Knowing your TCO is the first step to controlling fleet costs
TCO or Total Cost of Ownership includes all direct and indirect costs related to operating your corporate fleet. That sounds self-evident, but making sure you don’t forget any hidden costs can be quite a challenge. A challenge that becomes a breeze with the right TCO expertise on board.
What is TCO?
Obviously, Total Cost of Ownership starts with direct costs related to the vehicle. This includes the lease rate, fuel, taxation and all other vehicle costs that may not be included in the lease.
Indirect costs are easier to overlook even though they can also add up. When talking about vehicle fleets, indirect costs are costs related to managing the vehicle. Each company’s corporate processes determine what indirect costs need to be included but ideally, TCO should be as complete as possible.
Not all costs that are included in TCO fall under the remit of the fleet manager. Indeed, some fall under the responsibility of other cost centres. Is it the receptionist’s job to telephone dealerships to set up appointments for servicing and repairs? Maybe that should be part of your TCO as well. In short, TCO is defined by what you can and want to measure as a company.
Why does TCO matter?
All companies want to keep their operating expenses at a reasonable level, particularly in today’s post-coronavirus world. If you want to achieve that, you first need to know how much you are spending. That’s what TCO is about: it tells you how much your vehicle fleet is costing you, giving you more transparency than you would get if you only looked at expenses related directly to the vehicle.
Once you have established your TCO, you can try and find out where you can improve efficiency, modify processes, outsource processes or do other things to get your TCO down.
Doing this couldn’t be easier than with a powerful TCO dashboard like the one Business Lease offers its customers. It gives a clear and complete view on the company’s TCO and lets fleet managers turn the knobs to see immediate results. How does it affect your TCO if you add something or outsource something else? The TCO dashboard shows you instantly.
How do electric cars fit in your TCO?
TCO is quite different for electric cars, in large part because the charging market is less mature than the fuel market for ICE-powered vehicles. Electric cars also require infrastructure like charging stations at home and/or the office, which you do not need for petrol or diesel cars.
Nevertheless, Business Lease has the expertise to analyse if electrifying your fleet is also beneficial for reducing your TCO and to get you ready for an electrified vehicle policy if needed.
How can Business Lease help you keep TCO down?
There’s no hard and fast rule to determine what should be included in TCO. It depends very much on what company and what industry you’re in. Business Lease can help you draw up the tailormade TCO formula that makes most sense for your business case.
Because of our expertise and our focus on efficiency, we guarantee all new clients they will see their TCO go down by turning towards us. We will help you make sure you don’t overlook any hidden costs, like the phone calls the receptionist makes for your fleet.
Do you want to know what Business Lease can do for you? Get in touch with our International team or visit our website.