Total Cost of Ownership for fleet vehicles

To make sure your business car fleet is a worthwhile investment, you need to be aware of the total cost.

Total Cost of Ownership (TCO) represents how much a vehicle will cost your company over time. Being aware of this figure for both the short and long term helps businesses keep track of their spending on motoring.

What does TCO include?

The real-world cost of a vehicle is more than the list price. Price and cost are distinctly different. There are direct and indirect additions to the amount you will ultimately pay to run a company car.

Direct factors include:

  • depreciation in the model’s value
  • tax and insurance
  • vehicle registration fee
  • fuel costs and efficiency
  • maintenance and parts replacement
  • fleet management fees
  • loan repayments

Fuel is the most obvious ongoing cost of a car. It also affects the Company Car Tax amount, based on the vehicle’s emissions level.

Indirect factors include:

  • driver and vehicle downtime
  • fleet management processes
  • administration time
  • mileage

Most indirect contributions to TCO relate to time. These indirectly impact your business by increasing the cost in man-hours and taking up resources. While a vehicle is being repaired, for example, the employee who would typically use it can no longer work as effectively. A replacement car would solve the problem, but at an additional cost.

A car that’s more affordable at the outset but develops repeated issues will not represent long-term value. Choosing a reliable vehicle at a slightly higher list price could mean the TCO balances out over time.

How do I find out the TCO for a company car?

TCO is different for every make and model. It also depends on whether the vehicle is brand new or Approved Used.

This means the TCO is likely to be different for each vehicle in your fleet.

There are numerous TCO calculators available online.

Add to your company car fleet and save on TCO

Your choice of vehicle is important from the start. Finding the best-value car – with the equipment and mileage limit you need – improves your opportunities to keep TCO low.

Seek advice from the fleet management experts at a Lipscomb dealership. We represent Jeep, Fiat and Abarth, Alfa Romeo, and Volvo. Come to one of our Kent locations for more info