Planning for Profit
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New Costings for Three Popular Vehicles
Recent Increases in Wages and Insurance Premiumsare Included in the Operating "Costs Detailed Here.for.771and 10-ton
Rigids
ANOTABLE post-war trend in the commercial-vehicle industry has been the extension in the range of quantityproduced goods vehicles. In this category the maximum load for rigid four-wheelers has risen successively from 5 to 7 tons, and now to 71 tons. Recently, too, chassis manufacturers in this range have sponsored third-axle conversions. so providing vehicles capable of carrying loads around 10 tons,
It is therefore especially important that operators should be able to take full advantage of this increase in the range of vehicles now obtainable. Selection of the right vehicle for any particular job has always been largely dependent upon a complete knowledge of the respective operating costs of the vehicles under review. This has become particularly necessary as the range has become more complete, with progressive steps in carrying capacity as little as 10 cwt. in some instances.
Following the recent increase in drivers' wages and insurance premiums it is opportune to give the operating costs of three vehicles in the quantity-produced range, inclusive of the recent additions to some items of cost. The three models chosen are 7and 7.1-ton four-wheelers and a six-wheel conversion on a similar chassis, giving a 10-ton payload. All are fitted with oil engines.
Dealing first with the 7-tonner, the unladen weight of 3 tons 4 cwt. would incur an annual licence duty of £38 15s., the equivalent of 15s. 6d. per week. This latter calculation is based on a 50-week year, so allowing for two weeks per annum when the vehicle may be off the road for either driver's holiday or major vehicle repairs.
In accordance with the Road Haulage Wages Order R.H.(70), the basic minimum remuneration in Grade 1 areas for a driver of a goods vehicle with a carrying capacity between 5 and 10 tons is a42
£9 5s.. 6d. per week. In addition, ail employer will also have to Day Nationa Health contributions which at presen amount to 3s, 3d. for adult workers whilst employers' voluntary liabilit; insurance contributions would add 1 id per week. Due allowance would aim have to be made for two weeks' holida: with pay per annum, with the result tha the minimum total expenditure per wedl in respect of the item of" wages" for thi size of vehicle would be £10.2s. 5d. Thi cost of rent and rates incurred in garaginl the vehicle will be nominally assessed a us. 9d. per week.
As from January 1 increases have been announced in the cos of insurance premiums for goods vehicles ranging from 10 ti 50 per cent., according to individual circumstances. For tit purpose of these castings it will be assumed that the increas1 will amount to 20 per cent. As a result, whereas a representa tive premium for comprehensive cover in medium risk areas In ancillary users was formerly £43 2s. Od., this now become £51 4s. Od„ the equivalent of a standing cost of £1 Os. 7d.
Interest charged at a nominal rate of 3 per cent, on ar initial outlay of £1,300 would add 15s. 7d. per week, giving total of £13 5s. 10d. for these five items of standing was Incidentally, the figure taken as the initial cost is in contras to the average of around £1,500 normally taken for this clas
of vehicle. This is because, in this instance, the lower figure is applicable only to the quantity-produced chassis which forms the basis of all three types now under review.
Assuming that fuel oil is purchased in bulk at 3s. 101d, per gallon. and that an average rate of consumption of 15 m.p.g. is maintained, the fuel cost per mile would amount to 3.12d. Lubricants are reckoned to add 0.25d. A set of tyres for this 7-tonner would cost around L186, and with a conS'ervative estimated life of 30,000 miles, tyre cost per mile would add I.49d.
Maintenance is reckoned to cost 2.34d. per mile, inclusive of washing and servicing. To calculate depreciation it is first necessary to determine the balance to be written off. This is obtained by first deducting the cost of the initial set of tyres— namely £186—from the cost of the vehicle, with a further deduction equivalent to the estimated residual value. This leaves a balance of £1,170, and allowing for a vehicle mileage life of 150,000, the depreciation cost per mile will amount to 1.8-7. These five items of running costs would total 9.07d.
it will, be assumed that all three vehicles will average 800 miles per week. The standing cost per mile for this 7-tonner will then be 3.99d. and the total operating cost 13.06d. The corresponding operating cost per week would be 143 10s, ad,
The 7-1-tonner will probably have an unladen weight within the licence category of 31 to 31 tons, giving an annual licence duty of £42 10s. Od. The equivalent standing cost per week for this item would thus be 17s. Despite the slight increase in carrying capacity, however, wages will remain the same at £10 2s. 5d, per week, and rent and rates at lls. 9d. per week.
