Fleet Vehicles in US: Average Purchase Costs

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Part
01

Fleet Vehicles in US: Average Purchase Costs

Based on the purchase costs of Class 1 and Class 2 fleet vehicles from popular brands including Ford and Chevrolet, calculations show that the average purchase cost of Class 1 fleet vehicles in the US is $29,007 while that of Class 2 vehicles is $32,363.

Class 1 Fleet Vehicles

  • Class 1 vehicles are vehicles with a gross vehicle weight rating (GVWR) of less than 6,000 pounds, such as sedans and sport-utility vehicles (SUVs).
  • The 2020 Ford Escape is an SUV fleet brand that starts at $24,885.
  • The 2020 Chevrolet Equinox is a compact SUV that starts at $26,300.
  • GMC's 2019 Acadia is a highly maneuverable midsize SUV that starts at $32,800.
  • The 2020 Chrysler Voyager is an SUV from FCA that starts at $32,045.
  • Therefore, based on the prices above, the average purchase cost of Class 1 fleet vehicles in the US is about $29,007.

Class 2 Fleet Vehicles

Research Strategy

To address this request, we searched through media and industry sources for the average purchase cost of Class 1 and Class 2 fleet vehicles in the United States but immediately found that such information was not readily available. Hence, we resorted to triangulating the average from Class 1 and Class 2 fleet vehicle costs as provided by popular brands. We then attempted to find the popular brands in this space but wasn't successful, as we could not find any industry source, media article or blog post that identifies the popular brands in the US fleet vehicle space. As a way around, we surmised that popular brands would have a strong online presence and so, would be easily identified by being highly listed in the public domain. Moreover, to corroborate this, these brands are listed by Statista as key automakers in the US fleet vehicle space. With this, we identified Ford, GMC, Chevrolet, and FCA's Ram.

From these brands, we obtained the purchase costs for their Class 1 fleet vehicles in the US and determined the average purchase cost as follows: [($24,885 + $26,300 + $32,800 + $32,045) / 4 = $29,007].
For Class 2, it is [($34,510 + $31,900 + $31,900 + $31,145) / 4 = $32,363].
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Fleet Vehicles in US: Average Purchase Costs Part 2

Class 3 and Class 4 fleet vehicles include medium duty trucks that fall within a specific weight range. Listed below are further details on the average prices of Class 3 and Class 4 vehicles in the United States.

Average Cost of Class 3 and Class 4 Vehicles

  • The average purchase cost of Class 3 fleet vehicles in the United States is $36,330.
  • This figure was determined by calculating the mean of the starting prices of the 2020 models of the Ram 3500 Chassis Cab, Ford-350, Chevy Silverado 3500, and GMC Sierra 3500. The calculations are as follows: $35,000+$35,220+$34,100+$41,000=$145,20. $145,320/4=$36,330.
  • All of these vehicles fall in Class 3 with weights between 10,001 and 14,000 pounds.
  • The average purchase cost of Class 4 fleet vehicles in the United States is $47,223.
  • This figure was determined by calculating the mean of the starting prices of the 2020 models of the Ram 4500, Ford F-450, Chevy Silverado 4500, and Isuzu NPH. The calculations are as follows: $38,820+$49,880+$48,200+$51,993=$188,893. $188,893/4=$47,223.25. $47,223.25 was rounded down to the nearest whole number as $47,223.
  • All of these vehicles fall in Class 4 with weights between 14,001 and 16,000 pounds.
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Part
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Fleet Vehicles in US: Average Purchase Costs Part 3

Based on the purchase costs of Class 5 and Class 6 fleet vehicles from leading manufacturers (by market share), including Ford, Freightliner, International, Isuzu, Dodge, and Hino, the estimated average purchase cost of Class 5 and Class 6 fleet vehicles in the US is $53,000 and $70,000, respectively.

Baseline Vehicle Prices

  • In the staff report of the State of California Air Resources Board for the "Public Hearing To Consider The Proposed Advanced Clean Trucks Regulation" released in 2019, the assumed baseline vehicle prices for Class 4-5 and Class 6-7 trucks were $55,000 and $85,000, respectively.
  • Class 5 vehicles are vehicles with Gross Vehicle Weight Rating (GVWR) of 16,001 – 19,500 lbs.
  • Class 6 vehicles are vehicles with Gross Vehicle Weight Rating (GVWR) of 19,501 – 19,500 lbs.
  • Ford, Freightliner, International, Isuzu, Dodge, and Hino were the top manufacturers of Classes 4-7 trucks by market share, as reported in ATD Data 2018.

