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Short-Term Cost-Cutting Strategies Backfire in the Long-Run

The new reality of a tighter corporate operating environment has forced fleet managers to pursue two different types of cost-cutting goals - cost deferral and cost elimination. However, many cost-cutting decisions for fleet are made for the short-term, with very little consideration for total cost of ownership. Sometimes senior management is more interested in the fiscal, rather than economic, consequences of their decisions.

February 18, 2010

Forecast of Fleet Operating Costs for 2010 Calendar-Year

Fuel costs, the largest fleet operating expense, declined dramatically in the 2009 calendar-year due to a sharp decline in worldwide fuel consumption. Also, many fleets downsized, due to widespread corporate layoffs, which lowered overall fuel spend. However, maintenance and repair costs increased in 2009, primarily due to vehicles kept in service for longer periods as a result of corporations slashing capital expenditures. Open the blog for a forecast of 2010 operating cost trends.

October 19, 2009

Medium-Duty Operating Costs Increase in 2008-CY

Key factors that influenced medium-duty truck operating costs in 2008 were the price of diesel, increased repair costs related to new truck technologies, higher labor rates, and decreased utilization. However, fuel was the primary driver behind higher operating costs in the 2008 calendar-year.

April 13, 2009

Fleet Car Maintenance Costs Increase 5% in 2008-CY

Overall fleet car maintenance costs rose 5 percent for the 2008-calendar year compared to 2007, primarily due to increased prices for replacement tires and higher labor rates. Partially mitigating these increases were flat PM expenses and increased vehicle quality, resulting in fewer warranty claims and vehicle recalls. These findings are based on a survey of actual maintenance expenses of 70,374 passenger cars conducted by GE Capital Solutions Fleet Services.

February 8, 2009

Predictions for Fleet in 2009

When looking ahead to the next 12 months, I foresee reduced operating costs for fleets offset by increased depreciation expense caused by anemic resale values and decreased incentive monies. Here’s why I believe this will be the case, along with other predictions for 2009.

January 6, 2009

Fleet Operating Costs Increase Again in 2008

Although gas prices started to decline in August, the year-to-date cost of fuel in 2008 has increased 30 percent compared to last year. The price for replacement tires rose 5-10 percent in 2008 due to higher oil prices and the shift by manufacturers to larger diameter tires. Also, fleet maintenance and repair costs increased across the board in 2008. The cost for non-warranty maintenance services was up 5 percent for fleets.

October 21, 2008

Fleet Safety Must be Your No. 1 Job Priority

In two decades of chronicling the history of fleet management, I have seen interest in fleet safety ebb and flow. In an annual survey I conduct of fleet managers, they rated fleet safety as their No. 2 concern, right behind the cost of fuel. Why the renewed interest in fleet safety? More and more fleet managers are reporting an uptick in preventable accidents. In addition, fleet managers are feeling pressure from other corporate departments to increase fleet driver safety.

August 18, 2008

Trends in Commercial Fleet Management 2008-2010

The high cost of fuel is the No. 1 challenge facing fleets. Annual fuel cost increased, on average, $600 per vehicle from 2005-2007. In addition, other fuel-related commodities, such as replacement tires, have increased in cost.

May 1, 2008

Medium-Duty Truck Operating Costs Increase (Again)

The key reason for the increase was the cost of fuel, in particular, diesel fuel. This has also led to price increases for other oil-based products such as tires, which increased 4-7 percent in the past year. Other PM costs remained flat.

April 7, 2008