STRATEGY TCO
Leasing Partners
In search of
innovative TCO solutions
Total Cost of Ownership is now the undisputed manner in which car fleet costs are
calculated. Client companies therefore expect their leasing partners to provide not only
accurate data, but innovative solutions for driving the TCO down – while adhering to car
policy requirements and keeping drivers satisfied. We take a look at what some of them do
in practice…
Tim HARRUP
or Masterlease, the cost of the vehicle across its will find both a CO2 and
F question is fundamen-
tal. They state that their
whole approach to pan-
whole life time, from fuel to
servicing and maintenance to
the final residual value. In their
a TCO rating. Extended
and detailed price lists pro-
vide full transparency for all
European fleet management view more pan-European fleet TCO parameters. For existing
is based on considering total tenders should take total cost fleets, KBC provides exten-
cost of ownership, enabling of ownership into considera- sive reporting and invoices, in
customers to significantly tion. KBC Autolease offers its order to control the real TCO
reduce costs at a European clients various tools to calcu- of the fleet. The company
level. When reviewing a cus- late TCO by car. The com- also advises its clients that
tomer fleet, Masterlease takes pany’s website can be con- although local taxes form part
into consideration the total sulted by fleet managers who of the TCO calculation, these
TCO Components: What is included in the Total Cost of Ownership?
3% -
2% - Supplier Mgt fees 11% - MRT
Admin.
2% -
2% - Traffic Fines Costs
Other Costs
2% - Rentals
2% - Damage Costs
21% - Fuel
3% - Unrecoverable Taxes
FleetEurope Magazine 42
43% - Funding and depreciation 9% - Insurance
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CO2 emissions
Whatever aspect of company car fleets is being considered, it
isn’t long before CO2 emissions enter the discussion. And TCO
is no exception. Arval, for example, says that in 2007, control
over CO2 emissions became an integral part of the TCO. And
because fuel now represents around 25% of the overall fleet
budget, controlling CO2 emissions also means reducing con-
sumption and, therefore, costs. And Mercedes-Benz Financial
Services, in explaining the TCO approach, also makes refer-
ence to this. The company considers TCO in the fleet segment
as the full service leasing rate including the delivery and regis-
tration costs. It regularly measures the development of TCO
with regard to various models and consults the customer to ful-
fil his needs and lower his costs. An important part of CO2,
states Mercedes-Benz, is the CO2 emission tax, and it uses a
tool it has developed itself to show tax costs based on current
legislation and the CO2 emissions of the most popular cars in
Europe.
There is more in TCO than
just the cost of the car itself.
are difficult to influence, ‘hidden costs’ such as driver such items as the servicing tive fleet structures where
so the other parts of the equa- down time, which ultimately levels selected. models and manufacturers are
tion are those to which influence TCO too. Alphabet concerned, an analysis of the
the most attention should be also believes that customers Complex elements full-service modules for each
paid. must own the control over The number of items that can country and a conceptual
their fleets, in particular inter- be taken into account when check of insurance conditions.
Holistic view national ones. The company calculating TCO is much more Sixt is also one of many com-
LeasePlan believes that having considers it decisive for the extensive than might at first panies to use direct commu-
a cost focused approach is success of their business be thought. ALD Automotive nication between the driver
more effective in managing model, that customer fleets points out a few of them, such and the leasing company. This
the TCO, rather than a price are profitable. A contract must as an initial extensive invoice saves time, makes the driver
focused approach. By taking a be transparent as well as user- analysis and a vehicle use feel more involved, and ulti-
holistic view through calculat- friendly and must allow cost analysis in order to exactly mately reduces administrative
ing all cost elements in man- control. This TCO model manage the TCO, insurance costs for the client. The ARI
aging in a fleet from first order requires expertise with regard and damage costs, miscella- team of strategic consultants
until car return, a company to driver service (maintenance neous invoicing analysis, con- analyses any fleet and put
achieves the best insights on and repair, technical aspects tract re-writing, early termina- together a white paper con-
all direct fleet costs. Clear etc.), as well as to interna- tions, best-buy analysis per sisting of best practices,
insight into fleet costs, cycling recommendations,
according to LeasePlan, is the and green initiative recom-
first step towards identifying “ Clear insight into fleet costs is the first mendations. ARI is also able to
cost savings opportunities, step towards identifying cost savings report on TCO costs in
and the company has devel- smaller or emerging markets,
oped a comprehensive and o p p o r t u n i t i e s .” using its secured interface
structured approach to iden- accessible by users.
tifying cost saving opportu- TCO – it may not have been
nities. The international tional consulting and fleet vehicle segment. Sixt consid- around for all that many years,
LeasePlan team also works management (taxes, residual ers that other areas where but it is now absolutely fun-
closely with its clients. It values etc.). TCO can be analysed and damental to the entire sector,
believes that it is through With Visiocost, GE Capital reduced include homogenisa- and leasing companies are
FleetEurope Magazine 42
understanding client needs Solutions identifies and com- tion of manufacturers, car clearly providing ever more
and objectives that advice on pares all costs related to vehi- groups or motorisation, opti- sophisticated tools for keep-
the best cost saving oppor- cles, giving fleet managers a mising fuel consumption ing it under control.
tunities can be given. It also clear idea of how their choices through smaller engines or I
draws attention to what it calls affect their TCO. This includes changing to diesels, alterna-
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