Automotive Fleet, February 2016

certainly influenced by fuel price trends over 2015 according to James Crocker director of fleet operations for Merchants Fleet Management But overall there wasnt a drastic change in the pace of depreciation year over year The pace of vehicle depreciation in 2015 was very close to that of 2014 for the overall market Passenger cars especially compact models significantly under performed in the overall market while wholesale pricing for light trucks and cargo vans was strong throughout the year according to Tom Webb chief economist for Cox Automotive John Wuich VP strategic consulting services for Donlen agreed Overall using a weighted segment average and recent model years the rate of depreciation from 2014 to 2015 has slowed as compared with 2013 to 2014 he said One reason for the difference is due to record selling used vehicle prices from 2013 to 2014 Overall there has been a slight increase in the cents per mile for the cost of depreciation however 2013 and 2014 were record selling prices and the vehicle model years of vehicles selling during this period were in short supply The supply was impacted by the reduced volume in newcar production in prior years Nevertheless the increase has been minimal compared to historical depreciation costs and clients still enjoyed good depreciation rates during 2015 according to Bob Black director client analytics for Wheels Inc Another major factor in current and future trends is the price of gasoline Depreciation trends as reflected in wholesale auction prices have tended to be negatively skewed toward car segments while van SUV and pickup truck segments have tended to withstand the incoming volume of off lease off rental off fleet repo and dealer supply without severe reduction in prices This is likely to remain true going forward due to low gasoline prices according to Tom Kontos executive vice president of customer strategies and analytics for ADESA Depreciation Trends by Vehicle Segment While vehicle depreciation was stable overall each vehicle segment tells a separate story Digging deeper into each segment is key to seeing the full picture For compact cars both the average monthly miles and average months in service measurements have slowly crept up In 2013 the average monthly miles measurement for the compact car segment was 2017 miles by 2015 the average monthly miles measurement for that same segment was 2084 miles Similarly the average monthsin service for the compact car segment in 2013 was 363 months by 2015 that had increased to 422 months according to Bob Graham VP of vehicle remarketing at ARI And the story for intermediate cars is somewhat similar but with an interesting difference according to Graham While the months in service have gone up and depreciation as measured by cost per mile has remained steady the average number of monthly miles driven has dropped In 2013 the average monthly miles measurement for intermediate cars was 2158 miles in 2014 it dropped 82 percent to 1995 miles and in 2015 it moved up slightly to 2095 miles but remained below the 2013 peak Despite this fluctuation average months in service increased from 341 months in 2013 to 381 months in 2015 he said New standard equipment is also making an impact on stable resale values The passenger car segment has enjoyed flat or small increases in costs This is primarily due to the competitiveness of this FEBRUARY 2016 I AUTOMOTIVE FLEET 43 DEPRECIATION EXPENSES 2015 Compact Cars Average Monthly Miles 2034 Average Months in Service 35 Average Cap Cost 1822033 Monthly Dep Cost in CPM 015 Depreciation Dollars Per Month 30974 Intermediate Cars Average Monthly Miles 2045 Average Months in Service 33 Average Cap Cost 2031320 Monthly Dep Cost in CPM 015 Depreciation Dollars Per Month 30158 Minivans Average Monthly Miles 2218 Average Months in Service 42 Average Cap Cost 2173325 Monthly Dep Cost in CPM 015 Depreciation Dollars Per Month 33420 Full Size Vans Average Monthly Miles 2096 Average Months in Service 63 Average Cap Cost 2379700 Monthly Dep Cost in CPM 015 Depreciation Dollars Per Month 33755 Trucks Average Monthly Miles 2125 Average Months in Service 56 Average Cap Cost 2416433 Monthly Dep Cost in CPM 013 Depreciation Dollars Per Month 29300 SUVs Average Monthly Miles 2196 Average Months in Service 35 Average Cap Cost 2387900 Monthly Dep Cost in CPM 017 Depreciation Dollars Per Month 34997 Five of the survey partners that participate in AFs annual Operating Cost survey also provide depreciation data including ARI EMKAY Inc LeasePlan USA Merchants Fleet Management and Wheels Inc SOURCE AF RESEARCH DEPT BLACK Wheels Inc WUICH Donlen KONTOS ADESA CROCKER Merchants