In or out? 05 November 2014

Fleet managers thinking about a wholesale shift to R&M contracts for their trucks need to consider more than simply shedding workshop costs. Steve Banner reports

Operators fearing that the growing complexity of Euro 6 trucks may make it difficult for them to continue maintaining them in their own workshops are contemplating transferring the burden to dealers, under R&M (repair and maintenance) agreements. And, unsurprisingly, both franchised dealers and the manufacturers they represent are offering every incentive.

"We're supplying all new XFs with a two-year R&M contract that covers pretty much everything, apart from accident damage, as standard," says DAF marketing manager Phil Moon, echoing his counterparts from across the industry. "New CFs come with a two-year compliance package as standard," he continues. "It's not as comprehensive, but still includes scheduled maintenance and oil changes, statutory inspections, preparation for the MOT and the test itself."

In both cases, the hope is that the operator will be so impressed with the back-up that its trucks will continue to be maintained by the dealer concerned under contract once the initial two years have expired. And note that, while having your vehicles looked after by in-house maintenance costs no more than opting for an R&M deal, Moon contends that the latter brings extra benefits.

First, for a fixed monthly payment, an R&M deal enables an operator to predict maintenance costs several years ahead, he argues, noting that DAF's contracts are typically for four or five years. That makes running business a whole lot more manageable.

Meanwhile, Paul Ridout, truck sales director at West Country Mercedes-Benz dealership City West Commercials, points to the fact that his workshop at Avonmouth is open 24 hours a day on weekdays, unlike many in-house shops. "As a result, we may be able to get trucks back on the road more quickly than they can – so reducing downtime." And City West has no qualms about entering into seven-year R&M contracts, too. And its deals can encompass ancillary equipment – tail-lifts, for example – as well as the base vehicle.

What's more, unlike some dealers, City West is not solely interested in operators involved solely in mainstream haulage and distribution work. It is happy to talk about R&M with firms in the tougher end of the transport market, too. Hopkins Concrete, for example – which provides muckaway and concrete pumping services throughout the South West – has more than 50 Arocs rigids and tractor units under Mercedes-Benz R&M with this dealer.

Other potential advantages: subcontracting R&M work may allow you to close your workshop, cutting what many see as major overheads. Furthermore, it may be possible to turn the space over to warehousing and turn a profit – although some operators treat their vehicle maintenance units as profit centres and take on third party work.

But R&M is not for everyone. Some agreements impose mileage limits, and many dealers don't offer contracts on trucks already three years old or more – particularly when they are no longer covered by warranty and have been maintained by the customer or a non-franchised workshop since first registration. "They much prefer the contract to be in place when the truck is new, because it is unlikely to require much spending in its early life," explains Moon. Once a truck reaches its third year, it may require some expenditure and, if the dealership has not been handling maintenance, it won't have built a fighting fund.

So much for the pros; what about the cons? If you go the R&M route and close your workshop, you may fear becoming vulnerable to increased rates. Dealers say that's unlikely, making the point that it would be an unwise dealer who took advantage of such a situation. The truck market is competitive, and hauliers are known for having long memories.

But having no technicians on-site to sort out problems could cause headaches if a truck is due to depart at 6.00am only for the driver to report an array of warning lights. Furthermore, if trucks have to go to a dealership several miles away for maintenance, rather than being looked after in the home depot, they will inevitably suffer increased downtime.

Most important, letting dealers handle your service and repair requirements might mean you putting your precious O licence in their hands. If you are subsequently hauled before the traffic commissioner because maintenance issues have arisen, it will be no use blaming the dealership. The commissioner will doubtless point out, somewhat tersely, that it is your name on the O licence and you who gave the undertakings, not the dealer.

Inevitably, it's a balancing act. Manufacturers and franchised dealerships alike will point to very high first-time MOT pass rates in their networks. "We're achieving almost 94.5%," says Scania aftersales director Mark Grant, for example. "That takes into account non-Scanias and trailers as well as – and we count passes after rectification as failures." It's an impressive benchmark even for some in-house workshops to reach.

That said, subcontracting work to franchised dealers is not the only option. Many independent workshops also offer R&M deals too, although the lack of a manufacturer's sign over their premises may prompt some hauliers to question their capabilities. That's where the presence of technicians who are independently-assessed under the irtec licensing scheme provides a healthy dollop of reassurance. Add to that the IRTE's Workshop Accreditation scheme, under which FTA (Freight Transport Association) engineers audit compliance of entire workshops, and it isn't difficult to verify the service you're likely to get.

As FTA CEO Theo de Pencier puts it: "With around 80% of truck maintenance outsourced, [IRTE Workshop Accreditation] is a logical step that yields excellent results for the industry."

Age concern
One company that has contracted out all maintenance is Humber Ports Logistics. "It means our service and repair costs are fixed and predictable, and that makes life a lot easier," explains director Jamie Benton. "It also means that we don't have to worry about managing a workshop, buying equipment for it or recruiting technicians."

The decision is all the more understandable given that the oldest truck in the Immingham-based firm's 25-strong fleet of Volvos and Mercedes is three years. "We subcontract all our trailer service and repair work too," Benton adds.

Home or away?
All manufacturers have an emergency breakdown service that typically means a technician will attend a stranded truck in less than 60 minutes – although hauliers should check that costs are included in their R&M deal.

But while somebody on the spot from an in-house workshop might respond faster, in some cases a manufacturer's technician may be able to deal with faults quicker overall, despite having to drive to the haulier's premises. That's because he or she will have the specific training, equipment and experience.

As for shuttling trucks to and fro between operators' depots and workshops, it is worth noting that dealers often offer collection and delivery – although such services usually attract charges.

"Furthermore, it may be possible for dealer technicians to do some of the jobs required at the haulier's depot if there is somewhere safe for them to work," suggests Ian Wrench, commercial aftersales director at Renault Trucks.

Steve Banner

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Related Companies
DAF Trucks Ltd
Mercedes-Benz UK Ltd
Renault Trucks Essex
Scania (Great Britain) Ltd
Society of Operations Engineers
Volvo Group UK Ltd

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