Trucking Advice on Tire Costs

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Tire cost is a little more difficult because of the time span involved to gather the required data. You must figure steering tires and drive tires separately. Keep in mind every tire is different and will vary on cost per mile. If you are doing a recap program that adds another twist. Another twist is also added if you purchase a truck or trailer with used tires. You cannot calculate tire costs per mile with used tires. Let's take some of these scenarios to see which one is closest to your application. If you purchase a new truck with new tires, for all practical purposes you must estimate your cost by making calculated guesses until enough raw data is collected to give you accurate costs. Let's say, for instance that you estimate that your steering tires will give you 200,000 miles before needing replaced and that your drive tires will give you 150,000 miles before needing replaced or capped. Suppose steering tires cost $400.00 each and they need replaced at 200,000 miles. You take two times the purchase price which is $400.00 giving you $800.00 for your purchase of two new steering tires. Now don't forget that you have two good casings which have value. If you trade those casing in and get $75.00 each for those casings that gives you a $150.00 credit toward the purchase of your new steering tires. Giving you a purchase price of your new tires at $650.00. Now take that figure and divide that number by 200,000 (the estimated mile life of the tire) thus giving you a cost of .00325 per mile for your steering tires. Remember that I addressed you to take your figures out to the .0001. Now for the drive tires, there are two ways of calculating your cost: one way is replacement, the other way is capping. Replacement is very simple to figure by taking the cost of the tires and dividing by the number of miles driven. Let's say you need to replace 8 tires. The purchase price for each tire is $350.00, so you multiply $350.00 times 8, giving you a total of $2,800.00. Remember you have your casings to trade in, so let's figure that credit now. Let's take 8 times $75.00 giving us a credit of $600.00. Now deduct this from the purchase price of $2,800.00 giving us a cost of $2,200.00 for tires. Take that figure and divide it by 150,000 miles. Thus giving you a cost of .01466 per mile for drive tires. Now let's figure your cost by doing the capping method. Suppose you are getting 8 tires capped at the price of $125.00 each. This gives us a capping bill of $1,000.00. You can cap a tire 3 times before replacing your casings. This means each tire is good for 600,000 miles from its original purchase as a new tire. This is because of the original tread life of 150,000 plus 3 good caps times your mileage estimate of 150,000. Now take the original purchase price for the 8 tires which is $2,800.00 and add $3,000.00 for capping 3 times. Which brings you to a cost of $5,800.00. There is no casing credit since we are using our own casings. Now take the total cost of $5,800.00 and divide that by 600,000 miles, thus bringing to a cost of .0096 cents per mile. Next add your figures together for steering tires and drive tires to give you a cost per mile for tires, This example for new tires has a figure of .01791 per mile. The capping method gives you a figure of .01285 per mile. Showing the capping method would save you .00506 per mile deducting the replacement cost from the capping costs. Take the savings of .00506 per mile for capping over new tires for 600,000 miles and you will save approximately $3,036.00. That's a big difference!

Steering Tires Cost                ________________
Casing Credit  -                      ________________

Cost =                                    ________________      _____________
Mileage of Tires ~                 ________________
Cost Per Mile                        ________________
Drive Tire / Cap Cost             ________________
Casing Credit  -                     ________________

Cost =                                   ________________
Mileage of Tires +                ________________
Cost Per Mile =                     _______________      +_____________

Cost Per Mile for All Tires                                         _____________