SME fleets, already facing stretched SMR (Service, Maintenance and Repair) budgets with company cars on lease extensions, are now being hit with escalating replacement tyre costs.
According to i247 Group, an outsourced driver support and asset management provider to many of the top leasing companies, average replacement tyre costs are likely to continue rising. It says this is as a result of a rapidly changing fleet portfolio mix and double-digit percentage cost increases from tyre manufacturers.
David Legg, Director of Tyres, i247 Group explained:
The price escalation is substantial and we’re seeing two principal reasons for this. We’ve seen manufacturer price increases due to cost rises across materials, logistics, labour and fuel. These increases are then coupled with a significant change in the fleet mix where we’re seeing larger rim sizes and new, more expensive tyre technology to accommodate an increasing number of SUVs and electric vehicles.
The evolution of the company car in recent years and the move by fleets to electric vehicles are adding to the cost pressures on SMR budgets. A good example to illustrate this, says i247 Group, is to compare the traditional Volkswagen Golf company car with its electric equivalent, the Volkswagen ID.3. The like-for-like tyre fit costs are 246%* more for an electric Volkswagen ID.3 compared with the equivalent Volkswagen Golf. In addition, wear rates between the two models are also dissimilar.
SUV rim size also add to rising tyre costs
i247 Group added that the popularity of SUVs – with their ever-increasing rim sizes – is adding further inflationary pressure, while the range of tyres needed to serve both petrol and diesel ICE cars as well as electric EV fleets, is impacting the ability of tyre suppliers to stock such a diverse range of sizes and specifications and reducing fleet discounts. Additionally, fitter costs are rising in order to retain qualified staff in the face of an industry-wide shortfall.
David Legg added:
We need fleet managers and drivers to be aware of the cost hikes we’re seeing. The challenges in both tyre and staff supply mean that it’s critical to book your tyre changes in advance to ensure your requirements can be managed as efficiently as possible. At i247 Group we’re watching the situation closely and advising our customers on cost-reducing actions and tyre policy changes.
*Calculation based on: 2020 average fleet tyre price for a VW Golf 1.5 TGI, 148 hp, 110kw tyre size 205/55R16 91V Michelin brand vs an average 2022 fleet tyre price VW ID.3 143 hp, 110kw tyre size 215/55R18 98T Michelin brand. Total percentage increase 246% on like for like standard fit.
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