Fleet TCO (Total Cost of Ownership) Overview
How do you know the total cost of running a fleet is one of the most frequent questions posed to us.
Questions you may ask:
- Which costs should I include in the calculation?
- What are the typical costs involved when running a fleet?
- How do I account for mileage and fuel?
- How can I factor in future benefit in kind taxation rates?
- Can I evaluate costs of running one vehicle against another?
How does it work?
Total cost of ownership (TCO) is the most accurate way of evaluating fleet vehicles and doesn’t have to be complex to calculate or apply to your fleet.
An effective TCO approach brings together the key costs of running your fleet such as Depreciation, Fuel, Taxation, Maintenance and Accident spend to ascertain the total running cost of vehicles and fleet, once this is done it makes different vehicles, products and services much easier to evaluate and compare.
The simple task of calculating TCO often highlights high cost vehicles or drivers and further interrogation of the data can deliver other savings and potential operational efficiencies, our team can review your fleet and calculate TCO for you.
Fleet Total Cost of Ownership Example
A full cost of ownership model would include most/all of the following:
- Vehicle Lease Rate (ex vat)
- Maintenance Budget
- Disallowed VAT
- Employers NIC
- Fuel Costs
This would provide a monthly total cost of ownership (TCO) which could be used for vehicle selection and driver choice
Other fleet costs such as accident spend, fines, short term hires etc are not usually included as they generally apply unequally across the fleet but could be included as a contingency figure