 6,312 miles to 7,026 miles.
In addition, automakers are switching to new engine motor oils. New GM vehicles now use Dexos oil. Other OEMs, such as Ford and Chrysler, are switching to the GF-5 oil standard. These new oils have been touted by the oil industry as having superior protection properties, which will allow increased mileage intervals between recommended oil changes. The new oils help engines run more efficiently and better protect them from wear, which allows OEMs to increase the mileage interval between oil changes.
Proliferation of Non-Traditional Powertrains
Future fleet maintenance costs are expected to rise with the anticipated increase of hybrid vehicles in fleet service as OEMs struggle to meet CAFE requirements. Many national account providers are implementing training initiatives to educate their technicians on how to service hybrid powertrain components. Some repair shops bill a higher hourly rate for hybrid repairs to recoup the required special training and equipment.
Majority of Maintenance Costs are PM-Related
Approximately two-thirds of all fleet maintenance expenses are related to preventive maintenance (PM) and the replacement of wear items, such as belts and tires. Although vehicle quality is very high, there continues to be incidents of premature component failures. But, when these do happen, the OEMs, for the most part, are catching these problems early and quickly issuing service bulletins and recall campaigns. However, most component failures continue to be the consequence of not performing scheduled maintenance, which reinforces the need for fleet managers to be relentless in monitoring driver PM compliance.
Let me know what you think.
mike.antich@bobit.com
