Fleet maintenance isn’t something that most business owners get excited thinking about. But from a financial standpoint, it could be one of your most important areas of concern. Do you know how to keep these costs in check?
Major Fleet Maintenance Costs
Fleet maintenance costs can stem from any number of categories, including:
- Repairs. You can safely assume that your repair costs are going to increase every year. Some of these cost increases can be neutralized with strategic and preventive maintenance, but this is just part of the deal. Vehicles become more expensive to maintain the longer you have them. So you either have to upgrade (which should happen at predetermined intervals), or bite the proverbial bullet and pay for repairs.
- Depreciation. As your vehicles get older, they also depreciate. Some of these costs can be recouped with strategic tax planning, but some of the attrition is inevitable.
- Administration. Don’t forget about the administrative costs like insurance, licensing, training, etc. Depending on the size of your fleet, this can amount to thousands of dollars per month.
To be quite frank, these three categories of fleet maintenance costs pale in comparison to capital costs. That’s because anytime you spend money on your fleet, you’re technically spending money that could have been spent in another area of the business to produce a stronger return on investment. This is your biggest threat.
High capital costs are usually indicative of a small fleet. The more your business grows, the more your fleet grows. And the more your fleet grows, the more you can achieve economies of scale. This leads to lower costs across the board.
Tips for Reducing Fleet Maintenance Costs
According to a recent report from the American Transportation Research Institute (ATRI), the average marginal cost per mile for operating a fleet vehicle in 2020 decreased by more than 9 percent to $1.65.
However, that figure was likely heavily determined by the unique circumstances of the COVID-19 pandemic. It temporarily reversed an upward year-to-year trend. Marginal costs are still six percent higher than they were three years ago. And as anyone in the industry will tell you, they have nowhere to go but up.
Here are several tips for reducing your fleet maintenance costs:
Optimize Your Fleet Size
Did you know that the average cost of ownership for light-duty vehicles is somewhere between $5,000 to $8,000 per vehicle per year? And as you can imagine, these figures quickly add up. If you have extra vehicles that you really don’t need, you’re choking your bottom line.
Eliminating just ten vehicles from your fleet could save you as much as $6,700 per month. Not only that, but it eliminates all of the fixed costs associated with these vehicles and leads to greater efficiency across the board.
Adopt the Right Fleet Maintenance Software
If you want cost efficiency at scale, you can’t approach vehicle maintenance with a manual strategy. Automated workflows and preventive maintenance are absolutely required. One way to do this is by implementing fleet maintenance software that streamlines your parts, labor, and fuel costs. This will also ensure all of your assets are safe and compliant.
Limit Miles Traveled
While you probably have limited control over the number of vehicle miles traveled, this is a key area for cutting costs. We recommend spending time monitoring your fleet drivers and collecting data to identify any wasted mileage. Look for ways to get more out of each trip by optimizing routes and simplifying delivery processes.
One way to reduce mileage is to let employees know that you’re auditing their mileage (and to follow up with them on their results on a regular basis). Mileage reporting audits are shown to result in mileage reductions without incurring a noticeable investment cost.
Invest in Better Training
We often attribute driving costs to the fuel efficiency of the vehicle, the routes, and fixed overhead costs. However, your drivers actually have a lot of influence over costs. The more you invest in their training, the greater their efficiency will be.
Putting it All Together
There’s no singular method for reducing fleet maintenance costs. However, if you’re committed to constantly scrutinizing your balance sheet, you’ll always find new opportunities. Hopefully, this article has given you several ideas.