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.

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