The annual insurance premium will be a little higher at £55 4s. Od. or £1 2s. Id. per week. The initial outlay will now be £1,650, this substantial increase being partly due to alternative engine specification appropriate to the increased load. Interest charges will therefore be 19s. 9d., with a resulting standing cost per week of £13 13s. Od. With the weekly average mileage still remaining at 800, the corresponding standing cost per mile will be 4.09d.
With fuel purchased in bulk as before at 3s. 101d. per gallon, but with a slightly inereased rate of consumption, namely 14 m.p.g., the fuel cost per mile will now be 3.34d. Lubricants are reckoned fractionally higher at 0.26d. Due to a more generous tyre specification, a set is now reckoned to cost £202, giving a tyre cost per mile of 1.62d., still assuming a life of 30,000 miles. Maintenance is now calculated to cost 2.41d. per mile. Adopting the same method as before, but based on the higher initial cost, depreciation for this 714on oiler will cost 2.03d. per mile.
This gives a running cost per mile of 9,66d. and a running cost per week of 132 4s. Od. when 800 'miles per week are averaged. The total operating cost would be 13.75d. per mile, and the corresponding cost per week £45 17s, Od.
There is a parallel in' the development of six-wheel conversions of popular chassis and the adoption of the oil engine in the immediate post-war years. Originally, the oil engine was fitted to this type of chassis only to individual specification, but eventually was included in manufacturers' price lists as authorized alternative specification. A similar position has now arisen with six-wheel conversions which have recently been sponsored by the chassis manufacturers. The cost of an actual conversion would be around 1550. Further expenditure would be incurred because of chassis alterations, and the cost of the larger platform,, compared with a standard four-wheeler. If a total of £700 is allowed as the cost of the conversion, the complete six-wheeler would then cost approximately £2.000.
The recommended gross weight of such a vehicle would be approximately 15 tons, giving a carrying capacity of not less than 10 tons. Assuming the unladen weight for registration purposes were 4 tons 13 cwt., the annual licence duty would amount to £65, or the equivalent • of £1 6s.. Od. per week. Assuming loads were limited to 10 tons, the driver's wages would still remain within the same category and amount to £10 2s. 5d. per week. Because of the increased Overall length, rent and rates will now be 12s. 3d. per week.
Due to both the larger carrying capacity and higher initial cost the annual insurance premium will now be £72 or £1 8s. 10d:, per week. Correspondingly, interest charges will be increased to £1 4s„ Od, per week, giving a total standing cost of £14 13s. 6d. per week, or 4.40d. per mile..
Fuel consumption will now be reckoned at the rate of 12 m.p.g., giving fuel cost per mile of -3.90d., whilst lubricants are assessed at 0.26d, With 'a set of tyres costing ,£310 the tyre cost per mile becomes 2.48d., still assuming an average life per, set of 30,000 miles.
Maintenance is reckoned to cost 2,90d. and depreciation 236d. per mile. This .gives a running cost per mile of 11.90d. and a running cost per week of £39 13s. 4d. The total operating cost would -be 16.30d. per mile and f:54 6s. 10d. per week.
For the purpose of comparison, the three operating costs per mile for the 7-, 71and 10-ton oilers are thus 13,06d.. 13.75d. and 16.30d. respectively. Dividing these amounts by the appropriate carrying capacities would give the following costs per ton-mile: 7-tonner, 1.86d.; 71-tonner, I.83d.; and 10-tonner, 1.63d.
Under operating conditions, decisions as to which vehicle would prove most economic would depend upon the extent to which past-loading of the larger vehicles off-set the lower cost per ton mile. S.B.