Class 5

  • The average purchase cost of Class 5 commercial vehicles/trucks based on the prices of the below manufacturers is around $53,000.
  • Ford's F550 (Diesel Engine) costs around $52,680.
  • International's CV CV515 (Class 5 / Diesel Engine) costs around $55,150.
  • Isuzu's NRR (Class 5 / Diesel Engine) costs around $51,500.
  • Hino's 195DC (Class 5 / Diesel Engine) costs around $53,199.

Class 6

  • The average purchase cost of Class 6 commercial vehicles/trucks based on the prices of the below manufacturers is around $70,000.
  • Ford's F650 (Diesel Engine) costs around $69,055.
  • Freightliner's M2 106 (Diesel Engine) costs around $69,900.
  • International's CV CV515 (GVWR 22,940 lbs / Diesel Engine) costs around $75,416.
  • Isuzu's FTR (Class 6 / Diesel Engine) costs around $65,205.

Research Strategy

We first made a straightforward search for the baseline vehicle prices of Class 5 and Class 6 commercial fleet vehicles in the United States. While we did not find the average prices for the entire country, we found a report from the State of California that assumed baseline vehicle prices of trucks, including segments like Class 4-5 and Class 6-7. Although the information came from a credible source, the prices were still not specific to Class 5 and Class 6, respectively. Our second strategy was to make an estimation based on the average purchase costs of the models of the leading fleet vehicle / truck manufacturers. We leveraged the information from ATD Data 2018, which listed the leading manufacturers according to market share, and made individual research per manufacturer. We considered the four of the top manufacturers, starting from the top of the list. However, some of the manufacturers do not have their pricing information available, so we had to skip some — specifically, Freightliner's and Dodge's Class 5 vehicles.

Calculations

($52,680 + $55,150 + $51,500 + $53,199) / 4 = $53,132.25 or around $53,000.
($69,055 + $69,900 + $75,416 + $65,205) / 4 = $69,894.00 or around $70,000.
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Fleet Vehicles in US: Average Purchase Costs Part 4

The average purchase cost of Class 7 fleet vehicles in the US is $75,311.25, while the average purchase cost for Class 8 vehicles is $144,967.75. More information regarding the methods used to calculate these numbers is provided below.

Class 7

As an average purchase cost of Class 7 fleet vehicles in the US is not publicly available, this cost was calculated using the price value of 4 popular brands.
  • Ford's F750 has a starting price of $70,945.
  • Freightliner's M2 106 has a price of $72,500.
  • International's MV607 has a price of $72,950
  • Kenworth's T370 has a price of $84,850.
  • We first added up the four price values, which resulted in $301,245. Then, we divided this number by 4 (301,245/4) to get an average purchase cost of $75,311.25.

Class 8

As an average purchase cost of Class 8 fleet vehicles in the US is not publicly available, this cost was calculated using the price value of 4 popular brands.
  • Freightliner's CA126 Cascadia has a price of $168,900.
  • Kenworth's T680 has a price of $146,500.
  • Peterbilt's 567 has a price of $127,221.
  • International's LT625 has a price of $137,250.
  • We first added up the four price values, which resulted in $579,871. Then, we divided this number by 4 (579,871/4) to get an average purchase cost of $144,967.75.
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Part
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Fleet Vehicles in US: Average Purchase Costs Part 5

The operational costs of Class 1 and Class 2 fleet vehicles in the United States depend on several factors, including vehicle model specifications, mileage, fuel cost, maintenance, repairs, etc. For example, the cost to own a 2019 Ford Escape S1.5L (Class 1 vehicle) in 5 years, with 10,000 miles traveled annually, is reported to be $33,654; while the total cost of ownership (TCO) of the Class 2 vehicle 2019 Ford Transit 250, given the same parameters, is reported to be $43,244.

