Automotive Fleet

NOV 2013

Magazine for the car and truck fleet and leasing industry

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OPERATING COSTS 2013 OPERATING COSTS - MINIVANS TOTAL UNITS: 64,810 <24,000 MILES CENTS DOLLARS PER PER MILE MONTH 0.171 $343.50 24,001-48,000 MILES CENTS DOLLARS PER PER MILE MONTH 0.182 $358.04 48,001-80,000 MILES CENTS DOLLARS PER PER MILE MONTH 0.166 $366.84 80,001-100,000 MILES CENTS DOLLARS PER PER MILE MONTH 0.175 $384.69 economist and vice president of strategic modeling and analytics GASOLINE research team at LeasePlan USA. 0.005 $7.59 0.005 $8.93 0.009 $9.60 0.004 $8.95 Despite moderate prices, most OIL 0.006 $9.09 0.011 $18.40 0.017 $25.95 0.014 $22.06 feet managers will continue to ag- TIRES MAINTENANCE/REPAIR 0.011 $19.33 0.027 $42.28 0.033 $75.38 0.039 $78.06 gressively implement fuel-manWARRANTY RECOVERY (0.0002) ($0.72) (0.0018) ($2.72) (0.0007) ($1.84) (0.0003) ($0.31) agement initiatives. 0.193 $378.79 0.224 $424.93 0.225 $475.93 0.232 $493.45 "Fuel will continue to be a num- TOTAL OPERATING COSTS ber 1 cost focus. Tis should be true, even though fuel prices are dropping vehicle ordering process," keep tire pricing at, or below, current levsaid David Jankiewicz, diels. Overall, tire prices should be stable in this fall," said Bauer of Wheels Inc. rector, maintenance and 2014," said Ciccarelli of Donlen. Replacement Tire Cost Trends repair at LeasePlan USA. Another factor helping Afer many years of Tis observation was also curb tire cost pressures has ongoing price increases, made by Emkay. "Newer been more stable commodtire costs were fnally staunique limited supply ity prices. FONTANA tire sizes have increased "Tire costs have remained ble in 2013. "In 2013, tire pricing overall tire cost for certain make/models," fat due to the stabilizing was fat or even a bit lowsaid Gino Fontana, assistant vice president of the cost of carbon black BLEZIEN er than 2012 depending on of North American maintenance operations and rubber. In some inthe size," said Paul Cicca- CICCARELLI for Emkay. stances, tire prices have shown a decrease relli, VP, feet management within certain sizes," said Tony Blezien, vice However, longer tread life mitigates the services for Donlen. increased purchase price by helping lowpresident of operations for LeasePlan USA. Tis was echoed by Bauer of Wheels. er the cents-per-mile (CPM) cost of tires. Another positive trend is that newer tires "Tire costs were fat in 2013 afer having "In regards to tires and maintenance/ tend to have lower costs. increased previously," he said. repair for 2013, we've seen more of a trend "For feet units in the 1 to 24,000 mileage with clients paying attention to the cents per band, tire costs have decreased. We attriHowever, there still continues to be upmile of the tire, rather than the initial cost bute this to newer tire technology typically ward pressure on tire prices. "Tire costs were fairly stable in 2012, but installed on units recently placed in service. of the tire, ofen choosing to go with highthey have begun to increase again in 2013. Tis technology can help extend tread life on er-priced tires to achieve better overall return on investment. Our expectation is the these units, delaying the frst set of replaceWhile the 2013 increases have not been as same for 2014," said Sandler of PHH Arval. ment tires. Other benefts to new tire technolsignifcant as they were in 2011, they have had the largest cost impact on feet operAnother factor that has helped mitigate ogy include operating cost reductions, nameation expenses this past year," said Piscosome tire costs are the retail price wars that ly fuel consumption," said Piscopo of ARI. po of ARI. have occurred in many markets. In the fnal analysis, the cost of oil will One factor that has helped mitigate over"Pricing wars between the tire companies dictate the cost of tires. all tire costs was the widespread shortcycling have helped level tire prices and bring them "If oil prices are stable, tire prices will be of vehicles that has occurred in recent years. down slightly. Te fip side is the increased stable," said Bauer of Wheels Inc. "Many feets that accelerated their vehicle tire sizes that came out in the 2012/2013 replacements in late 2012 and early 2013 are model-years will be coming up for tire reForecast of Tire Costs in 2014 enjoying lower tire costs because of fewer placements this year," said Fontana of Emkay. As in past years, commodity prices will replacement tires needed," said Christensen Tis was reinforced by Christensen of dictate future tire prices. of GE Capital Fleet Services. GE Capital Fleet Services. "We expect more "We need to be watchful of global changstable replacement tire pricing for the same es to raw material costs as this is a key price However, the biggest factor infuencing tire cost has been the increased diameters model tires, but the overall costs may be oflever for replacement tires," said Christensen of OEM-specifed tires. set by larger wheel sizes and the introducof GE Capital Fleet Services. "Automotive manufacturers continue Critical commodities are the price of oil tion of newer, higher-priced tire models." to use larger tire sizes to increase mpg and and rubber. Tere are eforts with"If rubber and carbon black prices remain performance. Fleet managers are carefully in the feet industry to try evaluating whether the increased cost of the to stabilize costs at the nastable, then tire costs should remain fat in larger tire is ofset by the improvement in tional account level. 2014, with the exception of new tire sizes," mpg. Fleet managers rely on the feet man"Te major tire mansaid Blezien of LeasePlan USA. agement company for information regardufacturers are working Model changeover and newer vehicles ing replacement size and price during the closely with the FMCs to spec'ed with diferent size tires will put upCHRISTENSEN 24 AUTOMOTIVE FLEET I NOVEMBER 2013

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