What is the expected annual maintenance cost to the end-user?

The annual maintenance on a multi-jobber, as a percentage of initial cost, is expected to be in the range of 18-22% per year.

Charting the Distribution Channel

The impact of tariff imposition could be dramatic, as is well knwon. There are numerous scenarios to watch, and we need some tool to help us watch the may parts as expectations change.

Many observers would submit that the outcome most important to keep an eye on is the impact on the end-user, the party in a sense paying the final bill. This calculation is the Total Cost to Fleet Owner (“TCFO”).

In a tariff management plan, Champion is nit playing alone. The maker is tagged with a tariff - it passes all, none or part along. Then Champion picks up. It passas all, none or part along. Finally Absolute Parts & Service picks up. It passes all, none or part along - to Springfield.

But Springfield can only bear so much. It likely cannot be the dumping ground for the team. There must be a read the capacity to bear tariff cost at each level - essentially, how does the team split this up? It would appear that in this effort, Champion and Absolute are in the position to lead the team and influence a result that works.

Champion and Absolute are like the third base coach and the first base coach in baseball. Champion can best see Global, the maker. Absolute can best see Springfield, the end-user. Together they can craft strategic moves.

The Path to TCFO

The attached chart entitled The Path to TCFO is a tool that facilitates this process. We have stated that the ideal range for TCFO is 18-22%. As we track out sample support for the Model 200 belonging to Springfield, we can measure different plans - this interaction within the channel toward an end cost will be picked up in the next tab.

The sample is pre-tariff, prepared for a stable environment and producing a maintenance cost of 17.9% for Springfield. One can imagine tariffs so high that we throw up our arms. But let’s begin assuming that high, but not impossible, tariff rates settle in. The Path to TCFO can support decision-making for that. Tariff rates up and beyond that we’ll address at the end.