Today's choice : tomorrow's cost

21st September 1962, Page 251

21st September 1962

Page 251

Page 252

Page 251, 21st September 1962 — Today's choice : tomorrow's cost

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When deliberating between alternative models and specifications, the paramount importance of subsequent operating costs must be realized.

ELECTION of a commercial vehicle might be considered la simpler task,, to some extent, than choosing a private car.

Requirements of the motorist may relate to a variety of ivities not readily compatible. The majority • of potential rchasers of commercial vehicles, however, have,a known and :cific job of work for the vehicle to perform.

But in other aspects the correct choice of a commercial ficie can be more difficult if only because the consequences a bad buy can be more 'disastrous. Even if the vehicle ongly selected was nevertheless able to do the required work, you'd almost certainly be at the expense of higher operating as than were really necessary. Additionally, it could cause onvenience to drivers and loading staff alike if insufficient ention had been given to body-matching the vehicle to the file carried: The very repetitiveness of a substantial amount of general alage work and ancillary operation will obviously multiply an alarming extent even a slight deficiency in a commercial tide's ability to meet particular operational requirements, ich may only be apparent to the unfortunate purchaser after : vehicle has been in use for some time.

3ecause this country is a leading manufacturer of commercial ticks, both for home and export markets, British operators fortunate in having a wide range of models of chassis and 1y from which to choose. Unfortunate purchases are theremuch, more likely to be the result of inadequate dilation of one's precise requirements in the first place and isequent examination of suitable models than in inherent 'eats in the design of the vehicle.

Naturally. the initial price of a vehicle looms large in the id of prospective purchasers. But for commercial operators particular, subsequent operating costs will ultimately reach nuch higher figure. For example the price of a 5-ton goods tide with oil engine and platform. body is around £1,255. suming it averaged the relatively modest weekly mileage of ), the total cost of operation over five years would be in :ess of £7,122. In other words, a variation of only 10 per it. in operating costs would be equivalent to more than half initial cost of the vehicle.

HE availability and extent of financial resources will viously be a major factor in determining the ultimate choice. ne compromise may be necessary on, this account, but even 'e too great a curtailment of the original requirements and :cifications cannot be accepted if economic operation is to be kieved. Where capital is very limited consideration should given to hiring the ideal type of vehicle rather than 'chasing outright a cheaper but inadequate substitute.

ott Show time, interest and comparisons are understandably tired on the technical details of the new models and comptetsive descriptions of these appear elsewhere in this and :vious issues.. But because goods and passenger vehicles areidamentally commercial propositions, in that they have to wide a service. either for 'profit or in connection With an :diary busibeis, additional -comparisons have to be made by

purchaser..Basically, such comparisons are determined by

the traffic the purchaser handles and his estimate of likely developments in the particular trade or industry in which: he operates. A simple example would be the Comparative -costs of operating a larger vehicle, say a 7-tonner, instead of an existing 5-tonner. Little or no problems would, of course, arise if loads of seven tons were readily available, since the choice of the larger vehicle would be a necessity in anycase. A more difficult decision has to be made, however, in situations when loads of seven tons may be available only, occasionally. With future potentialities in mind, the purchaser may wish to estimate just at What point the outlay of a larger vehicle would be justified, even allowing for some under-loading on occasion.

Accordingly, detailed operating costs of a 5and 7-torincr are now given as an indication of the manner in which such a comparison may be made. At the same time, the proportion of each of the 10 items of operating costs to the total will 'be noted. This could then provide a basis on which to evaluate the cost of alternative specification and its likely effect on subsequent operating costs.

AS already mentioned, the price of the 5-ton platform vehicle. fitted with oil engine, will be assumed to be £1,255. The unladen weight will be reckoned at 2 tons 17 cwt. with a resulting licence duty of £42. This will be the equivalent of a standing cost per week of 17s. 8d. As with both vehicles the standing cost per week will be calculated on the basis of a 50-week year to allow major overhaul or driver's holiday, as a result of which a vehicle may not be available for service.

Driver's wages will be based on the rates payable under the current Road Haulage Wages Order in Grade 1 areas. With the addition of contributions to National Insurance and employers' voluntary liability insurance, the total cost of wages to the employer will be reckoned at £10 Os. fid. per basic week of 42 hours.

Rent and rates in respect of garaging the vehicle will be assessed at the equivalent of 13s. per week, whilst the cost of vehicle insurance adds £2 Os. 10d. to the weekly standing cost. For the purpose of this latter calculation it is assumed that the vehicle is based in a medium risk area and that A licence operation. applies. The resulting annual premium is then £102.

Based on a nominal rate of five per cent., interest charges on the initial outlay of £1,255 would amount to the equivalent of £1 5s. 2d. a week. The resulting total for thee five items of standing cost is then £14 17s. 2d.

With fuel in bulk at 4s. lid. a gallon and a rate of consumption of 18 m.p.g. maintained, the fuel cost per mile will he 2.76d. Lubricants are reckoned to add 0.26d. a mile.

With a set of tyres costing £158 and having a mileage life of 30,000, the tyre cost per mile will be 1.26d. Maintenance, inclusive of washing, servicing and major repairs is calculated to cost 2.35d. per mile.

