Inflation Trends in Depreciation
Take a deep dive into how inflationary pressures are affecting fleet expenses and what fleet managers and executives can do to protect your bottom line.
Recent news and events regarding economic inflation have led fleet managers and executives to inquire about how these inflationary pressures affect their fleet expenses. As the market continues to fluctuate, Holman BI&A aims to provide an updated status on the conditions relevant to fleet expense. Leveraging both internal and external resources, this analysis provides an update on key market pain points within the four stages of vehicle management– Buy, Drive, Service, Sell.
Key factors identified as causes for rising fleet costs include:
- Borrowing costs on the rise as Federal Reserve increases rates by ¾ percentage points
- Vehicle invoice costs continue to rise up to 20% since 2021
- Manufacturing challenges due to pandemic-related factory shutdowns are beginning to stabilize
- Amidst semiconductor chip and raw material shortages, light vehicle production is forecasted to grow 5% in 2023
- Cost of fuel increasing over 67.5% since Q1 2021
- Maintenance parts are still 10% - 20% higher than the 2020 standard
- Importance of and planning for extended vehicle lifecycles
- Black book retention value has increased 38% for used vehicles since 2020
Given these new challenges, it is vital that fleet managers understand the causes and budget accordingly.
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