Parts and labor costs dropped in the fourth quarter last year. After rising in the third quarter of 2024, following three consecutive quarterly decreases, combined parts and labor costs fell again by 1.6%, according to the latest Decisiv/TMC North American Service Event Benchmark Report released Sunday at the Technology and Maintenance Council Annual Meeting and Transportation Technology Exhibition in Nashville.
"Q3 threw us for a loop," said Rob Ziemba, Decisiv vice president of marketing, noting that 19 of the 25 VRMS systems saw increases during that quarter.
Lower costs to close out last year compared to the previous quarter reflect an expected drop in service activity following traditionally higher pre-holiday freight volumes in the third quarter of each year, Ziemba said. The American Trucking Associations’ For-Hire Truck Tonnage Index supports this conclusion by indicating declines in November and December of last year. The latest quarterly decrease is even more significant considering that the report is based on an increase of 4.7% in the number of service operations.
While the drop in costs indicate that parts supply chains are more stable and there is improved continuity in the ranks of technicians, Decisiv CEO Dick Hyatt said the data also shows that service operations are handling an increase in events more productively and efficiently.
The latest quarter-over-quarter data also indicated decreases in parts costs of -1.5% and -1.9% in labor expenses. The lower costs in Q4 may point to stabilizing parts prices and in some cases are lower due to a replenished supply chain. While the number of operations is up, Ziemba theorized a drop in labor expense might be owed to improving technician retention.
lower labor costs are also possibly the result of less turnover in the ranks of technicians employed by fleets and dealers.
Year-over-Year combined costs in Q4 dropped -1.6% on decreases of -2% for parts and -0.9% for labor. Illustrating that this represents a continuing trend, the decreases follow a -1.3% drop in combined costs year-over-year in the Q3 report. Parts costs year-over-year also fell for the second quarter in a row. However, the lower year-over-year labor costs were a reversal of the higher expenses seen in the annual comparison in Q3.
The Decisiv/TMC Benchmark Report is based on comprehensive service data. For the report, Decisiv collects and analyzes parts and labor costs for 25 Vehicle Maintenance Reporting Standard (VMRS) system level codes. These codes account for more than 97% of total parts and labor spending and more than seven million assets during 300,000-plus monthly maintenance and repair events at more than 5,000 service locations.In this quarter as well, combined costs increased in only nine of the 25 VMRS Systems tracked in the Decisiv TMC Benchmark Report compared to 19 systems in the previous quarter.
Powerplant and exhaust cover nearly half the overall cost, leading the cost breakdown with 47.5%. The biggest increase in parts and labor costs year-over-year were found in aerodynamic devices (6.3%), transmission (5.8%), and general accessories (5.3%). This was driven by massing labor cost spikes of 16.1%, 8.4% and 13.3%, respectively.
Ziemba noted AMT parts and labor costs have been up the last five quarters, while costs associated with manuals continue to fall. Much of that is likely due to the rising population of AMTs and the falling number of manual transmissions, but Ziemba noted those trends might not hold as more manuals leave the market and repair work on those gear boxes becomes more specialized. Parts expense for manual transmissions dropped almost 11% year-over-year and labor costs fell almost 6% for an overall decrease of nearly 9%.
