Fleets Face Escalating Tire Costs

An outsourced driver support and asset management firm is warning fleets to expect spiralling tire cost rises.

The i247 Group, based in Poole in Dorset, UK, says that average tire costs are expected to continue rising - at double digit percentage rates - due to a combination of increases from the tire makers and the more complex portfolio mix required by fleets.

“The price escalation is substantial and we’re seeing two principal reasons for this," says David Legg, Director of Tires at the  i247 Group. "We’ve seen manufacturer price increases due to cost rises across materials, logistics, labor and fuel. These increases are then coupled with a significant change in the fleet mix where we’re seeing larger rim sizes and new, more expensive tire technology to accommodate an increasing number of SUVs and electric vehicles.”

To illustrate the latter point, i247 Group has compared the cost of a fit for a traditional ICE company car - the Volkswagen Golf - with its electric equivalent, the ID.3. It says like-for-like tyre fit costs are 246% more for the EV and adds that wear rates between the two models will also be dissimilar.

Back in October 2021, Mark Atchley, senior supply chain manager for Enterprise Fleet Management, was already pinpointing concern over fluctuating commodity prices as a contributor to increased fleet maintenance spend.

However the rise comes at a time when fleet SMR budgets are already pressurized thanks to extended lifecycle running due to the unavailability of new vehicles.

Jess Jones, director national fleets, at tire and maintenance provider ATS Euromaster, said: “With lead times pushing out further and further, fleets are running vehicles for longer, which is impacting SMR budgets. It’s not as if fleets can turn to rental for new cars since the rental companies are also short of vehicles having de-fleeted during Covid lockdowns. What this means is a renewed focus on managing out maintenance budgets, particularly as many vehicles will require additional MOTs [a roadworthiness test required when vehicles are more than three years old] not originally envisaged at the commencement of the vehicle’s lifecycle.”

Changing Rim Sizes Also Adding to Price Pressure

But it’s not just the rising commodity prices putting pressure on fleet SMR budgets. I247 Group also points to the popularity of SUVs with increasingly large rim sizes, along with the requirement of tire suppliers to serve both ICE and EV fleets, which means a reduced range of stock. According to i247 Group,  such additional operational complexity is reducing historic fleet discounts - an issue fleets are also facing with cars and the withdrawal of OEM discounts.

Lack of trained fitters is also adding to tire center costs as increased wages are required to retain staff.

In light of these pressures, Legg advises fleets to review fleet maintenance budgets and policies, and also to proactively book ahead wherever possible. He added:

“We need fleet managers and drivers to be aware of the cost hikes we’re seeing. The challenges in both tire and staff supply mean that it’s critical to book your tyre changes in advance to ensure your requirements can be managed as efficiently as possible. We’ll continue to watch the situation closely and advise our customers on cost-reducing actions and tire policy changes.”

Volkswagen Golf v ID.3 Tire Calculation Comparison

Based on: 2020 average fleet tire price for a VW Golf 1.5 TGI, 148 hp, 110kw tire size 205/55R16 91V Michelin brand vs an average 2022 fleet tire price VW ID.3 143 hp, 110kw tire size 215/55R18 98T Michelin brand. Total percentage increase 246% on like for like standard fit. Source: i247 Group.