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"THE COMMERCIAL MOT UPON OPER TABLES AS A CHECK NG COSTS.

14th December 1926
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Page 56, 14th December 1926 — "THE COMMERCIAL MOT UPON OPER TABLES AS A CHECK NG COSTS.
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Which of the following most accurately describes the problem?

The Why and the Wherefore of the Tat Their Compilation. How to Use Then

he Methods and Principles Underlying 3rder to Ascertain Costs and Charges. IT is extremely difficult—we might fairly say im...-possible—to reach agreement concerning the operating costs of motor vehicles. Either side to any argument can readily produce authentic figures to prove whatever point be may wish to make. Statistics are notoriously unreliable, and in this matter they can be made to serve anybody's purpose.

The difficulty is not so much that, apart from the standard set by this journal over a number of years, there is no recognized method of ascertaining the actual costs of operation. That in itself would merely make agreement difficult, if not unattainable. The trouble is that, on any basis of calculation, the results achieved in actual practice differ so widely as to cause the most broad-minded of statisticians to despair. There is not a single item in the whole gamut of expenses which are involved in the operation of a motor vehicle which cannot be shown to vary very considerably indeed as between one user and another.

For that reason, if for no other, we must refrain from dogmatism in our tables of operating costs. We must not, and do not, say that the figures of operating costs which are given on the following pages are, definitely and irrevocably, those which are experienced in practice with the various sizes and types of vehicle concerned.

We do say, however, that our figures represent fair average results ; and we go farther, we state that any user who is operating his motor vehicles at approximately the costs which we have set down has no cause for complaint. He is getting good average results. If he is slightly improving on our figures, well, he may be congratulated, for he is doing well, but he should be able to do better. On the other hand, a man who cannot get the results which our figures show has not, of necessity, any cause either for alarm or complaint. It may be that his circumstances, or the condition under which his vehicles are run, may be such as to preclude him from approaching even average results. He is unfortunate in that respect. If, however, he be of opinion that his working conditions are reasonable, then he should look into his costs and find out where the leakage is occurring, for assuredly theie is leakage. On any such matter we hold ourselves ready at all times to give such assistance to our readers as is within our power, and we welcome their inquiries.

The " C.M." System of Costing Explained.

Having referred to the standard basis which we have set for so long in the matter of calculation of costs, it is necessary, for the benefit of those readers who have not had the system explained to them before, to describe The Commercial Motor method.

It will be observed that each table is divided into seven sections. For the time being we will confine our attention to the first two, those which are headed "Running Costs (Pence per Mile) " and "Standing Charges (Pence per Week I."

These two divisions comprise the whole of the operating costs for the sizes and types of vehicle to which they refer. The other five sections of the tables indicate methods of use of the operating costs thus tabulated.

The titles of these two divisions are almost sufficiently indicative of the main underlying principle of our method of recording costs. The system is based on the elementary fact that the expenses of operating motor vehicles are of two kinds, those which are only incurred when the vehicle is in use on the road—we refer to those a:; "Running Costs "—and those in which the user is involved even if the vehicle stays at home in its garage. The latter are aptly termed the "Standing Charges."

A very brief examination of the items which appear under each of these two headings will serve to illustrate our meaning.

Under the title "Running Costs" appear fuel, lubricants, tyres, maintenance and depreciation. All these are things which are only bought or incurred accord

lag to the distance the vehicle runs. Petrol, coal or coke or, in the case of electric vehicles, current, are only consumed when the vehicle or its engine is in motion. (In the case of steam wagons there is a certain amount of fuel which is consumed in getting up steani before starting out. This has to be added to the day's total before the average consumption of fuel per mile can be ascertained.) Neither oil nor grease is called for in connection with a vehicle which is stationary, but both are used in proportion to the miles it runs. The tyres also wear out as the wheels' turn, whilst the items covered by the term mainten ance, which includes all miscellaneous supplies needed directly or indirectly by the vehicles, are only neees sary while the vehicle is actually in use, and not while It is standing in the garage. Depreciation, according to our system, is calculated according to the mileage

run, since in a commercial vehicle the artificial drop

in price which is experienced in the case of a passenger car, depending on the year of its manufacture, does not occur. A commercial motor vehicle depreciates as it runs, and in proportion to its running, hence the logic of calculating the depreciation according to the

mileage and including the item itself urider the

heading of running costs in lieu of standing charges.

It is true that the need for intruding the item "Interest" is sometimes queried. The item is related to the interest on the first cost of the vehicle, and is calculated at 5 per cent. per annum on the prime cost of the complete machine, less t h e value of the tyres. We include it in these costs because, since t h e money spent on the vehicle is locked up in the vehicle instead of being put out elsewhere to earn .interest, it is fair to reckon that the owner of the

vehicle is losing that amount of money which he could get if he had not bought the vehicle, which must therefore be debited accordingly.

Figures Based on Ascertained Costs.

