Maintenance Leads Cost-Control Efforts

By Daniel P. Bearth

For many corporate fleet owners looking to save money, vehicle maintenance is a prime target for cost control.

Maintenance is the second-highest expense after labor and is the first place many executives go for quick savings, industry officials have said.

“We have noticed that a growing number of private fleets are choosing to defer vehicle maintenance and repairs,” said Mark Oliver, senior vice president for field maintenance at Penske Truck Leasing Co.

“Yes, fleets may see short-term savings,” he said, “but long term, deferred maintenance will come home to roost. Sooner or later, those catch-up repairs will become more costly to perform, and you then encounter safety and compliance issues.”

A top executive at Ryder System said he sees a similar pattern.

“We’ve definitely seen a reduction in discretionary expenditures,” said Mike Brannigan, senior vice president and chief of operations with Ryder’s Fleet Management Solutions unit.

Brannigan said the trend actually started in 2008, when fuel prices shot up dramatically and forced fleet operators to improve the fuel efficiency of their vehicles.

“I expect that kind of cost-consciousness to continue for some time,” he said.

Bob Brauer, vice president of sales for Kelley Fleet Services, Mission Viejo, Calif., said the company is seeing an influx of new business from companies looking to trim expenses by outsourcing maintenance.

“In telecommunications, cost is a huge issue because of the economy,” he said.

“We’re seeing prospects we didn’t have last year.”

Kelley recently took over responsibility for maintaining a large portion of the fleet of Qwest Communications and previously won business mostly from food and beverage companies, including Pepsi Bottling Group, Dean Foods and National Diary Holdings.

Many private fleet operators lack the ability to monitor maintenance closely, and many end up spending more money to repair vehicles when they break down, Brauer said. Those fleets also tend to have more trucks than they need because they can’t keep all of their vehicles in proper operating condition.

“We consistently see deferred maintenance,” Brauer said. “It’s not a core business, so it doesn’t get the attention it needs.”

Penske’s Oliver said companies are holding onto equip-ment longer and that the key to reducing maintenance costs is to “leverage historical repair costs.”

“It is vital to establish hard and fast policies and proce-dures regarding maintenance and tire processes,” he said, “and to constantly reinforce those performance expectations.”<

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