Strategies to Reduce Fleet Maintenance Costs with TransTRACK

Indonesia is one of the developing countries with the second largest automotive industry sector in Southeast Asia. The automotive sector is not only a mainstay of the national economy, but also shows significant growth. According to BPS census results, the number of motorized vehicles in Indonesia reached more than 133 million units in 2019, an increase of 5.3% from the previous year. This increase shows an increase in demand and usage of vehicles including maintenance costs, which can have a major impact on the environment.

With 22 companies in the automobile industry in Indonesia, this growth contributes positively to employment and national income. However, behind these economic benefits, the automotive sector also poses serious challenges related to environmental impacts, such as air pollution and greenhouse gas emissions. Motor vehicles are one of the main sources of pollution, which can affect public health and air quality.

This growth indicates a greater need for regular maintenance, such as oil changes and brake system checks. Increased demand for maintenance services may cause service prices to rise, so vehicle owners should consider maintenance budgets carefully.

In addition, attention to the environmental impact of the automotive sector is increasingly important. Poorly maintained vehicles can produce harmful emissions that damage air quality. By adopting technologies such as Fleet Management System (FMS), companies can monitor vehicle conditions in real-time and perform preventive maintenance, thereby reducing maintenance costs and environmental impact. Therefore, effective maintenance cost management is essential to support sustainable economic growth in Indonesia.

Fleet Maintenance Costs

Fleet maintenance costs include fixed and variable costs that are affected by various factors such as vehicle age, usage, fuel efficiency, emissions, frequency of repairs, and availability of spare parts. Spare parts availability has been one of the elements most affected by the supply chain issues that have occurred in recent years. These operational costs are also affected by fleet size, industry type, and business location.

To measure the cost of fleet maintenance, business owners should take into account the total cost of ownership (TCO) of each vehicle. TCO is the sum of all expenses related to owning and operating a vehicle over its lifetime, including capital expenditures, repairs, depreciation, administration, and licenses. While it cannot predict unexpected impacts such as a global pandemic, TCO helps fleet managers compare different vehicles and make better decisions regarding vehicle purchase, leasing, replacement, or disposal.

In addition, fleet maintenance costs can also be measured by looking at the average marginal cost (AMC) of each vehicle. AMC is the change in total cost divided by the change in output or activity level. For example, if a vehicle costs $10,000 to operate for 10,000 miles and $11,000 for 11,000 miles, then its AMC is $1,000/1,000 = $1 per mile. AMC helps fleet managers evaluate the efficiency and profitability of each vehicle and identify areas for improvement.

According to the American Transportation Research Institute (ATRI), maintenance and repair costs represent between 8% and 10% of a fleet’s average marginal cost since 2012. This means that for every $100 spent on operating a vehicle, $8 to $10 goes towards maintenance and repairs. While this figure sounds significant, the reality becomes clearer when considering macroeconomic factors such as rising labor rates and higher raw material costs.

Challenges and Solutions in Measuring Vehicle Maintenance Efficiency

A company serving more than 700,000 customers across 34 U.S. states struggled to track fleet maintenance improvements as vehicles aged, requiring the management team to align with company goals. Following a 2021 Holman business review, the company created a customized scorecard to track national account utilization, preventive maintenance compliance, and potential fuel fraud. The scorecard is now used by more than 200 decision-makers across multiple locations, driving advanced analytics and continuous improvement in cost reduction and risk management.

From 2022 to August 2023, by switching to a preferred national account, the client saw savings of approximately $13,000 (5%) on their total spend, which equates to 86 free tires. Some locations saw savings of up to 9%. In terms of lube, oil, and filter spend, the client saw savings of $19,000 (11%), which equates to 273 free oil changes.

Using the fuel scorecard to compare January and June of 2022 and 2023, fuel exceptions decreased by 65%, resulting in fuel savings of $360,000 (75% reduction in exception-related costs). Moving forward, the client will continue to invest in their fleet health in response to the changing climate of the supply chain industry. The flexibility of the scorecard opens up the possibility for the future to add new categories that include other vehicle programs in real time.

TransTRACK Solution to Address High Maintenance Costs Challenges

TransTRACK offers a comprehensive solution to address the challenges of high fleet maintenance costs through a variety of innovative features designed to improve operational efficiency and reduce costs. Here are some of the key features offered:

1. Fleet Management System (FMS): This system allows real-time monitoring of vehicle conditions, maintenance schedules, and repair needs. With accurate data, fleet managers can plan timely preventive maintenance, reduce the risk of sudden breakdowns, and optimize costs.
2. Vehicle Maintenance System (VMS): The Vehicle Maintenance System helps companies schedule and manage fleet maintenance more efficiently. The system provides automatic reminders for routine maintenance, ensuring all vehicles receive the necessary maintenance on time, and reducing potential breakdowns that can lead to additional costs.
3. Driver Monitoring System (DMS): This feature helps monitor driver behavior to improve safety and fuel efficiency. By identifying inefficient driving habits, companies can reduce fuel consumption and extend the life of vehicles.
4. Real-time Analytics: TransTRACK provides in-depth analytics to evaluate fleet performance and maintenance costs. Analyzed historical data can help fleet managers make better decisions regarding vehicle replacement and budget planning.
5. Digital Documentation and Reporting: The digital documentation system allows easy storage and access to all maintenance and repair records. This not only makes auditing and reporting easier but also helps in planning future maintenance based on historical data.
6. Predictive Maintenance: Using analytics and machine learning technology, TransTRACK can predict maintenance needs before problems arise. This helps in reducing last-minute repair costs and ensures vehicles are always in optimal condition.

With these features, TransTRACK not only helps companies in reducing fleet maintenance costs but also improves overall operational efficiency, allowing businesses to focus on growth and sustainability.