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Rising fleet maintenance costs: How to keep your bottom line in check

Thursday, December 2, 2021

By: Chad Christensen, Strategic Consulting

You’ve been tasked to reduce your fleet’s total cost of ownership, but OEM production delays caused by the microchip shortage have put you behind schedule. We’re here to help. Whether you manage your fleet on a local or global scale, there are a few things you can do to control rising fleet maintenance costs.

Chad Christensen

Fleet maintenance costs are on the rise

Year 2019 2020 2021
*PMs $57 $59 $64
Repairs $183 $194 $218
Total $240 $253 $282
Total % Increase   6% 11%

*PM: Preventative Maintenance | Source: Element’s proprietary maintenance data. Averages are based on per transaction costs for passenger vehicles.

Rising fleet maintenance costs: How to keep your bottom line in check

Top five reasons why fleet maintenance costs are rising

1. More expensive synthetic oils. Widespread OEM adoption of synthetic oils is becoming more common in fleet vehicles. This makes oil changes more costly per transaction, but the higher quality oil also means less frequent shop visits.

2. Rising labor rates. Higher labor costs (especially in urban markets) are also impacting the cost of preventative maintenance. The pandemic has exacerbated a shortage of qualified service technicians and there are growing reports of service delays as a result. To meet demand, the U.S. bureau of labor statistics estimates that the industry will need to add 46,000 (6%) more technicians by 2026.

3. Higher raw material costs. Supply chain issues are impacting many segments of the economy including the cost of raw materials. Notably, the cost of crude oil and rubber have increased as well as lubricants which tend to follow the crude oil market. 

4. Longer replacement cycles. New vehicle constraints due to OEM production delays are causing increased repair spend. Many clients are fixing older vehicles due to lack of new ones and pulling older vehicles back into service.

5. Replacement parts shortage. Vehicle replacement parts are costly and challenging to source. Engine and transmission components across various OEMs have been very difficult to obtain this year. This translates to increased downtime and rental costs as vehicles can be down for months waiting for parts. Fleet downtime costs can exceed $400 a day in lost productivity in addition to the actual repair costs .

Top three actions to control rising maintenance costs

1. Use preventative maintenance as a line of defense: Even though the price of PMs is increasing (3-5% annually), it is still your best line of defense against unexpected repairs. While longer-lasting synthetic oil leads to more time between oil changes, it’s important to stay on top of tire rotations and critical vehicle inspections (such as brakes) for increased safety and productivity. Leverage automated driver alerts and exception reporting to keep preventative maintenance top of mind and identify vehicles that are overdue for service.

2. Take advantage of available fleet discounts: Being part of a structured maintenance program can help you realize the benefits of a nationwide maintenance network with negotiated pricing. Element’s national account maintenance network realizes 8% - 15% cost savings. 

3. Treat your replacement strategy as a continuous routine.  A regular replacement rhythm is critical to ensuring your fleet’s health remains balanced. Rather than treating replacement as a one-time event, keep a disciplined approach to replacement and consider innovative solutions amidst the microchip shortage.

Find out more about Element’s fleet maintenance and repair services here or get in touch with us!

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