How to calculate and optimize the TCO of your vehicle fleet?

Does your company have a large fleet of vehicles with a high total cost of ownership? Fleet management is a solution that allows you to reduce costs and make savings on purchases, maintenance, contracts, as well as better driver management.

What is TCO (Total Cost of Ownership)?

TCO stands for Total Cost of Ownership. The TCO of a fleet is the total cost, including indirect costs. Direct costs include:

  • the purchase of vehicles,
  • the purchase of garages and parking lots or the rent paid to rental companies to park your fleet,
  • regulatory fees (registration certificates, insurance),
  • Costs related to the maintenance and use of vehicles (fuel, maintenance, repairs, etc.).

Indirect costs are irregular and differ for each park. This may include:

  • advertising campaigns,
  • employee training,
  • a software used for the management of the fleet,
  • depreciation of the value of vehicles,
  • carbon footprint taxes and tax fees.

How to calculate the TCO of your fleet?

To calculate the TCO of a fleet of vehicles, it is necessary to add up the various expenses that influence the cost of each ownership. It is necessary to take into account the contractual data representing approximately 36% of the total.

They include the long-term rental calculated according to the base price of the vehicle, its duration, the mileage provided for in the contract and the residual value at the end of the contract. The calculation also includes additional services: tax costs, fuel consumption, CO2 tax, maintenance and insurance.

A final element to remember is the total cost of mobility (TCM). These are employee travel expenses (train, plane, cab tickets).

optimize TCO of iot vehicles

TCO optimization: points to consider

After obtaining the cost estimate, the fleet manager studies how to manage a fleet of trucks or cars. It is recommended to choose the right vehicles in order to optimize the costs by giving preference to those that consume less fuel or that have a smaller size to save space in the fleet.

It is important to select the suppliers (insurance, oil companies, garages, maintenance) in order to obtain the best rates. It is useful to think about the evolution of the fleet over time.

Finally, talking with drivers is essential. They know how the fleet works and can advise you on how to optimize it, as well as on the best routes to reduce mileage.

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