Light-Duty Vehicles

  • Light-duty vehicles, according to gross vehicle weight rating (GVWR) category, are Class 1 and Class 2 vehicles or vehicles with GVWR of less than 10,000 lbs.
  • The average lifespan of light duty fleet vehicles (Class 1 and Class 2) is estimated to be 8.35 years, according to FleetOwner.
  • The average annual miles traveled by light duty vehicles is 11,346 miles, according to the data of the Federal Highway Administration.
  • The operational costs of fleet vehicles, including Class 1 and Class 2, depend on several factors, such as vehicle model specifications, fleet size, mileage, fuel cost, maintenance, repairs, etc.

Class 1

  • The total cost of ownership (TCO) for 5 years, with 10,000 miles annual vehicle travel, for the Class 1 vehicle 2019 Ford Escape S1.5L is estimated to be $33,654. The vehicle, which has a retail price of $24,105, is estimated to incur the following costs within the 5 years.
  • The TCO for 5 years, with 10,000 miles annual vehicle travel, for the Class 1 vehicle 2019 GMC Acadia SL is estimated to be $41,698. The vehicle, which has a retail price of $29,000, is estimated to incur the following costs within the 5 years.

Class 2

  • The TCO for 5 years, with 10,000 miles annual vehicle travel, for the Class 2 vehicle 2019 Ford Transit 250 is estimated to be $43,244. The vehicle, which has a retail price of $34,085, is estimated to incur the following costs within the 5 years.
  • The TCO for 5 years, with 10,000 miles annual vehicle travel, for the Class 2 vehicle 2019 GMC Savana 2500 LS is estimated to be $49,150. The vehicle, which has a retail price of $34,900, is estimated to incur the following costs within the 5 years.

Research Strategy

We found out in our research that there are no available straightforward information about the operational costs of Class 1 and Class 2 fleet vehicles in the United States. Apparently, there are different factors contributing to the operational costs of fleet vehicles, many of which are vehicle model specifications-dependent. Such factors include fleet size, depreciation rate, fees & taxes, fuel consumption, insurance, interest, maintenance, opportunity, and repairs. Also, there are tools for TCO computation available online, such as International's and Dana's, which consider other factors like downtime, driver cost, and toll cost.
To provide insights into the TCO calculation in Class 1 and Class 2 fleet vehicles, we presented 2 cases of specific models for each class. We then calculated the ratio of the TCO to the retail price of each vehicle to look for a pattern. However, there were wide differences observed, further supporting our initial finding that the fleet's vehicle model is a major factor in TCO calculation.

TCO-to-Retail-Price Ratio Calculation

Class 1 Vehicle Models
2019 Ford Escape S1.5L
(($33,654 - $24,105) / $24,105) x 100% = 39.6%
2019 GMC Acadia SL
(($41,698 - $29,000) / $29,000) x 100% = 43.79%

Class 2 Vehicle Models
2019 Ford Transit 250
(($43,244 - $34,085) / $34,085) x 100% = 26.87%
2019 GMC Savana 2500 LS
(($49,150 - $34,900) / $34,900) x 100% = 40.83%




Part
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Part
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Fleet Vehicles in US: Average Purchase Costs Part 6

The operational costs of Class 3 and Class 4 fleet vehicles in the United States are provided. For both classes a calculation for the total cost of ownership which factors in purchase, maintenance, repair, fuel and insurance costs as well as losses due to depreciation, is provided. Lastly, the average lifespan of fleet vehicles in these classes was found to be 8 years.

General Findngs

  • Commercial motor vehicles in the United States are categorized into classes according to their Gross Vehicle Weight Rating (GVWR). The GVWR is the maximum safe operating weight of a vehicle including the net weight of the vehicle with passengers, driver, fuel, and cargo.
  • The total cost of ownership (TCO) for a vehicle is an estimate of the total cost to own a car for a particular period, usually five years. It accounts for expenses toward fuel, insurance, maintenance, repairs, service, loan financing as well as losses due to depreciation of the car.
  • The total cost of ownership for fleet vehicle owners decreases as the size of the fleet increases. Additionally, it is more difficult for small fleet owners to calculate their TCO since maintenance and other administrative costs are not accurately known more than 70% of the time.
  • It is recommended that fleet managers use their own fleet metrics to calculate their TCO since there may be variations in the number of assets, assets use, required maintenance and economies of scale among different fleets.
  • According to the American Transportation Research Institute (ATRI), the average truck drives 89,000 miles per year and the total annual operational cost for one truck is $151,859 or $1.69 per mile. However, these averages account for all classes of vehicles uses in the trucking industry and data is not dis-aggregated according to class type.

