TCO, the essential indicator for fleet management

Optimal management of TCO (Total Cost Of Ownership) is a crucial concern for a company with a large fleet of vehicles. TCO provides a better estimate of the cost of usage. While in the past, the vehicle purchase price was the only criterion, TCO incorporates all expenses related to maintenance costs, fuel consumption, taxation, and even resale value!

Breakdown of TCO

In order to reduce the TCO of the fleet by taking action on various factors, it is important to identify all the cost components that make up the overall fleet TCO.

The fleet's TCO is primarily divided into three major cost components, which are :

• Vehicle TCO (75% of TCO): This includes acquisition costs, energy consumption, depreciation, financing expenses...
• Driver TCO (20%): This includes fuel consumption, repair costs, and maintenance expenses resulting from the driver's behavior behind the wheel.
• Fleet TCO: It includes various internal fleet management and administrative activities.

The TCO Reduction Levers

Saving money in an unstable industrial and economic environment is not an easy task for most businesses. However, there are some key factors that can significantly reduce your fleet's expenses.

• Contract Selection and Negotiation : Lease agreements, insurance contracts, and maintenance service providers should be selected and negotiated in a way that minimizes maintenance costs, lease expenses, mileage charges, and vehicle insurance costs. Bundling insurance, for example, is one solution among others.
• Driver Education : To avoid inappropriate behaviors by some drivers, eco-driving training is necessary. Sensitizing drivers to best practices should be ongoing. Its impact is significant in achieving savings on energy consumption and fleet repair costs. Encouraging drivers to optimize their routes using technology is also a valuable approach not to be overlooked.
• Opt for Fuel Cards and Choose the Right Fuel : A fuel card is a solution that allows your company to minimize fuel consumption costs for your vehicles.

Furthermore, more and more companies are opting for long-term leasing, allowing them to completely outsource the management of their vehicle fleet and benefit from their lessor's expertise to optimize their TCO. Long-term leasing offers numerous advantages for businesses, including:

• Preserved Financial Capacity
• A Controlled and Optimized Automotive Budget
• Outsourced Fleet Management: From vehicle ordering to resale in the used market, including maintenance, tire replacement, and a wide range of other services.

LTR is therefore an economically attractive alternative. Renting vehicles instead of acquiring them allows businesses to free up cash that they can allocate to their core activities. Furthermore, at the time of return, they are protected from fluctuations in the used vehicle market, as it is the lessor who handles the resale of the vehicles.