The True Cost of Fleet Vehicle Downtime

The True Cost of Fleet Vehicle Downtime

In case you were wondering, your company fleet vehicle downtime can be translated directly into dollars your company is losing. In fact, downtime costs a fleet an average of $448 to $760 a day, per vehicle. Yup, it adds up fast. Let’s dig into the true cost of fleet vehicle downtime:

 

getTREAD true cost fleet vehicle downtime unlock revenueDEFINING COSTS:

When it comes to fleet vehicle costs, they can be broken down into two categories: obvious and hidden. Regular operating expenses such as fuel, maintenance, and insurance are considered obvious costs. Hidden costs can be more difficult to anticipate.

A hidden downtime cost is difficult to accurately budget for, as no additional money is actually spent on these costs. When a employee and vehicle are sidelined, the company incurs downtime costs. These costs can quickly add a significant amount to a fleet’s operating budget.

For example, a technician/vehicle combo working for an Air Conditioning service business in Central Florida can generate billable revenue on average $200/job, and normally completes 3-5 jobs per day – that’s about $600-$1000/day in generated revenue per technician.

When that technician’s vehicle gets sidelined for maintenance, that technicians/vehicle combo misses out on a half day’s worth of jobs – if not more. That equates to between $300-$500 in lost potential revenue. Now you can probably start to see the true cost of fleet vehicle downtime taking it’s toll.

The hourly cost for an Air Conditioning technician is roughly between $22-30 and the opportunity cost (lost profit) can be $35-45, making the total hourly “cost” of downtime $57-$75/hr. While that figure on its own doesn’t seem alarming, it add ups as fleet size grows. Case in point: a 20-unit fleet with similar technicians at an average of 3  half-day downtime events per unit, per year, will result in an annual downtime cost of $18,000. Scale up to a 50-unit fleet and that’s $45,000. And just to drive it home further, a 200-unit fleet with 3 half-day downtime events per unit, per year, will result in $180,000 in lost opportunity cost. That’s money you could be putting back into your business.

MINIMIZING DOWNTIME:

One of the keys to saving money and keeping a fleet vehicle based business healthy is to minimize vehicle downtime. Efficiency and optimization is paramount, as increasing the percent of up-time for your vehicles will ultimately lead to more profit for your business.

Studies show that fleet vehicles participating in a preventive maintenance program experience about 20 percent less downtime days than those that aren’t.

Plus, fleets can take advantage of many technologies that provide insight and real-time data through vehicle tracking and On Board Diagnostics.  Using these tools can lower the cost of your fleet maintenance by taking a pro-active and preventive maintenance approached based on your actual vehicle’s performance – with the end goal being cost savings and increased revenue through more vehicle/technician uptime.

getTREAD is doing it’s part to help fleet vehicle managers by delivering a revolutionary Mobile Tire Service that eliminates vehicle downtime completely. We use tactics like providing tire installation at your location (office, warehouse, even job-site), tread wear tracking, auto-appointment setting for regular balance/rotations, and more. Our goal is to help fleet managers optimize their vehicle uptime and put them on the road to cost savings.

getTREAD true cost fleet vehicle downtime opportunityPROPER PLANNING:

Plainly speaking – operating budgets for fleet managers are tighter today than ever before. Time in the brick & mortar tire shop, instead of on the road, can mean lost sales and less face time with customers, resulting in a hit to your bottom line.

For more info about how getTREAD can help support your tire needs and eliminate vehicle downtime, check out our Fleet Services page – your accountant will appreciate it 🙂

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4 COMMENTS

  • Moira Blythe
    February 21, 2018, 9:48 am REPLY

    I work for a company who does mobile fleet maintenance and no matter what company you work for, efficiency is something that you work on with all of your employees. I appreciate your advice here that increasing the percent of up-time for your vehicles will lead to more profit. We will have to focus on doing this with our team!

    • Kal Gohill@Moira Blythe
      February 22, 2018, 5:51 pm REPLY

      Yes you’re right! Efficiency is key! Maybe in the future when we expand to your area we can help your team as well!!

  • Lilia Robberts
    July 25, 2018, 9:10 am REPLY

    Comment *I’ve been thinking of starting a company soon. Thank you for letting me know that there are many things that go into a fleet truck. I’ll need to make sure that I take in consideration, what you call the "hidden costs". I’ll also need to make sure I find a great place to get fleet trucks, and figure out where I will get them repaired if something is to happen.

  • Kairi Gainsborough
    July 30, 2018, 6:41 pm REPLY

    It is interesting that just one vehicle can cost a business hundreds of dollars for every day it is out of commission. This goes to show how important regular maintenance is. Keeping track of an entire fleet and making sure each vehicle is up-to-date with maintenance seems like an important job. You would have to choose if you want to do them all at once or space out your schedule.

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