Calculating the Total Cost of Ownership

The total cost of ownership for Class 3 or Class 4 vehicles was not readily available. As such, we attempted to triangulate values by using an online calculator developed by the truck manufacturer International Trucks. The calculator requires the following inputs and the values used for each are explained. For the purpose of triangulating the data, a typical Class 3 vehicle was taken to be the Dodge RAM 3500 truck and a typical Class 4 vehicle was taken to be the Ford F-450 truck.
  • The trade cycle per year which refers to the number of years a fleet company is expected to keep a vehicle. For this study, the trade cycle was assumed to be the average life span of the vehicle which is 8 years for Class 3 and 4 vehicles.
  • The number of units in the fleet. This was assumed to be 100 vehicles (a small fleet) for the purpose of this study.
  • The number of miles driven per year. According to the Federal Highway Administration, delivery trucks travel 13,000 miles on average per year. Delivery trucks are typically classified as Class 3 or 4 vehicles.
  • The average vehicle purchase price. The Class 3 calculation was based on the starting price of a 2020 Dodge RAM 3500 truck at US$35,000 and the Class 4 calculation was based on the purchase price of a Ford F-450 truck at US$50,000.
  • The finance rate for buying a new vehicle. An interest rate of 30% was used for both calculations as this is the highest typical rate seen for commercial truck financing.
  • The expected residual value. According to cars.com, this was found to be an average of US$21,000 for an 8-year-old Ford F-450 truck and approximately US$20,000 for an 8-year-old Dodge RAM 3500 truck. These were assumed to have driven 13,000 miles per year over the life span in keeping with the previous assumptions for trade cycle and number of miles driven. It should also be noted that these residual values are approximate and largely depend on the particular model selected.
  • The average fuel economy. For Class 3 vehicles, a fuel economy of 9.5 miles per gallon was used. For Class 4 vehicles, a fuel economy of 10.5 miles per gallon was used.
  • The average diesel price per gallon. This was taken to be $2.42 based on the EIA reported price as of March 02, 2020.
  • Other costs factored into the calculation were average driver turnover in months, average driver cost to hire and train, average driver cost per mile, average number of down days per year and average cost per down day. The default values provided by the calculator tool were used. These were a turnover period of 12 months, a training cost of $5,000, a driver wage of $0.50 per mile, an average number of down days of 6 per year and an average cost per down day of $1,000.


Class 3 Vehicles

  • Class 3 vehicles in the United States have a GVWR of 10,001 – 14,000 pounds and are considered medium-duty trucks.
  • The average vehicle age for medium-duty trucks (includes Classes 3, 4 and 5) is 8 years.
  • According to Edmunds, the total cost of ownership for a single 2018 Dodge RAM 3500 is approximately US$50,000 depending on the particular model selected but this does not account for driver costs.
  • According to the International Trucks online TCO calculator, the total cost to ownership for the Class 3 vehicle is $27.77/mile.

Class 4 Vehicles

  • Class 4 vehicles in the United States have a GVWR of 14,001 – 16,000 pounds and are considered medium-duty trucks.
  • According to Edmunds, the total cost of ownership for a single Ford F450 truck is US$86,763 but this does not account for driver costs.
  • According to the International Trucks online TCO calculator, the total cost to ownership for the Class 3 vehicle is $25.83/mile.
Part
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Part
07

Fleet Vehicles in US: Average Purchase Costs Part 7

The total cost of owning (TOC) class 5 or 6 fleet vehicles in the US can be determined using a number of factors including maintenance, finance, administration and licensing, legal and tax and daily running costs such as fuel and labor costs. The TOC of a fleet vehicle varies on many factors including the economy at the time.

Total Ownership Cost and Lifespan

  • Research has indicated that the total lifetime cost of ownership for class 6 fleet vehicles in 2020 is on average $450k which includes maintenance, fuel and the purchasing of the vehicle.
  • The average lifespan of class 5 and 6 fleet vehicles in the US is 8 years.

Maintenance

  • Maintenance costs increase as the age of the vehicle increases.
  • Research has found that fleet vehicles cost an average of $38.90 per unit per month in 2016, which rose by 5-7% in 2017 averaging $41.29. Costs then increased by 2-5% in 2018 putting the average monthly cost per vehicle at $42.74.

