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For the past decade, more OEMs are recommending the use of more expensive synthetic motor oils, which is increasing the cost of each PM service. But the higher quality motor oil also allows the intervals between these services to lengthen, which is offsetting some of the additional per-transaction costs.
Average repair cost per unit increased in 2019, primarily due to higher labor rates. Also, PM costs were up as more units require more expensive synthetic oil. Tire price per unit, on average, increased 3% in the past 12 months.
There are three key reasons why the transition to synthetic oils is occurring. They are the proliferation of smaller displacement turbocharged engines, escalating CAFE fuel economy requirements, and government regulations to lower tailpipe emissions.
On average, PM costs have increased due to higher labor rates, expansion of models requiring synthetic motor oil, and more expensive cartridge oil filters. One offset is that longer lasting synthetics have extended oil-drain intervals.
Average repair spend per unit increased 3-5% in calendar-year 2018, primarily due to higher labor rates and part prices. Also, PM costs were up due to the shift to more expensive synthetic oil and higher replacement tire prices.
Citing the higher cost of crude oil, many major manufacturers of finished lubricant products increased prices from 5% to 8% in CY-2018. Plus, each model-year, more OEMs require the use of more expensive synthetic motor oils.
Recently, I conducted a survey of several hundred fleet managers to identify emerging industry trends. One recurrent theme expressed by fleet managers was the concern that fleet costs are starting to experience upward pricing pressures. Here's what they told me.
Although repair incidents were flat, other fleet-related maintenance expenses were up in calendar-year 2017, primarily in labor rates and parts prices. PM costs were up around 3%, while replacement tire costs increased 5-10%.
Extended oil-drain intervals have helped to offset increases in the cost of motor oil because of the expanded use of synthetic oils and cartridge oil filters. Higher labor rates in 2017 exerted upward pressure on preventive maintenance costs.
Continued stability in crude oil prices, along with longer oil drain intervals, are helping to offset the higher cost of synthetic motor oils that are now required by more automotive OEMs.