Automotive Fleet, March 2019

Like for like replacement tire prices for passenger vehicles increased on average 8 in calendar year 2018 compared to CY 2017 For the purposes of this study passenger vehicles are defined as cars SUVs crossovers and minivans A key reason for the price increase was due to the increase in price for the raw materials used to manufacture tires In 2018 on average raw material prices increased 5 to 10 Higher commodity pressures exert pressure on tire OEMs to maintain margins as their production costs increase In the end commodity prices dictate replacement tire costs Tire pricing is rising due to higher cost of raw materials and larger catalog of tire sizes A key reason is the increase in OEM automobile wheel diameters which has driven up the price of fleet replacement tires primarily because the larger the tire the greater the manufacturing expense Tire prices on average continue to increase in cost Many factors have impacted these cost increases but are primarily driven by the continued use of large diameter low profile tires said Mark Lange CAFM managed maintenance analyst for Element Fleet Management There was concern in 2018 that tariffs would impact replacement parts cost and availability To date we havent seen evidence of this trend These were some of the key findings of AFs 24th annual fleet passenger car maintenance survey conducted exclusively by Element Fleet Management The study is based on an analysis of actual maintenance expenses incurred during calendar year 2018 by more than 100000 passenger vehicles which include cars SUVs crossovers and minivans TREND TO LARGER DIAMETER TIRES The average cost per tire has increased due to larger diameter 17 to 18 inch wheels becoming more common on compact and mid size vehicles Wheel diameters are continuing to increase in size further exerting upward pressure on replacement tire prices AUTOMOTIVE FLEET I MARCH 2019 22 PHOTO ISTOCKPHOTO COM VASYL DOLMATOV PART 3 MAINTENANCE SPECIAL REPORT INCREASED 8 IN CY 2018 UPWARD COST PRESSURES ON REPLACEMENT TIRES HAVE EMERGED IN 2018 DUE TO HIGHER COST FOR THE COMMODITIES USED TO MANUFACTURE TIRES AND THE TREND TO LARGER DIAMETER 17 TO 18 INCH WHEELS WHICH ARE MORE EXPENSIVE TO REPLACE BY MIKE ANTICH REPLACEMENT TIRE COSTS 5038 5212 5371Average Cost Per PMAVERAGE PM AND TIRE COST201620172018 10 20 30 40 50 60 10323 12293 12746Average Cost Per Tire201620172018 0 30 60 90 120 150383942Average 0006 0006 0006Cost Per Mile2016201720180000000100020003000400050006 1288 1332 1439Cost Per Unit Per MonthTIRE SPEND201620172018 0 3 6 9 12 15 0006 0007 0007Cost Per Mile201620172018 0000 0001 0002 0003 0004 0005 0006 0007 0008 Average per tire costs increased in 2018 driven by higher commodity prices and continued trend of vehicles being replaced with larger diameter tires and snow tires SOURCE CHAD CHRISTENSEN STRATEGIC CONSULTANT FOR ELEMENT FLEET MANAGEMENT INCLUDES DATA FROM CARS SUVs CROSSOVERS MINIVANS Tire spend per unit per month PUPM increased 8 as replacement tire prices have experienced upward pricing pressures due to higher prices for the commodities used to manufacture tires which were up 5 10 in CY 2018 SOURCE CHAD CHRISTENSEN STRATEGIC CONSULTANT FOR ELEMENT FLEET MANAGEMENT INCLUDES DATA FROM CARS SUVs CROSSOVERS MINIVANS TIRE SPEND CHRISTENSEN ELEMENT FLEET MANAGEMENT