OUR TABLES OF OPERATING COSTS.
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Some Details of the Way in which They are Compiled, and the Figures on which They are Based.
NEARLY every business 'inan is interested, in one way or another, in the commercial, motorvehicle, anti, if he considers it from the business aspect at all, he wants to know something about its cost of operation. There are two classes to• be considered--those who already own motor vehicles and those who intend, in the near future, to become owners. The former want to know what their vehicles are costing them; they also want to know what they ought to be costing, so that they may discover whether any economies may be effected. Those who are not yet owners are anxious to know what the costs are before they buy. Now, it would 'seem, on the face of it, to be a very simple matter to ascertain the actual cost of -operation of a vehicle which is already in use or to estimate beforehand what such a vehicle would involve in the way of operating expense. Yet it is not so easy as it looks., the chief difficulty arising from the fact that the cost differs to a very considerable extent, not merely as between vehicles of the same type, make and capacity, working under similar conditions one to the other, but actually as between one period and another of the life of the same vehicle.
It is, in fact, perfectly true to state that it is easier, very much easier, to drive, operate and maintain a motor vehicle than it is accurately to ascertain its cost : to forecast that of other vehicles of the same kind, even if engaged upon similar work, is more difficult still.
In this article we must consider the matter in three phases. We have, in the first, to agree upon the actual items; then we have to decide on what basis those items may be calculated, and, thirdly, we have to set such values against each as will serve as figures for comparison, on general grounds, with any actual results which may be obtained in practice. In the beginning, too, for the sake of simplicity, we will confine ourselves entirely to the items of expenditure directly and entirely attributable to, and quite inseparable from, t ft e operation of the vehicle. The extraneous expense -that of staff and organization necessary 'to deal with fleets of vehicles-is not quite outside our scope, and we shall refer
to it later. In order to make the matter perfectly plain to an our readers and not merely to those who ate already trained to the use of figures, we shall deal with the matter in an elementary manner and make our way through the whole range of expenditure which the purchaser of a vehicle has to face right from the start, when he places his order, to the time when he has got his transport arrangements well under way. The first item is by far the largest; it is the actual cost of the vehicle itself. The expenditure will have to cover the price of the chassis, body, tyres, accessories and spare parts. Several other sums will have to be disbursed before the machine can be set on the road. There is its licence and one for its driver; there is the insurance-we make no bones about that; it is, in our minds, as essential as the licence.. Fuel is required, as also is fail.
A driver will have to be engaged, and possibly a mate. The latter is almost essential if the vehicle is a steam wagon.
At the end of the day the vehicle will want a home to go to, and whilst it may be the case that there is an empty shed at the warehouse which affords the necessary accommodation, it is still the case that the housing of the vehicle involves some expense, even if it be only apparent in the loss of use, for any other purpose, of
that particular shed.
We are aware, a course, that it is still the habit of -some owners of commercial motors, even in these enlightened days, to leave their vehicles out in the open. Even they, in assessing. their costs, should allow an average amount, for the treatment will react on the vehicles, involving greater expenditure in renovation and repair, as well as more rapid depreciation.
Finally, certain sundries will have to be purchased, such as paraffin for cleaning and for lamps, if paraffin lamps be used. Dusters, polishing materials, hose and sponge, and a few items of that sort, are essential items of equipment. • We have now outlined the expenditure which the acquisition of a commercial motor involves. The next step IS to itemize and to classify them. The first big expense we mentioned has to be
Split up. Part of it is capital expenditure, part Is running cost. We mentioned four things--chassis, body,, tyres a n d spares. The, cost of the chassis and body together is the capital expenditure. If the price paid for the vehicle included the cost of the tyres, as it almost invariably does, then the
ordinary retail price of a set of tyres should be deducted from the total, in order to get at the net cost.
