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September 13, 2021

Understanding the Real Cost of Vehicle Downtime

Understanding the Real Cost of Vehicle Downtime

Vehicle downtime is an inevitable yet highly frustrating part of fleet management. The reason for downtime can vary. It may be due to regular planned servicing, minor repairs for fixing normal wear and tear, or major repairs stemming from an accident. Regardless of why, the bottom line is that an important vehicle is out of commission. 

And that hurts profitability. The question is, what exactly is the real cost of vehicle downtime?

Obvious and Hidden Costs

First, it should be noted that there are two types of costs — obvious and hidden (also known as hard and soft). An obvious cost is pretty straightforward and includes expenses such as maintenance, fuel, and insurance. These are easy to identify and to quantify.

A hidden cost, on the other hand, isn’t as easy to pinpoint and measure. It doesn’t involve any actual costs that go into making a repair, and it may not appear until later on. Say, for example, a technician’s vehicle is out of action for a day while repairs are being made. While they would normally complete five jobs per day, they’re only able to complete three jobs while their vehicle is in the shop. This results in them generating only 60% of the revenue that they normally would.

Or, say your other technicians have to cover the extra workload while the technician who’s experiencing vehicle downtime is out of action, and they get behind on their appointments. This would likely create friction with customers, which could harm your brand equity. So in the long run, this could potentially lead to higher than normal churn and a loss of customers, which would diminish your profitability yet again. 

When you look at the big picture like this, you can start to see how big of an impact vehicle downtime can have, especially at scale. 

A Quantifiable Number

There are a wide number of variables that determine exactly how much vehicle downtime costs (something we’ll discuss in detail later on). But how much does it cost on average across the board? 

According to recent data, vehicle downtime ranges from $488 to $760 per vehicle, per day, for an average of $624. Again, factoring in long-term costs like diminished brand equity is impossible, but $624 is about what you can expect to lose each day a vehicle isn’t operational. Of course that number increases for every vehicle that’s sidelined. If you were operating a large fleet and five vehicles were out on a given day, that would equal a total of $3,120.

According to recent data, vehicle downtime ranges from $488 to $760 per vehicle, per day, for an average of $624. Click To Tweet

As you can see, this can really add up in a hurry and take a toll on profitability if you’re not careful. That’s why reducing downtime should be a top priority for all fleet managers. 

Common Reasons for Vehicle Downtime

Now that we have a concrete figure of what it costs, let’s discuss some of the main reasons why fleet vehicles suffer downtime. For starters, there’s accidents, which account for 20% of annual downtime on average. It’s really quite simple. One out of every five fleet vehicles sitting in the shop have been in an accident, which shows the supreme importance of safe driving. 

While this won’t eliminate accidents completely, the overall number of accidents fleet drivers are in could at least be reduced by placing a larger emphasis on safe driving. Or as fleet management expert Mike Antich puts it, “The best way to minimize preventable accidents (and by default vehicle downtime) is by modifying driver behavior.”

The second biggest cause is mechanical problems. This could be something relatively minor, such as replacing a fan belt or spark plugs. Or it could be a major repair, like replacing brakes or even installing a new transmission. 

Although it’s impossible to eliminate mechanical problems altogether, especially with many fleet vehicles naturally receiving so much wear and tear, it’s crucial to service vehicles regularly. Most experts agree this is one of the best ways to lower the likelihood of serious mechanical problems and extend their lifespan. To quantify, “vehicles participating in a scheduled preventative maintenance (PM) program experience about 20% fewer maintenance-related downtime days than those that aren’t,” Antich adds.

Besides that, here are some other common reasons for vehicle downtime:

  • A dead battery
  • A flat tire
  • Expired tags or registration
  • Drivers getting locked out of their vehicles who then need emergency road service
  • Vehicles getting booted for parking in off limit areas
  • Vehicle recalls

Actionable Ways to Reduce Vehicle Downtime

We touched briefly on a couple of ways to reduce downtime by promoting safe driving behavior and consistent vehicle servicing. But let’s look at some hyper-specific ways to keep it in check and some helpful tools that can assist with this. 

One is to use a fleet software optimization platform like VQ Safety to remove the need for driver modification. This simple software offers a few key features that protect your drivers and assets and limit risk exposure to dramatically reduce the odds of accidents occuring. 

Distracted driving prevention call blocking, for instance, syncs with a driver’s phone, automatically locking it whenever a vehicle’s gear is engaged. So the second a driver puts their vehicle in forward or reverse, they’re unable to use their phone, which helps prevent distracted driving. 

Vehicle downtime

With cell phones contributing to 1.6 million crashes each year, this is a practical and highly effective way to keep your drivers and everyone else on the road safe, while at the same time reducing vehicle downtime. 

Another innovative piece of technology that can help a great deal is a speed governor. Once installed, it creates a maximum speed limit a vehicle can hit that aligns with what you’ve set in your fleet safety policy. So, if you have a maximum speed limit of 65 mph, for example, your drivers won’t be able to surpass 65 mph while they’re on the road. That way you don’t have to simply rely on a driver’s word that they’ll stick to the speed limit. With a speed governor, it’s strictly enforced. 

Vehicle downtime

Finally, you can implement driver management solutions to provide you with an ongoing stream of near-real-time data on driver behavior. As a result, you know how your drivers are performing and can quickly identify risky behavior. VQ Telematics, for instance, supplies you with data, such as miles traveled and trip duration. It will also alert you when it spots risky driver behavior so you can take swift corrective action to stop issues and educate fleet drivers.

Vehicle downtime

Consequently, this can go a long way in reducing accidents, and in turn, reduce vehicle downtime, as well as wear and tear. On top of this, it can help your drivers optimize the routes they take so they make smarter decisions, which can help them move from destination to destination more efficiently and lower their fuel consumption.

The Real Cost of Vehicle Downtime

There are numerous factors that contribute to vehicle downtime — not all of which can be immediately measured. But when you look at averages across all collective fleets, it comes out to $488 to $760 per vehicle, per day. So as you can see, it’s quite expensive, and the financial backlash can really add up quickly if it’s a large fleet with multiple vehicles out of a commission. 

That’s why it’s so important to 1) understand the most common reasons for vehicle downtime (accidents and mechanical problems are the biggest) and 2) take practical steps to address these problems. With the right approach and using innovative tools like the ones mentioned above, you can keep downtime to an absolute minimum, thereby boosting your productivity and profitability.

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