The inaugural Element Fleet Total Cost of Ownership (TCO) Index shows that the total cost of having a vehicle fleet fell 14 percent from 2014 to 2015, and that companies with fleets experienced their lowest expenses in at least five years. The drop was attributed primarily to the decrease in fuel prices – one of the largest cost drivers.
The TCO Index was created by Element Financial Corporation (www.elementcorp.com) – one of North America’s leading fleet management and equipment finance companies. A proprietary annual look at major cost categories affecting vehicle fleets, it is intended to bring greater clarity to company vehicle expense for businesses, company officials say.
The cost categories include vehicle depreciation, interest expense, fuel and maintenance costs.
INDUSTRY TRENDS
Looking at industry trends, the TCO analysis noted these key factors:
- Average U.S. fuel costs fell 29 percent, driven by the price of fuel – $2.43 per gallon in 2015 vs. $3.36 the previous year – and improvements in vehicle miles per gallon.
- Depreciation costs rose 1 percent, attributed to a higher average initial cost of vehicles, and offset by continued strength in the resale market for vans and pickups.
- A 1 percent rise in average monthly maintenance costs, driven by an increase in unscheduled repairs (1 percent) and an increase in preventive maintenance expenses (4 percent).
- Tire costs remained static year over year.
2013
The Element Fleet TCO Index uses 2013 as the base year, with a starting value of 100.
The Index showed a drop in TCO for fleets to 96.8 in 2014 and then to 83.3 in 2015, a 14 point year-over-year decline.
