How do you properly determine tire cost?

How do you properly determine tire cost?

Today’s fleets understand how important tires are to the success of their total maintenance budgets. With the average price of a commercial truck tire in the $500 range, fleets take tires seriously. It is not always a simple procedure to determine exactly what goes into the total cost of owning a tire over time. Tire casings can last close to a million miles after multiple retreads. Most fleets count on getting one, two or even more retreads per casing. So what makes up the total cost calculation for tires?

New tires can be divided into three categories: original equipment tires; replacement tires; and road purchases. Original equipment tires come on new tractors, trailers and dollies. Replacement tires are purchased to replace tires that have been removed from service. Finally, road purchases are tires replaced due to tire failures on the road. The number of units and actual cost, including Federal Excise tax, should be included for these three new tire categories.

Retreads are more complicated. Fleets have the option of purchasing a retread with a casing supplied by their local retreader. Another option is for the fleet to provide their casing and purchase a new tread. As with new tires, it is also good to separate out retreads purchased due to tire failures on the road.

Another cost category to consider is the labor and material needed to repair a tire. Some fleets do their own tire repairs, while others outsource to their local retreader; and then there are repairs that occur on the highway.

Every time a tire event occurs, such as mounting, dismounting, balancing and rotating, it must also be included in your cost calculations under the labor heading. There is also a material cost associated with valve caps and valve cores. Some fleets use balancing materials, puncture sealants and tire pressure sensors, which have both a material and labor component.

Looking for more insight on tires and wheels? Click here to read through Al Cohn’s archive of columns.

When tires end their useful life after multiple retreads, there is a cost to send the tire to a landfill for scrap. With just-in-time delivery such a critical piece of trucking, there is a significant cost associated with tire related roadside service calls. The average delay of a roadside service call is two and a half hours. Many fleets now include the number of hours associated with just-in-time delivery penalties because of a tire failure.

There are normally some credits that will help lower the total tire cost/mile calculations. Depending on the specific tire make/model, tires, casing and retreads typically have some sort of warranty. Passenger tires will have mileage guarantees, but commercial truck tires never will. Truck tire treadwear is all over the spectrum depending on vehicle make, model, load, speed and service vocation. A steer tire running in a line-haul operation from coast to coast may average 200,000 miles before removal. The same exact tire that is running in city service with lots of turning in a pickup and delivery operation may only get 75,000 miles before reaching the legal limit of 4/32 in.

Warranty claims on truck tires usually involve tire durability issues. Today’s warranty adjustments have dropped dramatically over the years as state of the art production equipment for both new tires and retreads are standard in the industry.

Sales of used tires and casings may also generate some credits for fleets. The final credit that can help the bottom line is a rebate or year-end reimbursement offered by the tire manufacturers and local retreaders. Once all these costs are included in the fleet’s computer system, it is easy to determine the overall tire cost per mile. Costs can be determined for steer, drive, trailer and dolly wheel positions.

A fleet can calculate its tire costs by different vehicle makes and models and service vocations. Once the data is included into the fleet’s database, it will be very clear which tire has the lowest overall cost per mile.
It is always important to work with your local tire professional to help make the best possible decision as to what new tires and retreads will give you the best performance and lowest cost per mile.

You May Also Like

Used Class 8 truck volumes exceeded seasonal expectations in March

When compared to March 2022, the retail and wholesale markets declined by -13% and -40%, respectively.

Used-Heavy-Duty-Truck-Generic-600x300

According to the latest State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research, used Class 8 retail volumes (same dealer sales) jumped 18% month-over-month in March. Average mileage declined by 5%, with average price up 4% and age down 2%. Longer term, average price, age, and volumes were lower, with miles higher year-over-year.

So you want to write for Fleet Equipment?

Of course you do. As the premiere online publication for the heavy-duty truck market, charting the latest in trucking equipment, technology, and service trends, Fleet Equipment has a knack for digging up the stories behind the stories (while having a lot of fun along the way). Now you can be a part of it! But

Write for Fleet Equipment
Babcox Media mourns the passing of Tim Fritz, longtime editor and friend

Babcox Media Editor Tim Fritz passed away on Feb. 23 from a heart attack. He was 53 years old. Related Articles – Debating the merits of ethanol – Why isn’t a truck’s appearance part of the PM process? – Change is coming to U.S. energy policies Tim joined Babcox Media in 1990 and spent 31

Tim-Fritz-1400x700
What’s behind the slow adoption of FA-4 oil?

Introduced three years ago, the American Petroleum Institute (API)’s CK-4 and FA-4 oil categories were billed as the next generation of oil, improving on the engine protection and fuel economy benefits offered by previous engine oil categories.

Slow-Adoption-Oil-800x400
How will today’s ‘customer focus’ translate to tomorrow’s electric trucks?

Over the past three years, OEMs have invested heavily in driver-focused equipment benefits—from cozy creature comforts to uptime- and productivity-boosting technology. Today, significant R&D investment is going into the development of electric trucks—probing the possibilities of untested powertrains in hopes of producing a product that meets application needs.

Volvo-electric-truck-VNR-800x400

Other Posts

EUFMC releases conference speaker lineup

Fleet managers can unite at this year’s EUFMC, June 4-7.

Overall new equipment business volume down slightly Y/Y

According to ELFA findings, total headcount for equipment finance companies was down 4.6% year-over-year.

Equipment-Leasing-and-Finance-Association-monthly-index
Growth rate of parts aftermarket sales continues to gradually decelerate

CMVC’s Parts Aftermarket Sales Leading Indicator signals slowing growth in commercial vehicle parts sales.

parts-aftermarket-sales-leading-indicator