That is then to be regarded as the capital outlay on the vehicle. It is recalled in our schedule of operating costs in the item " interest," which is calculated on the capital outlay, ascertained as above, at 1 per cent. per annum above the current bank rate. As we write, the bank rate is 5 per cent. The item " interest " is therefore calculated at 6 per cent, per annum on the east of the complete vehicle, less the value of the tyres.• For the sake of convenience this sum is divided by 52, in order to assess it as aweeklyamount. Incidentally, in
• the case of a pneumatic-tyrecl vehicle carrying one or more spare tyres, only the value of those on which the vehicle is running must be subtracted from the total cost ; the spares are assumed to be always there and are not being constantly worn, and, Consequently, are part of the capital.
This interest on capital cost is regarded as an item of expense in the operation of a motor vehicle, because 4.t is considered that the money otherwise invested would bring in at least the amount set down under that heading.
The next thing to consider is the cost of the tyres. They will wear and will have to be renewed. If they are pneumatics, there may also be some slight expenditure in repairs. As a rule, however, this will be negligible.
The Life of Tyres Expressed in Terms of Average Mileage.
Solid tyres will last anything from 8,000 to 20,000 miles. A life of 24,000 miles is not unknown, and in rare cases even more than that. Generally, however, the average may be taken as 16,000 miles per set, front as well as rear, and taking different conditions of roads into account.
Pneumatics are more of a gamble; from 2,000 to 10,000 miles is the usual range. Rarely now, however, do tyres give out at the lower figure, and, on the other hand, 20,000 miles has been achieved in a sufficient number of cases to remove the occurrence from the realms of chance. As a basis for calculation, 8,000 miles per cover and 12,000 miles per tube is sufficiently accurate to meet the average case.
It has to be borne in mind, therefore, that the expenditure on tyres will recur, in the case of solids, at round about 16,000 miles. With pneumatics new covers should be provided for in the estimates at the expiration of each 8,000 miles and new tubes at each 12,000 miles.
The Reasons for Accepting an Average Figure.
Let us, at this stage, make ourselves quite clear. We do not say that solid tyres will last 16,000 miles; we do not deny that in many eases they run for longer than that. We are equally emphatic in saying that in many cases they do not last so long. What we say to the man who is wondering what his vehicle is going to cost is that his solid tyres, at any rate, should not need renewal until his vehicle has run approximately 16,000 miles. To the man whose experience is not so favourable, we say :‘ Either the conditions under which he is working are detrimental to tyre life or that he is not taking reasonable care of his tyres; and in that connection we may mention that overloading, overspeedlag. harsh braking and much backing against, or mounting of, kerbstones are only a few of the unfavourable conditions under which some tyres have to work. The same remarks apply, in general, to prenmatic tyres. In the figure stated, averages only are given, and it is a most curious fact that, in any walk of life, the average cash N so rarely met with that its existence is sometimes doubted !
Before going any farther, attention should be drawn to the important fundamental difference between these two items of operating cost—" interest" and "tyres."
The item " interest " is a certain definite sum recurring regularly each week. It makes no difference whether the vehicle be, running or not, the interest still D46 goes on unchanged. On the other hand, the expenditure on tyres may be said to depend, for all practical purposes, on the mileage covered. Assuming, for the sake of argument, that our figure of 16,000 miles holds good in any particular case, then the period covered by the expenditure on a set of tyres may be anything from 16 weeks (as might very well be the case with a motorbus) to two, or even threek years-in the case of an ordinary lorry not doing a big annual mileage.
The " interest " item stands the same', whatever the conditions under which the vehicle is operated; that of " tyres " depends directly on the running of the machine. These fundamental differences are very important, and it is by reference to them that the various items of the operating ca8t of a vehicle are classified as standing charges or running costs only. Subsequent items will be set into their proper classes and a better understanding of the significance of the classification and the terms themselves will accrue as we proceed.
Vehicle Life Taken at 160,000 Miles.