Licensing and Administration

  • Licensing costs were estimated at $2.7 per mile and administration costs estimated at $2.9 per mile in a 2012 study. Based on these figures and accounting for inflation rates, we have estimated that in 2020 licensing costs are on average $3.03 per mile and administration costs are $3.26.

Purchasing The Vehicle

  • The initial purchasing price for a commercial class 5 or 6 fleet vehicles was between $100k and $175k in 2016. While specific data regarding the average cost in 2020 is not available without contacting suppliers for a quote, we have estimated this cost considering inflation to be between $108k and $188k.

Operating Cost

  • Research has shown the operating cost for a traditional diesel truck is on average $1.51 per mile. However, this research has not specified what class of vehicle the truck is.

Factors Influencing TOC Calculations

  • Less than 1% of fleet vehicles are electric, therefore we have calculated costs based on non-electric vehicles.
  • Research indicated the larger the fleet the lower the total cost of ownership per vehicle so calculations will vary dramatically depending on the size of the fleet.
  • With changes in emissions laws, commercial vehicles are adopting new technology in order to comply. The newer the vehicle the more sophisticated the technology and with more advanced engines, maintenance costs are higher. This is due to the advanced data analytic, digitized diagnostics, and telematics required in maintaining the vehicle.
  • Calculating the TOC depends on many variable factors including geographical location, age, type of vehicle, the size of the fleet and the number of miles driven annually. The TOC also varies as the economy changes and fuel prices, labor costs and inflation rates change.

Research Strategy

After several hours researching the TOC and operational costs of class 5 and 6 fleet vehicles in the US, we were unable to find specific data breaking down the costs. We did, however, find this helpful report highlighting some operational costs for vehicles that provide some context, but it is not specific to class 5 or 6 vehicles.

We used industry blogs, articles, and studies, including a study, carried out by Ernst and Young in 2012, which were able to provide insights and some helpful data, however, as the industry has grown and developed these figures fail to be as accurate today. We, therefore, attempted to triangulate the information using statistics and industry expert websites such as Statistica, Forbes Automotive Fleet, and fleetowner.com, with the hope of uncovering data on contributing costs such as maintenance, legal fees and licensing. While some of this data was available and we were able to triangulate more accurate figures using inflation rates and information on market growth, we were not able to gain enough data to accurately calculate the overall cost for class 5 and class 6 fleet vehicles separately.

Therefore, we have provided insights on the data that was available and indicated where estimations have been calculated based on past data. We were also able to find this helpful tool that calculates the TOC based on set parameters, but when we tried to calculate an accurate figure we were unable to source up-to-date data for all the parameters required, and therefore, the tool would have provided an inaccurate result.
Part
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Part
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Fleet Vehicles in US: Average Purchase Costs Part 8

In the United States, commercial vehicles are classified by their gross vehicle weight rating (GVWR). They fall into eight classes that are divided into three categories. Class 7 and Class 8 vehicles fall under Heavy-Duty Trucks and require a Class B commercial driver's license (CDL). Below is a breakdown of operational costs for a fleet of Class 7 and Class 8 vehicles in the United States.

DETERMINING TOTAL COST OF OWNERSHIP (TCO)

The TCO for a fleet of vehicles considers several factors to provide an objective view of operating costs for a fleet of commercial vehicles. While there is no one way to do it, it is recommended that TCO calculations include the purchasing price, fuel expenses, planned maintenance and unplanned expenses, such as breakdowns and accidents.

A TCO study completed in 2016 determined TCO using maintenance, financing, administration, legal/taxes and other costs, but did not factor in driver and fuel costs. These findings are the basis for determining TCO below. A complete breakdown of what was included in determining TCO for the study can be found here.

In a 15-year study of Class 8 vehicles in North America, found that wages and benefits for drivers accounted for 44% of the TCO. According to the Bureau of Labor Statistics, truck drivers make an average of $43,680 a year.