The figures which are given in the tables them selves are not "calculated according to some special formula of ours. They are based on results obtained with the types of vehicle named, results which, in most cases, have been collated over many years. They are brought up to date each year accosting to the fluctuating prices of commodities. This year the following figures are taken as a ;basis. Petrol is assumed to cost is. 3d. per gallon, and lubricating oil 5s. a gallon. Grease is put in at 8d. a lb. For steam wagons coal is presumed to be the fuel, and the price of 50s. per Con is taken as the basis. Current for electric vehicles is assumed to cost lid. per B.T.U. .

The cost of the items which are included under the heading •maintenance has not altered appreciably of late, and thaf figilre remains the same as it was last year.

Depreciation is calculated, as we have said, on the life of the vehicle reckoned in miles. An average life ' for a modern lorry, reasonably treated, is 160,000 miles. To arrive tit the figure for depreciation p e r mile, the actual first cost of the vehicle is taken and from it is subtracted the cost of the tyres. The remainder is divided by 160,000, to get th e depreciation per mile. The cost of the tyres is taken away from the original capital sum, because tyres are already accounted for in these tables under a separate heading.

MIIIII.112,.MLIG11111.1137311ZD1700.7117011.11.11/1101117.11.•37.eale10111011

; COMMERCIAL MOTOR ATING COSTS.

lness is possible to those who follow the prin

if his own ascertained costs are sigh or low. CMS the differences occur. He is then in a

a job, to ascertain what his net profit will be hould he set aside for establishment charges, at only occurs after a long running period.

st there are other expenses in connection with el, oil and wages.

lent regard to depreciation, or overlooking the nme can ascertain his minimum weekly return Ite for each individual trip.

w route, can calculate his probable costs, and, le, can estimate the return he is likely to obtain

er he shall use steam or petrol vehicles, either le is enabled by our Tables Nos. II and III to

Tyres are taken at the price current at the end of November, 1926, a n d the Dunlop Company's list is taken as a basis. Solid tyres last,on the average, 16,000 at s. Cushion tyres have a life of 12,000 miles. Pneumatic tyres are taken to last 8,000 miles for covers and 12,000 miles for tubes. It is on the question of the life of pneumatic

tyres that difference of opinion must undoubtedly arise. These are of greatest importance in connection with the larger size of tyres as fitted to passenger vehicles. The larger the tyres the more expensive they are and the more important, correspondingly, is the matter of their life.

Now, we have taken 8,000 miles as the life of pneumatic covers of all sizes, notwithstanding that we have direct evidence that they do frequently last for three times that distance and more, and we have taken it for this reason. Those tyres which have withstood over 20,000 miles of use are almost invariably working under conditions which conduce to long life. The majority has not those advantages and their life is nearer the figure we have given. Further, as offsetting the exceptionally long-lived tyres of which we hear, there are also other cases, about which information is not generally broadcasted, which do not even • last 8,000 miles. The latter bring down the average to the figure we give.

The Life of Pneumatic Tyres.

We quite appreciate that, with tyres 'assumed to

last 8,000 miles, it seems as though the advantages gained by fitting pneumatics instead of solids are secured at high cost. The difference in cost between pneumatic and solid-tyred vehicles is seen to be almost entirely due to the expense of the pneumatic tyres. In reading those figures, therefore, the individual reader should ,have in mind the fact that with care and attention it is possible for him to prolong the life of his -tyres to double that on which these tables are calculated. If he does that he may actually succeed in reducing the apparently high running cost of pneumatic-tyred vehicles until the figures are actually below those which are attainable in connection with solid-tyred machines. In considering that matter he should have in mind the fact that by using pneumatics his maintenance, fuel and oil costs are reduced, and if he can make his tyres last not 8,000 miles but 16,000 miles then he can divide the figure of tyre cost given in the tables by two.

Those who have seen the tables corresponding to

these, which we have issued in former years, will recognize in the line designated by the symbol X a new item. It is a figure for correcting the various tables according to fluctuations in the cost per gallon of petrol, per ton of coal, or per unit of electric current.

All the items of cost are, of course, variable. Even

as we go to press rumours of a further drop in tyre prices are afloat. With regard to the three items named, however, the conditions are different. Petrol, for example, which we have taken to cost Is. 3d. per gallon, actually varies in price from is. id. to is. 8d., depending on the grade label and locality of the buyer. The price of coal fluctuates also according to where it is bought, as also does the cost of current. We felt, therefore, that it would be a help to the reader to have the figure X as a guide to the actual costs which he himself has to face.

We have taken an arbitrary figure for the required haulier's profit, because of the impossibility of saying what return would satisfy any particular set of circumstances. We do urge this consideration, however, that a haulier who covers 400 miles in a week is entitled to a higher return than one who only covers 100 miles in a week. Each user must decide this question for himself.

We draw special attention to the fact that in Table I we have provided separate figures of costs and charges for (a) the 1-ton vehicle which weighs one ton or less unladen, and for (b) the 1-ton vehicle which weighs over one ton unladen. This type is just on the border line of the weight limit, the tax showing a substantial increase if it be crossed.

Another set of tables is in preparation dealing with six-wheeled vehicles for various loads. In those tables we shall give authentic figures for both types of sixwheeler—the rigid-framed and the articulated.

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