We have not yet finished with the capital cost, as ascertained above, of the complete vehicle, less tyres. The vehicle itself will not last for ever. It wears out as it runs. Every mile brings it nearer to its end and its owner to the time when he will have to buy another. Moreover, it is no easier to quote a definite figure for the life of a vehicle than it is to say how many miles its tyres il1 run before they become worn out. Many sound chassis are still going strong after 300,000 miles; some hardly go one-third of that distance. Many are still being used .that ought long ago to have found their way to the scrap-heab. An average life, for a wellmade machine, well found and reasonably treated, is 160,000 miles. After 160,000 miles the owner may reckon on having to renew—and not so bad, either—a life of 10 years at 16,000 miles per annum.
The wise, man will set aside a sum each' week towards that time when a new vehicle will have to be bought. He will base the amount on the mileage covered, and the amount per mile will be ascertained by dividing the capital cost, as defined above, by 160,000. This item is called "depreciation," and, since it depends on the mileage run, it is clearly due to come under the classification "running cost."
There will be few, we imagine, who will think that the vehicles they buy will cheerfully cover their 160,00a miles apiece without any other expenditure than " depreciation " as just described. Those who have that Idea may disabuse their minds at once. In the first big outlay to which we referred in this article, mention was made of an item for spares. Later on we enumerated some things which had to be bought for the garage. •There will be call for those spares as parts of the vehicle wear out ; the other things will be used, each according to its piirpose, in the garage and on and about the vehicle. This is called "maintenance," and the cost of the things named must be set down under that heading. Clearly, too, there is no need fer maintenance of an idle vehicle, sothat this item must be • classified as a running cost.
Inevitable Expenditure on Maintenance.
• Now, very little notice should`be taken of those testimonials which we sometimes see in the Manufacturers' advertisements describing the prodigious mileages which the writers' vehicles have run for an expenditure of a fractional part of a shilling on maintenance. They are exceptional cases. It May be taken that a certain expenditure on this item is not only to be expected ; it is actually to be commended. A man who runs his lorry for thousands of miles on end witho-at proper attention is getting along very nicely, for the time, without any maintenance expense. Ha will have to spend all the more, however; when he does begin. It may be taken that a small fraction of a penny per mile Is the average experience of users an the items mentioned. In the ease of a light van, that amount may be so little as onetwentieth of a penny per mile, and in a 4-ton petrol lorry or a steamer it approaches a farthing a mile.
That, however, is not all that comes under the heading "Maintenance," Provision has to be made for an overhaul, which is preferably carried out after every 15,000 or 16,000 miles of running. In a small van that may cost no more than from £20 to £25, but in the case of a big lorry £100 is nearer the average figure.
If we take the ease of a light van having a capacity of 7 cwt., the cost for maintenance might be Ad., plus £25 for 16,000 miles, which is 0.375th a mile. The average maintenance cost per mile of a vehicle of this capacity would therefore be 0.375d., plus 0.05d., total 0.425d., say 0.43d.
A 3-ton lorry would cost about *cl. per mile for ordinary upkeep and £80 for the overhaul; total, 1.33d. per mile, and so on.
Here, again, we must reiterate that the figures we give are average results, the mean of a large number of cases covering all sorts of work, in all sorts of places, and relating to all kinds of vehicle. Many a man may find his costs higher ; on the other hand, many will be able to improve on our figures.
The Weekly Cost of Licensing.
The next item we named in our preliminary outline of expenditure was licensing. Little need be said about this matter. The actual amount of the licence per annum varies with the weight of the machine when unloaded, except in the case of electric vehicles, which pay £6 a year, and passenger vehicles and hackney carriages, taxicabs and the like, which are taxed according to Seating capacity. The amount which has to be paid can always easily be ascertained from the concern from which the vehicle is being acquired, from the manufacturers, or from the local licensing authority, or The Commercial Motor will tell you. The manufacturer is one of the best sources to go to for the information. It is clearly a standing charge, and although it is payable either annually or quarterly, it is better to reckon it out on a weekly basis, in order to be able to fit it into the general accounting scheme. Divide the annual amount by 52, or the quarterly sum by 13, in order to ascertain how much per week should be set down to this item.
