Fleet News

Whole life costs are still ignored

FAILURE to base fleet policy on vehicle whole life costs is costing UK companies thousands of pounds a year. A survey by Fleet Management Services has revealed that 86% of companies with fleets in excess of 50 vehicles do not use a 'pence per mile' system to calculate car costs.

While fleet managers pay lip service to the whole life cost philosophy, the majority continue to use either list price or contract hire rental to set their car policy.

Shaun Price, FMS sales director, said: 'By actually ignoring the proven benefits of whole life costs for setting their company car policy, fleet managers are disregarding budgetary factors and causing havoc with their fleet choice list.' He offered the example of a Vauxhall Vectra 1.8 air-conditioned LS five-door which has a list price of £105 less than the Volvo S40 2.0L, yet costs 2.95 pence per mile less to run. Over four years/80,000 miles the Vectra would work out £2,360 cheaper than the S40, according to FMS.

While contract hire rentals provide a better yardstick for a fleet policy, covering funding, depreciation and maintenance, they fail to take into account fuel or insurance costs. And rental rates are subject to market fluctuations, sensitive to manufacturer support for various models.

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