The TCO Concept

Fleet management 25 May 2016

By using a ‘Total Cost of Ownership’ (TCO) methodology a company can ensure that all aspects of the cost of operating a vehicle is considered and calculated rather than just the cost of the vehicle or the monthly rental.

Indeed 2 similar priced vehicles can have a significantly different TCO’s when aspects such as purchase price, residual value performance, maintenance and tyre costs, insurance costs, fuel consumption and various taxes are considered. ergy and CO2 emitted. The TCO is a good way to compare brands, models and practices. These elements can be considered to be the predictive TCO of a vehicle.

In addition there are the less predictable costs of a vehicle that are required to be monitored and improved to ensure a cost effective vehicle and fleet.

The cost of operating a vehicle is heavily impacted by the driver. His behaviour and the way they drive will influence a number of key elements of the TCO. These include fuel consumption, insurance costs and premiums, refurbishment costs, etc. That is the reason why companies should consider the concept of a ‘Driver TCO’ which takes into account all costs directly related to the driver's behaviour.

By considering all TCO elements of operating a vehicle and managing and improving the drivers behaviours means that a company will benefit from an improved view of the overall cost of managing a fleet of vehicles.

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