Class 7

  • Total cost of ownership (TOC): The KPMG study determined the TCO in dollars per mile based on fleet size. The cost per mile ranged from .78 for a small fleet to .63 for a fleet over 500. The average was .79 per mile. This was based on an average annual mileage of 36,000 miles.
  • The average cost per mile (.79) multiplied by the average annual mileage (36,000) equals the total cost per vehicle ($28,440).
  • A fleet of 5 trucks can anticipate a total operating cost of $28,080 per truck for a total of $140,000, plus the cost fuel and drivers. .78 cost per mile x 36,000 annual mileage= $28,080 per truck x 5 trucks= $140,000.
  • A fleet of 500 trucks is looking at an operating cost of $22,680 per truck for a total cost of $11,340,000, plus fuel and drivers. .63 cost per mile x 36,000 annual mileage= $22,680 per truck x 500 trucks = $11,340,000.
  • Purchasing Price: Class 7 vehicles vary in price depending on type, make, model, year and mileage. Prices range from $20,000 for a used vehicle to well over $500,000 for brand new. This cost is figured into

Class 8

  • Total cost of ownership (TOC): The KPMG study determined the TCO in dollars per mile based on fleet size. The cost per mile ranged from .58 for a small fleet to .47 for a fleet over 500. This was based on an average annual mileage of 78,000.
  • Purchasing Price: Class 8 vehicles vary in price depending on type, make, model, year and mileage. Prices range from $1500 for a used vehicle to $8,000,000 for brand new.
  • The average cost per mile (.58) multiplied by the average annual mileage (78,000) equals the total cost per vehicle ($45,240).
  • A fleet of 5 trucks can anticipate a total operating cost of $45,240 per truck for a total of $226,200, plus the cost fuel and drivers. .58 cost per mile x 78,000 annual mileage= $45,240 per truck x 5 trucks= $226,200.
  • A fleet of 500 trucks is looking at an operating cost of $36,660 per truck for a total cost of $18,330,000, plus fuel and drivers. .47 cost per mile x 78,000 annual mileage= $36,660 per truck x 500 trucks = $18,330,000.

DETERMINING HEAVY-DUTY VEHICLE LIFESPAN

As with most vehicles, heavy-duty vehicles, regardless of class, deteriorate with age. Replacing vehicles too soon equals more capital and depreciation costs, while holding on too long results in increased maintenance costs for engines and transmissions. It is recommended that fleet managers utilize a life cycle spreadsheet to track things like interest costs, estimated maintenance and operating costs, and vehicle depreciation rates. This data can help with determining the best time to replace a vehicle. On average, for Class 7 and Class 8 vehicles, this appears to about 7 to 10 years. Other factors to consider when determining the lifespan of a truck is found below.
  • Hours versus Miles: Vehicles where the engine is use more frequently may not necessarily have more drive miles. Vehicles that spend more time idling, such as utility trucks, may have lower lifespan. It is recommended fleet managers use cost-per-hour versus cost per mile when determining lifespan for these types of vehicles.
  • Specs: A diesel engine in Class 7 vehicles is typically good up to 300,000 miles before problems begin to emerge. Class 8 vehicles average about 480,000 miles in the first phase of their life cycle.
  • New-Vehicle Technologies: Improvements in fuel efficiency may mean less degradation, extending the cost-effectiveness of the vehicle. New technologies include hybrid-electric, battery-electric and other alternative truck technologies. These new technologies are expected to improve fuel economy while significantly decreasing the CO2 emissions.
  • Location and Region: The type of terrain and the climate can also have an impact on life cycles of heavy-duty trucks. Trucks that primarily travel flat roads will have a longer life span than those that do not. Trucks that need to make frequent stops will likely wear out faster.
  • Risk Tolerance: How long a fleet can tolerate a vehicle being out of commission for a period of time impacts how often fleets are willing to replace vehicles. The cost of downtime needs to be considered to weigh the risks if a vehicle breaks down.

Research Strategy

The research team reviewed the different classifications of fleet vehicles in the United States by reviewing various trucking industry related blogs, articles and reports. From this definition, the research team was able to focus on Class 7 and Class 8 vehicles. The next step was determining what factors are considered when calculating TCO. A study completed by KPMG in 2016 included a complete and comprehensive breakdown of the factors used to determine TCO. We used their findings to provide examples of fleet costs, based on size and class. Determining the life span of heavy-duty trucks requires an analysis of how a vehicle is used, its location and the risk tolerance of the fleet manager. We included key points to consider when determining life cycles.

Sources
Sources

From Part 01
From Part 06