The recent economic gloom has meant organisations need to keep a tighter control on costs and reassess how they do business to maintain their competitive edge.

Put simply, money saved now could mean the difference between a company’s survival.

Fleet managers can play their part in preserving an organisation’s bottom line by making sure they take the wholelife cost (WLC) of their vehicles into account.

The potential savings on offer can add up to tens of thousands of pounds depending on a fleet’s size.

But, whether it’s a fleet of five or 5,000 vehicles, taking a WLC approach has never been so important, especially now the Government has linked taxation to CO2 emissions.

“When looking at compiling company car choice lists, it is imperative that fleet operators take into the account the wholelife cost of the vehicle,” explained ACFO chairman Julie Jenner.

“Ideally this should include blocked VAT, employers NI and fuel on top of the monthly rental cost.

“Unless all these factors are taken into consideration it is easy to make mistakes and end up including vehicles that may look reasonable based on rental alone, but are less so when all cost elements are included.”

But Clive Buhagiar, development manager at ING Car Lease, says: “Most companies look at the purchase price as the main indicator of the cost of the vehicle, without really assessing the actual cost of running and disposing of the car over a three or four-year period.”

Buhagiar, like Jenner, stresses that the “real art” to developing a meaningful WLC model involves calculations on NI Class 1A, fuel costs, insurance and the net tax position that takes into account CO2 emissions.

If fleets do not take this approach, two cars with the same monthly lease rental, a common company car grading parameter, can have WLCs that are thousands of pounds apart, according to business car consultant Dan Rees at Deloitte.

“Tax and NI are frequently dealt with in unrelated departments to the fleet management function, so it easy to see why such costs can be missed, thereby focusing attention on the upfront vehicle cost, rather than the WLC.

“Therefore, we suggest a targeted car selection policy that takes into account the full cost of cars to the business,” Rees says.

Such a policy can dramatically reduce a fleet’s operational costs, while continuing to provide employees with a wide choice of vehicles.

“With the appropriate trade up and trade down policy this approach encourages the take up of lower emitting cars as the savings generally increase inline with lower emissions, due to the tax structure being closely related to company cars emissions.”