It may be worth while, when considering the type of body, to keep the question of taxation in mind, too. In many cases an extra few pounds of timber in a goods body or a seat too ninny in a motor coach or bus may make a considerable difference to the annual tax.
The cost of a driver's licence-5s.—is so small as to be negligible. It barely exceeds a penny a week.
On the question of insurance much might be written, but this is hardly the place for it. The amount of the premium varies according to the locality and according to the class of work upon which the vehicle is to be engaged. The actual amount care always be ascertained and calculated down to a weekly basis.
Fuel Cost Not to be Based on Test Runs.
We come now to fuel and oil consumption. If the fuel be petrol, then we advise readers not to base any estimates or statement of fuel cost on any figure per mile per gallon obtained by any other means than by setting the actual amount of spirit used against the mileage covered during that period. No other method is of any use, and the longer the period the more satisfactory and reliable the figures gained. Entirely distruSt any figures for mites per gallon obtained by any other method. The best way is not to worry at all about the miles per gallon, but to ascertain from the books the cost of fuel per mile.
In the case of steam wagons this advice applies with even greater force. Coal or coke is required to boil the water and to raise steam before the wagon turns a wheel in the morning. Fuel, is being consumed, even if not very quickly; while the wagon is standing, and fuel is wasted whenever steam is blown off. Cost of fuel per mile over fairly long periods is the only guide.
Unreliable Logging with Electrics.
Electric vehicles offer similar opportunities for logging unreliable results, as they are subject to the same varying conditions of weather and road surface as the other types. The variation in the efficiencies of their motors, gearing and batteries correspond to the difference in engine and gear performances which are so frequently experienced in practice when dealing with the more self-contained types of road vehicle.
One of the smaller items of running cost is that of lubrication. Concerning that it need only be said that it is false economy to be too sparing of oil or grease, and we would certainly not advise motor users lightly to abandon the safeguards which the purchase of oils properly branded and guaranteed by reputable makers confers. The " average " figure for the cost of lubricants has perhaps even less meaning than any other; even the quantity of oil and grease consumed per mile run varies enormously.
There is only left the item of "rent and rates," and that is an arbitrary matter, the amount being determined in accordance with the principle of the law of supply and demand, as applied to the locality in which it is desired to house the vehicle. We would warn readers, however, against the folly of attempting to save a shilling a week on a garage by moving the vehicle to a place two miles away from its job, when the actual cost of operating that vehicle is almost a shilling a mile. Bear in mind in this connection that the lost mileage in a week in the case of a vehicle stored a mile from its job is 12.
A Summary of the Principles of Costing.
To sum up, the operating costs of a motor vehicle are divided into, and classified as, "standing charges" and " running costs," according to whether they depend on the fact that the vehicle is in use or not. The standing charges comprise licences, insurance, wages, rent and rates, and interest. The first three explain themselves, except that it should be emphasized that, in the item wages, only those of the actual driver are included, or in steam wagons the wages of the driver and a proportion of those of the mate. Rent and rates comprise the cost of garaging the vehicle. Interest is reckoned at 6 per cent, per annum on the first cost of the vehicle, less the price of a new set of tyres, complete, but without spares.
The running costs include fuel, lubricants, tyres, maintenance and depreciation. The fuel cost is the expenditure in fuel divided by the mileage run. It bears, as a rule, very little relation to the figure which would be obtained by noting the actual consumption over a long and fairly straight run over level roads. The cost for lubricants is similarly ascertained, as is that of tyres. Maintenance covers two sets of items— cost a upkeep, which includes expenditure on materials for cleaning, adjustment, and other sundries, and cost of periodic overhauls. Depreciation is a measure of the wear and tear of the vehicle.
"The Commercial Motor's Tables of Operating Costs" for every kind of vehicle are, and always have been, regarded as standard in the hauling and carrying industry. They are published from time to time in this journal and are issued in brochure form free. They are in process of revision and will be republished very shortly.