TCO and TCO profiling
Understanding the financial implications of the vehicles in your fleet is always best practice – whether this be for budgeting, cost awareness/control or to facilitate your transition to electric vehicles (EVs).
It ensures that vehicles are not only fit for purpose operationally, for your drivers and your business, but that there is visibility of the true cost of the vehicles in your fleet.
Fleets everywhere are moving to EVs due to regulatory requirements and sustainability goals.
Building a strong business case for the adoption of Battery Electric Vehicles (BEVs) or Plug-in Hybrid Electric Vehicles (PHEVs), whether that’s cars or vans, can help your business make substantial savings and future-proof your fleet.
Working out your transition timeline and your BEV and PHEV vehicle mix can seem complex, but Lombard Vehicle Solutions’ (LVS) TCO and TCO Profiling products can help simplify the decision-making process.
What is TCO?
Understanding the financial implications of running a fleet should always start with a Total Cost of Ownership (TCO) analysis.
By combining current Government incentives with the overall costs of owning and maintaining a fleet, you can gain insight into the real-life potential savings of changing your fleet mix.
Calculating a vehicle’s, or fleet’s, TCO highlights the financial impact of your lease decisions across your whole business.
TCO not only factors in the cost of procuring the vehicle, funding and maintenance, but it also include the additional costs of the vehicle throughout its lifetime:
- Corporation tax
- Corporation tax reliefs, government incentives – especially pertinent for electric and ultra-low emission vehicles
- Employer Class 1A National Insurance
- VAT payable and recoverable VAT
- Business mileage reimbursement (and private mileage if applicable)
- Insurance
- Additional cost considerations including administration fees, home chargers etc.
A TCO analysis reveals the true cost over a vehicle’s entire lifetime rather than focusing on the initial outlay, helping you to calculate when it’s worth the switch.
What is TCO Profiling?
A TCO analysis will provide valuable data and insight into the true cost of vehicles in your fleet.
The next key stage is utilising this information to make informed and strategic decisions to create a robust and future-proofed fleet policy.
LVS’ unique TCO Profiling tool helps you to quickly and effortlessly achieve this by providing interactive, instant and insightful information on a variety of scenarios.
For example, finding the right vehicle mix for your fleet or reducing downtime costs.
With TCO Profiling, your fleet electrification transition is simplified.
Features of TCO Profiling
Live and interactive visibility of the impact of TCO utilisation on your fleet.
Historically, it was commonplace for fleets to govern their fleet policy and driver grades/bandings with either a net or effective rental restriction.
However, this is focused purely on the initial outlay or cost to fund a vehicle.
In the absence of factoring in the operational costs of the vehicle throughout its lifetime, this does not result in having the most cost-effective fleet for your business.
Fleets are now making the switch to governing their policy with a Total Cost of Ownership approach, unlocking true insight into the actual costs of vehicles over the entire duration of their lifetime.
LVS’ TCO Profiling tool enables an instant calculation of the TCO equivalent of your existing net/effective rental policy, as well as insight into the impact on cost, vehicle selection and powertrain split that switching to TCO will have on your fleet. This is all prepared for you by our Fleet Consultants.
“My experiences with the TCO dashboard are nothing short of exceptional. The tool allows full fleet customisation and is fast and efficient. It’s a vital tool for us to use while we assess the future state of our company car fleet and saves us many hours of manual data configuration.”
Rob Muddyman, Managing Director - FedEx UK, February 2023
Live and interactive driver grading allowance calculation capability
LVS’ TCO Profiling tool enables instant insight into the impact of TCO utilisation on your policy. It then also unlocks visibility of the required revisions to your driver gradings/allowances to either secure your benchmark vehicle(s) availability and/or the right vehicles within each grade.
With the current economic climate, fleets are experiencing cost challenges and rising prices, so the ability to obtain visibility of the actual changes required to driver gradings/allowances removes the guesswork and ensures that the minimum increases are applied, mitigating unnecessary cost increases on fleets.
Why is TCO Profiling important?
LVS’ TCO Profiling offers market-leading insights and an innovative, consultative approach to unlocking the power of TCO to identify the most suitable vehicles for your business and assisting with the transition to electrification.
Choosing the right electric vehicles for your fleet can be challenging and throwing in a new powertrain like electric can make finding suitable vehicles even more onerous.
TCO Profiling makes that decision simple and fast, providing confident decision making and true cost transparency.