Depreciation is calculated on a mileage basis and with an estimated vehicle life, in this instance of 150,000, the resulting depreciation cost per mile becomes 1.55d. The amount to be written off is obtained by first deducting the equivalent cost of the original set of tyres from the initial price of the vehicle, because this item of cost is already dealt with separately. From this interim balance a further deduction is made equivalent to the estimated residual value, here reckoned at 10 per cent, of the original cost. The total for these five items of running costs is therefore 8.18d. a mile.

Assuming this medium-size goods vehicle averages 400 miles a week, the corresponding running costs per weelc will be: Fuel,

• £4.12s.; lubricants,-8s. 8d.; tyres, £2 2s.; maintenance, £3 18s. 4d.; and depreciation, £2 1 Is. 8d.: total £13 12s. 8d.

The addition of 'standing and running costs gives a total operating cost of 17.10d. a mile or £28 9s. 10d. a week.

DEALING now with the oil-engined 7-tonner, an avei-age cost would be £1,383. The unladen weight of 3. tons 4 cwt. incurs an annual licence duty of 146 10s. or 19s. 5d. a week.' 'Wages are increased to £10 8s. 11d, and rent and rates to .14s. 2d. a week.

Because of the increased carrying capacity and initial outlay the annual insurance premium under Similar operating conditions is raised to £124 10s. or £2 9s_ 9d. a week. Interest charges are increased to £1 7s. 8d. a week, .giving a total for these filie items Of standing costs of £15 19s. 11d.

Because of its larger size this 7-tonner is likely to be engaged in mediumto long-distance journeys and, consequently, the average weekly mileage-throughout the year-is appropriately raised to 600. This has the significant effect of a resulting standing cost per mile of 6.40d. as Compared, with 8.92d. for the smaller 5-tonner .when limited to 400 miles a week.

The 7-tonner will be reckoned to average 15 m.p.g., with a corresponding fuel cost per inile,of-3.32d. Lubricants now cost 0.28d. and tyres 149d. a mile, assuming a coSt per set of £186. Maintenance is increased to 2.58d. and depreciation to .1,69d., a mile, calculated on the satrie procedure as before. The total

running Costs are 9.36d. a mile. .

-Alternatively, the five items of running costs of this 7-tonner when' averaging 600 miles per Week, expressed as a cost per week, read: Fuel, a 6S.; lubricants, 14s.; tyres, £3 14s. 6d.; -iliaii!tenanee,£6,:',, and depreciation, £4,'44:-.64:1'.toial; .£23,, 8s. Correspondingly, the total operating cost is 15.76d. per mile, or £39 76. 1Id, a week.

Compaling the individual items of .operating costs of the 5-tonner with the .total operating cost (f.28 9s. 10d, per week) it will be noted that nearly a third of the total is accounted for by wages (£10. Os. 6d.), even when calculated on-the basis of

the minimum Statutory rate applicable toa bagic.424obr week. Whilst the'amotint of rates payable is -fixed on a national basis and therefore outside • the control' of individual employers, variations in .specifications, particularly as regards cab des which allow the driver to be more productive in collection 4 delivery work, could obviously be worth while.

The next highest single item of operatingcost is in resi ol fuel, which even at a 'modest 400 miles a week is aroi a sixth of the total. Consequently, any item of .additio equipment or variation in Specification which can reduce item of expenditure merits scrutiny. In this context an Mere of £101)... in the initial cost would give a corresponding incre in interest charges of 2s per. week: Tyres are also a substan item of cost and despite relatively standardized Prices, are aspect of operation where the user can effect substan economy by the adoption of a relatively simple but persist maintenance routine.

Although it is convenient to divide the total operating cc into .10 items it must never be forgotten that this is an arbitre albeit convenient, excercise. Several of the 10 items still rem inter-connected and this applies particularly to two items, . running Cost, namely maintenance and depreciation. Therefr when considering any variation in specification which has efl on maintenance costs, repercussions on the associated items depreciation should be borne in mind.

BECAUSE of the higher mileage assumed in the case of 7-tonner (600 as compared with 400), the ratio of fuel cost total operating 'costs is naturally higher, namely £8 6s. compared with £39is. 11 d. In such circumstances, a con pondingly greater otitlay'on alternative equiprilent might justified to effect an Overall fuel saying. Selection of a goods vehicle, haWever, as stated earlier, n in sonic instances be more dependent upon traffic than techni aspects. For example, whether a larger vehicle of similar t: would be jtistified. The operating costs so far -given for 5and :7-tonners relate to average weekly mileages conside appropriate to their, class. In order to make a comparl betr:veenthem it will now be assumed 'that the 5-tonner a averages 600 miles a week with a corresponding total operat cost of 13.97d. per mile or £34 19s. a week.

.The corresponding figure for the 7-tonner,is I5.76d. per n Or approiirnately £39 8s: a Week. Therefore, if the lar vehicle is used, in addition to the initial outlay of around £1 there will be a weekly increase in operating costs of £4 ! whilst on the credit side there will he the additional carry capacity of 2 tons. Provided additional traffic were availal its effect on revenue must be accumulative, even though advantage of the additional capacity could not always be tak Next. week similar comparison between initial outlay subsequent operating costs will be made in respect of 1016-ton artics.