Description

Frost & Sullivan's research service on the Life Cycle and Total Cost of Ownership analysis of class-8 trucks in North America forecasts a class-8 truck's total cost of ownership over a 15-year period. It analyzes the key total cost of ownership through measures, such as driver wages and benefits, fuel, truck payments, repair and maintenance, insurance, tolls and permits, and tire replacement. Each measure of the total cost of ownership is derived from a miles-driven perspective in addition to the vehicle’s cost over the life cycle period. The study also compares the total cost of ownership model between financing and leasing a class-8 truck over a 15-year period, providing a breakdown of the pros and cons of each option. Furthermore, the study offers a future outlook toward the total cost of ownership, comparing model year 2018 trucks to model year 2027 trucks. Finally, the study provides an in-depth look into the viability of alternative fueled class 8 trucks, including electric and natural gas to diesel trucks. It will provide an understanding of payload differences, fuel economy, and repair and maintenance intervals between the three different truck types. It concludes with a breakeven-scenario forecast that will help the readership understand the viability of an electric truck and natural gas truck to a competing diesel truck in long-haul applications.

A semi-truck commonly goes through 3 phases in its life cycle. The 1st owner is typically a fleet that drives an average of ~480,000 miles. The 2nd life owner is the owner-operator or small-sized fleet that drives an average of ~640,000 miles. Finally, the 3rd life owner is the owner-operator that drives ~ 400,000 miles. ‘Driver wages and benefits’ is the highest operating expense for truckers in 2018, accounting for ~44% of the total cost of ownership. This expense is expected to continue rising due to the worsening driver shortage issue. The TCO for a 15-year life cycle financed truck is ~$2.28 million and a cost per mile of ~$1.50. Comparatively, the TCO of a consumer who leases a truck in 4-year intervals over a 15-year period is ~$2.30 million and a CPM of ~$1.53 CPM. Financing remains the primary choice of ownership, accounting for ~68% of purchases. Leasing is gaining traction in the market with 32% as consumers who lease and want to take advantage of factors such as shorter equipment life cycles, lower maintenance costs (under warranty), and funding stability Frost & Sullivan research indicates that leasing can be a realistic alternative to financing under the right circumstances, including fleet operations and capital.

Author: Wallace Lau