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Tire Costs

Using Performance-Based Incentives to Optimize the Cost-Effectiveness of Fleet Operations

A fleet cost reduction program goes straight to the corporate bottom line. If a company operates at a 10% annual net profit margin, reducing annual fleet expenses by $100,000 is the equivalent of generating $1 million in sales. Although fleet managers manage hundreds of thousands to tens of millions of dollars in corporate assets, only half are incentivized to achieve targeted performance goals. I advocate incentivization should be a universal best practice extended to all fleet managers.

Higher Commodity Prices Put Upward Pressure on Tire Costs

For the past four years, tire costs have been stable. But new cost pressures have emerged in 2017, primarily with higher prices for commodities used to manufacture tires and the trend to larger diameter, more expensive, tires.

Tires are a Depreciating Asset: 10 Ways to Slow the Rate of Depreciation

As a wear item, tires are a depreciating asset. Your job, as the fleet manager, is to slow the rate of depreciation. Replacement tires as a cost category are a fleet’s second-largest operating expense, exceeded only by fuel. By maximizing tire tread life, you lower per-mile costs, resulting in fewer premature removals and optimizing the condition of tire casings, allowing for multiple retreads.

Stable Commodity Prices Keep Replacement Tire Costs Flat

Replacement tire prices for CY-2016 are flat because of less volatility in the global prices of commodities used to manufacture tires, namely oil, rubber, and steel. The forecast is for a continuation of price stability into CY-2017.

Rising Tire Prices Take a Bite Out of Fleet Budgets

Tire industry experts foresee another round of tire price increases during calendar-year 2012. In the past, national account tire manufacturers have done their best to shield the fleet industry from price increases by holding prices for a 12-month period. Nowadays, there is concern that national account vendors will no longer be able to continue to absorb these cost increases.

The Forecast Is for Higher Tire Prices in 2012

The multiple price increases for replacement tires occurring year-to-date for calendar-year 2011 point to more increases on the horizon. Most tire industry experts foresee tire price hikes continuing for the balance of this calendar-year, with expectations of another round of pricing increases in calendar-year 2012. There are a variety of factors that will influence future tire price.

Global Economic Recession Cuts Fleet Operating Costs

Fuel costs, the largest fleet operating expense, declined dramatically in the 2009 calendar-year due to a sharp decline in worldwide consumption. Also, many fleets have downsized, which contributed to a lower overall fuel spend.

Tire & PM Costs Increase Car Maintenance

Increased cost of replacement tires and PM caused car maintenance expenses in 2007 to increase slightly higher than the prior year. Tire costs were up 4-7 percent, while PM expenses increased 10 percent. Other costs remained flat.