Vehicle Cost

orson

Alright, I know we've hashed through this before but let's hit the topic again.

Let's leave the buy vs. lease argument to older(or a new) thread and talk about budget numbers for a company owned employee vehicle.

I am getting close to having enough work to hire an employee and would like to come up with a realistic hourly cost for vehicle and related expenses.

I will probably finance the vehicle over 5 years and will be looking for a low mileage used van.

One of my peers buys new vehicles and bases the cost per hour on a 10 year service period.

This seems fine(I typically put less than 20k a year on my work vehicle, so basicaly figuring a 200k service life) but how do you go about estimating an average repair cost per year of the vehicle once the warranty expires? I don't have any historical data to base this on.

Any input on how you folks come up with your vehicle costs appreciated.

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SLSTech

Your regular monthly payments on the loan or lease = your cost to repair is one quick formula (when it starts going over that or even getting close it is time to get another one)

Save the money not used in an account for your next vehicle

Don't forget all your tuneups, & normal maintenance that should be equal across the board (4 Oil changes a year, new tires & overhaul every 2 or 3 years)

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72chevy4x4

check out used cargo van prices on craigslist around Philly-you can find some great deals and with the money saved provide many years of repairs/maintenance. Once I decided to buy a commercial vehicle (box van), I got one w/ 103k and 5 yrs old. Have put some money into it over the years-alternator, tires, plugs/wires and a few other odds and ends-still with the price tag of $8000 plus $1500 in maintenance, it's a lot less than the comparable new cost of over $32-34 grand for the truck.

While I may have not done anything to answer your original question, don't rule out buying used as an attractive means of keeping costs down in order to grow your business.

orson

I guess the main question I'm asking is what you guys budget per year per vehicle for repairs (not including normal service items: oil and fluid changes/brakes/tires/wipers/filters) that has worked for you historically?

I've always bought older(100k plus mileage) vehicles and been nickel and dimed to death by many of them. My new strategy is to buy low mileage(50k and under) used vehicles which I think will yield lower repair costs in the long run.

Do you think 1000 per year is a realistic number for vehicle repairs over a 10 year period? (service rates in my area are generaly 45 to 65/hr)

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ottagosoon

You have to budget a realistic amount and you know as vehicle go you could be short on your budget on year and heavy the next.

One year I put 5k in my truck. It was one thing after another. Then go two years with nothing but regular maintenance.

But just remember when you take your truck into the shop, the auto shop has on thing stuck in his head " $500.00 dollars for that and another $500.00 dollars for this and that last thing I can do for $500.00 dollars"

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Can't Say That Here!!!

katoman

Bought them, leased them, flipped them every 4ys., tried to keep one forever. It doesn't matter, my experience (40ys of truck ownership) is it costs me $7.00/hr to run a vehicle. This is all costs, and in Canadian dollars.

Mike Finley

There are a lot of reports available for what you are looking for on the Internet if you look around.

You should find that total cost of ownership of a buisness vehicle is about .50 a mile. This is an all inclusive number and you might recognize it coorelates with the IRS per mile vehicle deduction. This number takes into account finacing interest, gas, and maintenance, depreciation, everything.

When you look at maintenance numbers only you will see they usually break it out into a few categories such as tires and things like that. You should expect that number to be about 20 cents a mile.

So your 20,000 miles a year is about $4000 a year. You can probably do a lot better then that with being involved more hands on with cost savings and scronging for deals.

But just figure tires alone = about $1000 every two years. Can you do better then that? Probably, but just $300-$500 a year for tires is probably pretty damn close.

Pearce Services

here is how I would figure this based on complete assumptions.

I expect 10,000 miles per $1000 spent of trouble-free miles from any vehicle I purchase, and have found this to be a relatively safe assumption.

So if you buy a van for $8,000, with 50,000 miles on it, I would expect to get it to 130,000 miles with little trouble. If you would like to get 200,000 miles on the vehicle before you dispose of it, expect a $7000 budget for the life of the vehicle, which in your case, to hit 200k, would be 7.5 years.

This is just under a grand per year, then go through the owners manual, and add up all of your scheduled repairs to 200k, divide this by 7.5, and add to your 1000, and you should be safe.

This is a complete guestimate, but I have not been disappointed by the 10k/$1k cost assumption.

Whatever formula you use, I would think that accelerating the contributions to this maintenance account, until you have a safe balance, then reducing your contributions would be worth doing, since, you never know when that unexpected repair is going to hit you.

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Kevin

www.BadcoDoors.com

orson

I did some checking on the interenet but couldn't seem to find info for the vehicle I have in mind (Dodge Sprinter 2500).

Using the 50 cents a mile rule comes out close to what I had calculated by entering my normal maintenance costs and figuring an additional 1000 a year repairs for the life of the vehicle.

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TxElectrician

When I read your post I thought this was high. Checked my truck budget for the last two years and it has been 14,000.00 per vehicle. 2080 hrs x 7.00 hr = 14,560. Pretty close.

I have averaged close to 30,000 miles per vehicle, per year, the last 10 yrs. Gas closing in on 4.00 per gallon last year played havoc with the budget. Hope we don't see a repeat this summer.

Valencourt

Learn to carry around less stuff, buy a cheap and efficient NEW and SMALL mini SUV like the Scion Xb and drive the wheels off of it for 100,000 miles. Then sell it for half of what you paid. You MAY spend a few more bucks, but you will not lose any business for a repair. Also, it is good for your image to have a nice ride.

rbsremodeling

I go to the auctions and by 2-3 F-150 for about 1500 bucks a piece and give it to my new guys. Mostly govt auctions, vehicles look fairly clean slab and magnet sign on them.

When they break down if its more than 1000 bucks the tags go on the next truck

I usually get 2-3 years out of each truck

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