Owning and operating a fleet of vehicles gets expensive. You are responsible for everything from gas to tires to paying the lease each month. Those expenses add up quickly. Let’s look at the costs of fleet repair and general fleet maintenance. You may find the expenses of owning and operating fleet vehicles more challenging to support.
Fleet vehicles range in popularity based on business size and industry need. There’s plenty of variation in company fleets, with everything from a compact passenger car to a luxury electric vehicle, a full-size truck to a cargo van. For the sake of simplicity, we’re going to stick with the winner of Vincentric’s 2022 Best Fleet Value in America Award (in the category of compact passenger cars): the Toyota Corolla Hybrid LE.
As with a personal vehicle, part of the fleet value of the Toyota Corolla Hybrid LE is it’s a vehicle that will last a long time. But there’s more to a vehicle than its lifespan. Let’s drill into what typical fleet repair and maintenance looks like with this vehicle.
American drivers average 14,263 miles each year. It’s safe to say that those who drive for work are well above that average. It’s also likely that employees with fleet vehicles are taking full advantage of the perk, driving it for both business and personal use. That comes out to just over 1,000 miles each month. This will come into play as we figure out just how frequent each upkeep measure is recommended.
An oil change for this vehicle is recommended every 3,000 – 5,000 miles. So let’s say an oil change occurs about every three months. Prices vary depending on location, but they can be anywhere from $35 to $75 for conventional and $65 to $125 for synthetic. Multiply that by four and you’re looking at $140 to $500. The last step here would be to multiply that number by the number of vehicles in your fleet.
Tire rotations for this vehicle are recommended every 5,000 to 7,000 miles. Again, depending on location, that might cost anywhere from $24 to $50. Multiplied by two and that’s an additional $48 to $100, per vehicle.
Engine air filters and cabin air filters have an average replacement of 15,000 to 30,000 miles under typical conditions. Depending on location, that can cost anywhere from $40 to $65, on a yearly basis (again, multiplied by the number of fleet vehicles).
After considering those expenses, typical maintenance on each fleet will cost anywhere from $228 to $665 each year. While these costs are to be expected, there are additional sources of expense.
Mobile workers come and go. Whether they’ve transitioned to elsewhere in or outside the company, their vehicle remains. The hiring process generally takes about three months. So what do you do with the vehicle during that time? The season will play a role in whether it requires storage or not. Depending on the location and storage requirements, that could be $45 to $450 a month for a car not being used. Depending on how long it’s been idle, the vehicle may require additional costs to get it ready for use again.
The costs of regular maintenance for the entire company fleet will add up, but the cost of vehicle repairs in general has also been on the rise. And fleet vehicles have a higher rate of accident involvement because they’re often on the roads for both business and personal use. The extent of the accident’s damage could be as little as a fender bender or as much as a totaled vehicle. On the low end, that’s a $500-$700 in fleet repair. On the high end, replacing the vehicle will cost anywhere from $18,000 to $30,000. But that isn’t even accounting for the costliest possibility: potential lawsuit costs.
Fleet repair is a common aspect of company-provided vehicle programs. Unfortunately, lawsuits are too. As you may know, when the driver of a fleet vehicle is found at fault in an accident, the company is often targeted. Lawsuits levied against companies in these circumstances often work to prove the driver shouldn’t have been trusted with a corporate-liable vehicle. This is known as negligent entrustment. It’s not uncommon for fleet accidents that result in lawsuits to end in arbitration. While the seriousness of the accident will play a large role, settlements can be in the hundreds of thousands and even more. Note that isn’t accounting for legal fees.
Besides opting out of fleets, what can companies do about this? Many use Motor Vehicle Record checks (MVRs). These checks can be set up to notify the company when a mobile worker receives an infraction on their driving record. Companies also use MVRs when hiring employees to validate their driving records. Companies not using MVRs may have a harder time proving they consistently employ appropriate measures designed to ensure safe vehicle operators.
In 2021, the average fleet vehicle cost per employee was $12,816. That’s far above every other vehicle program option on the market. Businesses using company-provided vehicles need to stop looking for fleet repair solutions and start looking to repair their vehicle program.
Offering company-provided vehicles is a popular program, but as we’ve seen, the cost of this program adds up quicker than you may realize. The first step in finding the right alternative is is learning more. You should know the vehicle program options you can choose from like fixed and variable rate (FAVR), cents-per-mile, or car allowance. Check out our post on selecting the right vehicle program for your company. You may be surprised there are more benefits to fleet alternatives than cost savings and risk mitigation.
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