The total cost of ownership of fleet vehicles managed by Element Financial Corp. fell 14% in 2015 from the prior year and has reached a five-year low due to low fuel prices, the fleet management company has announced.
Element is introducing its Element Total Cost of Ownership (TCO) Index, which will track TCO factors including fuel, vehicle depreciation, maintenance and interest expense.
"The Element Fleet TCO Index suggests that now may be a good time to replace vans and pickups while the resale market is still strong for those types of vehicles," said Bob Sandler, senior vice president of strategic consulting for Element Fleet Management. "Lower gas prices provide an opportunity for fleets to make replacement investments, increasing safety and fuel efficiency without a major year-over-year spike in expenses."
Element noted three factors it considered in its TCO analysis, including average fuel costs, depreciation, and monthly maintenance expenses.
Average U.S. fuel costs fell 29%, because the price of fuel fell to $2.43 per gallon in 2015 compared to $3.36 the previous year and improvements in vehicle miles per gallon.
Depreciation costs rose 1% due to a higher average initial cost of vehicles and offset by continued strength in the resale market for vans and pickups.
And lastly, a 1% rise in average monthly maintenance costs resulted from a 1% increase in unscheduled repairs and 4% increase in preventative maintenance expenses. Tire costs remained static.
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