Fleet vehicle maintenance and repairs (M&R) are not optional – they can be deferred, but the need for repair is certain, leading to lifecycle costs that escalate as repairs are deferred.
Vehicle maintenance and repair (M&R) cost is a component of a fleet’s variable direct operational costs. There is a strong correlation between the milage and M&R cost which is sometimes difficult to calculate and forecast. Here I will try to explain how we can apply lifecycle cost principles so that we can find a practical and easy way to decide when the best time is to renew. Although this analysis will not give a precise forecast of future costs, it will be helpful to improve decisions by combining the fleet’s historical data and principle. Make, engine type, fuel type, segment, and road conditions kind of independent variables will help you for a more precise forecast. For now, let’s focus on the graph which is milage with regression analysis to see the nature of the cumulative M&R cost curve.
As the mileage increases the repairs are more costly. The average cost per mile increases with a steep rise after the optimum renewal point (Tangent to the curve). Up to this point, it is more likely to gain benefits from the new asset. In a more detailed analysis, it’s possible to find precise optimum mileage by considering vehicle specs and historical data in addition to this life cycle cost analysis which provides an insight into total operational cashflows that will improve decisions about where to renew for improving business performance.
