Report on fleet
maintenance costs
TOTTS Inc is currently operating 11
vehicles, which consist of 3 buses and 8 cars. We introduced three new Hundai i-30 last year. However the other
five cars are older than 8 years, and some cars incur much higher running and
maintenance costs. Total Expense for the fleet in 2010 was
$102,147, and the total mileage was 460,202km.
Because 87% of the expense was attributed to the sum of fuel and
maintenance cost, it is important to focus on analyzing those two cost (Figure
1).
Figure 1: Cost structure of
the all fleet
The cost of fuel and maintenance &
repairs is analyzed by simple average calculations based on actual mileage,
fuel, and maintenance cost of 2010. The analysis of fuel and maintenance &
repair cost is computed in dollar per 100km, so that all the cost of the fleet
can be compared in the same base
Diagrams
below highlight the vehicles which incur higher cost than the average. All the
three buses, Bus 1, Bus 10, and Bus 608, are excluded from the average calculations
due to having different cost structures and different purpose of usages.
Fuel Expense
Figure 2: Fuel
expense per 100km ($/100km)
Figure 2 shows that the car number 6, 7, and 8 cost higher than the
average cost of $12.5 per 100km. The fuel costs of car 6, 7 and 8 are $15.20,
$27.53, and $17.25 per 100km respectively.
Maintenance
& Repair expenses
Figure3: Cost of maintenance & repairs per 100km
($/100km)
Figure 3 show that maintenance cost of
car 6 and 7 costs $13.74 and $9.42 per 100km respectively. The average of
maintenance & repair cost on the fleet is $6.84 per 100km. notably the
maintenance cost of Bus 10 was $95.38 per 100km. This considerably high
maintenance cost was caused by major repairs on the injector pump overhaul
($7853 incurred).
Running
cost (Fuel + Maintenance cost) per 100km ($/100km)
Figure4: Running cost (Fuel + Maintenance cost) per
100km ($/100km)
Figure
4 show that running cost per 100km. The running cost of car 6, 7, and 8 is
$28.94, $36.96, and $23.98 per 100km. The
average running cost is $19.34 per 100km. Bus 10 is again having significantly
higher running cost due to the major repair.
A cost
model: if 3 highest cost cars are replaced to the Hundai i-30
The diagrams
above show running cost of car 6, 7, and 8 are higher than the average of the
cars. If those 3 cars are replaced to Hundai i-30, the cost of the fleet can
reduce significantly.
Tables
below are the cost model which if all 3 cars are replaced to new Hundai i-30.
Table 1: Fuel expense model
|
Fuel analysis |
|
|
Total fuel cost 2010 |
$ 40,637.15 |
|
Average of I 30 ($/100km) |
$ 8.56 |
|
Fuel cost if 3 cars are
replaced |
$ 32,859.89 |
|
The difference between the actual fuel cost in 2010
and the cost model |
$ 7,777.26 |
|
Save up % |
19% |
Table 2: Maintenance &
Repair cost model
|
Maintenance & Repair analysis |
|
|
Total Maintenance cost in
2010 |
$ 25,556.45 |
|
Average maintenance
cost of I 30 ($/100km) |
$ 4.19 |
|
Maintenance cost if 3 cars
are replaced |
$ 20,388.75 |
|
The difference between the actual maintenance &
repair cost in 2010 and the cost model |
$
5,167.70 |
|
Save up % |
20% |
Table 3: Registration cost
model
|
Registration Analysis |
|
|
Total registration cost
now |
$ 5,905.13 |
|
If the 3 cars replaced to
I 30 |
$ 5,516.90 |
|
The difference between the actual registration cost
in 2010 and the cost model |
$
388.23 |
|
Save up % |
7% |
Tables
above show all the expenses for the cars can reduce by replacing the 3 cars to
new Hundai. Fuel cost can be saved by
$7,777, maintenance & repair cost can be saved by $5,167, and registration
cost can be saved by $388. Table 4 show replacing the cars to new i-30 reduces
the vehicle cost by $13,333 per year.
|
Total cost analysis |
|
|
Total cost incur 2010 |
$
75,461.40 |
|
If the 3 cars are replaced
to I 30 |
$
62,128.21 |
|
The difference between actual total cost in 2010
and the cost model $ |
$ 13,333.19 |
|
save up % |
18% |
Table 4: Total cost can be
saved by replacing the 3 cars
Conclusion
The
cost analysis show car number 6, 7, and 8 require considerably higher running
cost than the other five cars. Average running cost of those three cars is 230%
higher than the average running cost of the others ($29.96/100km for car 6, 7,
and 8 and $12.97/100km for the other five cars). If those 3 cars are replaced to
new cars to Hundai i-30, it is
estimated that $15,164 can be saved per year.
The
3 new vehicles, number 2, 5 and 9 had average running cost of $12.75 per 100km
which can be a benchmark running cost if TOTTS Inc introduces new Hundai i-30 in future.
Based
on this analysis, if cost of financing new cars is less than $13,333 p.a.,
purchasing new cars is suggested. However if the financing cost exceeds $13,333
p.a., replacing cars should be reconsidered.
It
is important to note that this analysis is based on the only last year’s actual
data, and the oldest Hundai i-30 we own is only one year old. Therefore it is
unknown how much maintenance & repair cost increases as the cars get older
which may reduce the saving cost of $13,333 in long time prospective. Also cost
fluctuation of fuel may alter this result as well.