The long-term trend in vehicle cycling for commercial fleets has been a gradual increase in vehicle service lives. An increasing number of companies cut costs by extending vehicle replacement cycles so cash flow can be diverted to other expenditures. When extending vehicle cycles, the most significant (and uncertain) expense is the impact on the maintenance budget. Another argument against extended replacement cycling, albeit less vocalized, is the impact on corporate sustainability.
OEM Parts Prices Increase as Parts Availability Decreases
Slow retail sales have prompted not only closure of assembly plants, but also component factories, which is delaying parts deliveries. OEMs are also hiking parts prices, with some experiencing double-digit percentage increases. The dramatic slowdown of automotive sales has also created a "financial crunch" for many parts manufacturers, with many second-tier suppliers going out of business. This portends a difficult environment for fleets to manage accident repair costs.