How to Manage Fuel and Maintenance Costs
Clay Johnson, CTO - May 21, 2019
The first thing you'll notice when researching fleet fuel and maintenance solutions are the number of recently published articles lamenting that costs are on the rise. And it's true, calendar year 2018 saw a 5-10% hike in maintenance costs and a $0.40-$0.50 per gallon jump in gas and diesel prices, and these numbers are only going up. In this article I'll try to summarize their findings, provide concrete solutions from experts in the industry, and share how Carlease can help your fleet and your business save big.
At the top of everyone's mind and the nightly news cycle are the Trump administration's tariffs on imported steel, in particular, their effects on U.S. oil and gas producers. Forbes writes, "Unfortunately, it’s been commonly reported this earnings season, rising costs for imported specialty steel products eating into profits. The problem, of course, has been that many of these items are necessarily imported, as they are not even made here in the U.S.[...] Where steel tariffs will hit hard: your gas tank."
Top four fleet variable expenses:
- Fuel: 75%
- Maintenance/repair: 17%
- Tires: 6%
- Oil: 2%
Automotive Fleet reports that gas prices are fleets' largest budget line-item under operating expenses, and rising prices are the number one factor contributing to the increased operating costs for 2018. This has once again shifted focus to vehicle mpg and fuel efficiency in fleet acquisition strategy. While end of lease and resale values are still top of list when determining make, model and quantity of vehicles, an important part of the conversation is starting to revolve around vehicle "rightsizing" and vehicle service life. Additionally, fleets small and large are investing in new technologies to help curb fuel spending. Mike Antich for Automotive Fleet shares, “Service fleets are utilizing routing/telematics [...] to reduce unnecessary miles driven. The industry is [also] seeing increased use of small displacement turbocharged engines, hybrids, and all-electric powertrains."
Using a combining of GPS systems and onboard diagnostic technology, fleet owners can now map the exact location of each vehicle in their fleet while in use. It's in this way that they are able to plan the most efficient routes, most affordable gas stops, and ensure that drivers are being safe and responsible with their vehicles. Many fleet managers are also turning to fuel cards as a way to mitigate rising gas prices. Fuel cards are like corporate cards but used exclusively for gas/diesel purchases. These cards also offer rewards programs for businesses and provide a quicker, easier way to view and manage fuel expenses. Fuel fraud is also easier to track and detect using a dedicated payment method.
Fleet leasing is another excellent way to mitigate rising fuel costs. As gas and diesel prices increase, the ability to cycle out older models in exchange for newer, more fuel-efficient vehicles is one of the ways small businesses are taking control of their spending. With a typical lease ranging anywhere from 12 to 48+ months, small business owners can be assured they're getting the best mpg rated vehicles as they come to market. Combine new fleet leasing, telematics, and fuel card programs and you get Carlease, the easiest way to lease your next fleet. The business leasing experts at Carlease will walk you through the vehicle and lease selection process so you can be sure you're getting the right cars to drive your business forward. We'll outfit our fleet with the latest in telematics and help you select a fuel card program that's right for you.
Another advantage to new vehicle fleet leasing is the manufacturer warranties that come standard on all leases. As maintenance costs get more expensive year over year, fleet managers and businesses are searching for ways to keep their fleets in top working order for longer. Automotive Fleet writes, "Maintenance costs are steadily trending upward as a result of advanced vehicle technology, skilled labor shortages, increased tire prices, and widespread use of engines that require high-capacity and synthetic oils."
As cars get more advanced with infotainment systems and safety features, the labor required to maintain each system requires more skill. And when your vehicles are outside of their warranty periods, maintenance costs add up fast. Thankfully, leased fleets rarely incur these high costs. Basic bumper-to-bumper warranties start at 3 year/36,000 miles and increase in coverage with the value of the car. As most leases range from 12 to 36 months, your fleet could be covered for the entirety of its life with your business.
Not to mention, with ongoing increases in build quality and longer-lasting components, new vehicles require far less maintenance than used ones overall. What's perhaps unavoidable are the preventative maintenance charges - these include oil changes, breaks and alignments. But again, with improvements in engine refinement and synthetic oils, preventative maintenance appointment can be schedule farther apart for newer vehicles.
Working with Carlease ensures your business is outfitted with the best possible fleet, at a price that's right for you.
Still not convinced Carlease is the best option? Reach out to our business leasing experts today and find out how easy, fast and painless the leasing process can be. And how much money you and your business could save.
Our business leasing experts combine extensive research, personal support, and easy vehicle selection help you make an informed decision - all from the comfort of your home or office. When you’ve picked your perfect vehicle(s) and customized lease plan, our agents will take care of the financing and deliver your new lease(s) right to your door, saving you hours of time and aggravation at the dealership and saving your business money.
Visit Carlease.com or call (847) 714-1414 today!