How do you calculate the total cost of ownership?
- The initial cost of the vehicle (Capital Costs)
- All the costs to keep the vehicle running (Operating Costs)
- The return dollars when the vehicle is sold (Disposal Value)
Capital Costs
These are costs associated with acquiring a new vehicle and putting it into service.
- The dealer’s sell price
- Manufacturer concessions or incentives
- Add-ons / upgrades
- Licensing fees
- Inspection Fees
- Taxes
- Administration costs
- Financing costs / interest
Operating costs
These include expenses associated with keeping the vehicle running.
- Fuel
- Scheduled maintenance
- Repairs
- Vehicle insurance
- Plate renewals
- Insurance fees and deductibles
- Downtime
Disposal Value
This includes the proceeds of the sale when the vehicle is sold. When you decide to sell a fleet vehicle, there are two factors to consider here:
- Which vehicle attracts the highest dollars at time of resale?
- What is the best mileage, age or time to replace the vehicle?
Why is calculating TCO important?
Keeping Costs Low
Calculating TCO helps fleet managers understand long-term or indirect costs that add up during the lifecycle of the vehicle in addition to the short-term up front costs. In addition, using the right tools to monitor vehicles or drivers allows fleet managers to be proactive to help decrease waste, improve efficiency and therefore reduce costs.
Accurate Financial Reporting
Businesses use TCO to analyze which purchases are viable over the long term. This analysis helps provide insight into which purchases/vehicles will supplement business growth, as well as helping to prepare for unexpected financial expenses.
Increased Profitability
A company’s profitability can be greatly affected by your total cost of ownership. Since fleet costs take up a considerable amount of a company's budget, keeping initial costs and operating costs low, choosing the right time to sell or trade in the vehicle, and choosing vehicles with the highest resale value all play a part in overall profitability.
How Fleetilla Solutions Can Help
Fleetilla solutions can help Fleet Managers measure and manage the total cost of ownership so they can make better financial decisions for their fleet.
Here are some examples of ways you can leverage the Fleetilla solution to monitor TCO:
- Preventive Maintenance Schedules
- Fuel Cost Reporting
- Maintenance and Repair Cost Reporting
- Acquisition Cost Reporting
- Mileage and Engine Hours Reporting
- Fuel Consumption / Usage Reporting
- DTC / Engine Trouble Code Notifications
- Integrations with Vehicle Maintenance Software
- Configurable Reports to calculate TCO
- Dashboards to identify vehicles with the most mileage and fuel consumption