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Service contracts: guideline to costs
Page 134
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Workshop, in order to find out why contract maintenance schemes are becoming so popular, contacted manufacturers to find out what they offer and how much they charge • Daf introduced contract maintenance in the late 1970s. Enabling an operator to have his trucks maintained by Daf's agents for a fixed monthly sum was a new concept at that time.
Most manufacturers have followed Daf's lead. So important has this type of service become that Steyr, which as yet has only a handful of vehicles registered in the UK, is already "compiling a highly competitive package".
To find out why these schemes have become so popular, we looked at contract maintenance costs from the leading manufacturers. Despite the growing importance attached to this service, Scania and Volvo, however, would not provide us with figures.
From the other manufacturers we obtained quotes for a 17-tonne, daycabbed rigid with a 134kW (180hp) engine, covering 80,0001cm (50,000 miles) on UK trunking a year, and a maximumweight tractive unit, equipped with a sleeper cab and a 223kW (300hp) engine covering a theoretical 120,000Icm (75,000 miles) a year in Britain. The prices given include at least eight services a year but exclude glass, tyres and inflation, resulting in an annual sum that would rise only by the rate of inflation over the five years of the contract. Servicing on a top-spec vehicle is likely to be more expensive than a more basic one because of the extra equipment on it. For this reason we have included a list price for each vehicle. Dividing the five-year maintenance cost by the list price gives us a rough "value-formoney" figure.
A transport or workshop manager considering in-house servicing against "contracting out" to the local dealer or service agent will often be given two figures. The first is usually a pence per kilometer (p/km) figure and the second a monthly sum paid (usually in advance) for cover. Pennies count because even a very small difference in the p/km figure, if projected over the distance to be covered, becomes a substantial sum after five years. In the 17-tonne sector, with a spread of less than one p/km over 400,000ktn gives about £3,800 variation over five years. At 38 tonnes, the spread is even more marked with a five-year variation of up to £12,000.
Workshop has tried to get like-for-like quotes even though differences still exist. Our tables should be viewed as a guideline and not as a list of set rates.
Foden, for example, which is by far the most expensive quote in the 38-tonne sector (it has no 17-tonner) includes a service and inspection every month and all MoT charges. Also Fodens come complete with items like a night heater as standard, which customers expect to be repaired as part of the contract. Other manufacturers, which do not supply such luxuries as standard, do not have to bear the cost of their repair.
Renault quoted a figure that excluded the inspections required to satisfy 0licensing regulation. We have, however, added the additional amount to the figures in our tables. In both categories the French-owned manufacturer faired well, with its G290 close to the top of the 38-tonne table.
Leyland Daf, on the other hand, stresses that its repair and maintenance schemes do not make money. The AngloDutch company says its schemes are part of an overall after-sales customer support service. This explains why its vehicles lead both tables with payments over five years being £280 below that of its nearest rival (MAN) at the lighter weight and over £2,000 less than the G290 at the maximum weight.
Alone in offering a large discount if the five years total is paid "up front", Seddon Atkinson consolidates its already highly competitive maintenance schemes. Costings done on this discounted figure would make Seddon's the cheapest vehicles to run in either of our two classes (this does
not include any loss of interest on the "up front" money).
Paying for the Seddon's maintenance "up front" puts the Strato running costs £58.50 below its 95 Series counterpart, and boosts the 17-tonne sector saving up to 2938.20.
Our table of costs leads to the conclusion that the Mercedes-Benz contract maintenance prices are high. However, the German giant is alone in including a replacement vehicle if the one under contract goes off the road for more than 24 hours.
This may be a basic requirement for some operators and would push the other manufacturers prices up were their quotes to include such cover. List prices of the German product remain very much in line with those of most manufacturers. It is interesting to note that on the 1729S, an operator would pay half of the purchase price in maintenance costs alone in the first five years.
MAN's showing was, on average, better than its bigger German counterpart. The new M90-Series 17.192 appears near the top of the 17-tonne table, but its big brother the F90 was closest to Foden at the other end of the 38-tonne one.
With the only 38-tonner whose list price tops £50,000, it's perhaps not surprising that the MAN's maintenance cost should be higher than those of others. In our "Value for money" column, the F90 comes out second best thanks to its high list price_ Even more surprising then that, with the dearest 17-tonner, the M90's five-year maintenance cost should be one of the lowest, second only to Leyland Daf s 1900.
Closer to home, ERF has a very good showing, especially as it is the smallest independent manufacturer in our survey. In the 38-tonne class, its traditional market, ERFs El0 is number three in the maintenance cost table while having the
second lowest list price (behind that of the G290).
At 17 tonnes, the E6 fares slightly worse on both counts, having the fourth lowest maintenance cost with the third lowest list price. With these factors ERF has put together a package that many operators find attractive, as witness the increasing registrations of the Sandbach products.
With 113 main dealers, Iveco Ford has the best coverage in Britain. It offers more "local dealers" than any other manu
facturer and those dealers have more workshop hours to fill. This fact is not reflected in the maintenance contracts it offers, which tend towards the expensive (bottom) end of the tables in both weight categories.
We would recommend that contracts are tailored to your needs, just like your vehicles. Finally, remember the small print is everything.
Mi Contract Care Plan, based in Leeds, provides a comprehensive maintenance package for anything from an artic to a car-derived van. In addition to offering contracts to individual operators and dealers, CCP has been appointed to handle maintenance packages for AWD and Seddon Atkinson.
Contract Care Turbo 63