TCO (Total Cost of Ownership): how to assess the cost of a fleet of vehicles?

Evaluating the cost of a fleet of vehicles goes beyond simple purchasing. In this article, we explore TCO (Total Cost of Ownership), encompassing purchase, operating and maintenance costs, and TCM (Total Cost of Mobility), which integrates costs related to global mobility.

Understand these essential indicators to control and optimize your fleet expenditure.

What is the TCO (Total Cost of Ownership) of a vehicle fleet?

When managing a fleet of vehicles, it’s essential to understand the concept of TCO (Total Cost of Ownership). This is a key indicator for assessing the true cost of each vehicle in a company fleet over its entire lifetime.

TCO: Definition

TCO encompasses all the costs associated with a vehicle, well beyond the initial purchase. This includes acquisition, operating, maintenance, depreciation and insurance costs, as well as the administrative and technological costs associated with fleet management.

Distinguishing the different TCOs of a vehicle fleet

It is important to note that TCO can be divided into three distinct categories:

  • Vehicle TCO focuses on costs related to a specific vehicle
  • Driver TCO takes into account the individual costs associated with each driver
  • Fleet TCO covers all the costs involved in managing the entire vehicle fleet.

Components for calculating TCO

To calculate the TCO of a fleet of vehicles, it is necessary to take into account several essential components according to the different expense items:

  • Initial acquisition cost: Vehicle purchase price, ancillary costs, taxes, etc.
  • Operating costs: Expenses related to fuel, fuel consumption, maintenance, management costs, depreciation, etc.
  • Maintenance costs: repair, technical inspection, overhaul
  • Management costs: such as the salaries of the fleet manager
  • Administrative costs: Costs linked to the administrative management of the fleet, travel expenses, registration fees, etc.
  • Costs related to fleet management technology: Expenses associated with tracking systems, dashboards, etc., are not included.
  • Depreciation: The distribution of the initial purchase cost over the useful life of the vehicle.

Costs depend on the type of vehicle chosen: combustion or electric, and the financing method: vehicle rental, vehicle purchase or leasing.

How to control your TCO?

Controlling TCO requires rigorous management of each component. Collecting and analyzing relevant data is crucial to identifying areas where savings can be made.

Using modern fleet management software can make this task much easier, by providing precise information on the performance of each vehicle.

What is TCM (Total Cost of Mobility)?

In addition to TCO, there’s another essential concept to consider in fleet management: TCM (Total Cost of Mobility).

Definition of MCT

The TCM encompasses all the costs associated with a company’s professional mobility, including vehicle costs, but also the costs of alternatives to vehicle ownership, such as car-sharing, rental or company car-sharing services.

Difference with TCO

The main difference between TCO and TCM lies in the way alternative mobility options are taken into account. TCM assesses the effectiveness of the company’s mobility choices, which may include reducing fleet size in favor of shared mobility solutions, while maintaining optimum flexibility.

How carsharing improves TCO (Total Cost of Ownership) for a fleet of business vehicles

Find out how carsharing can significantly reduce your TCO (Total Cost of Ownership) and optimize your vehicle fleet.

Optimizing vehicle use

When companies opt for car-sharing, they can optimize the use of their vehicles. Employees can reserve vehicles only when necessary, avoiding unnecessary direct and indirect costs.

Reducing the size of the vehicle fleet

Car-sharing also reduces the size of the fleet of vehicles required. By sharing vehicles between employees, a company may need fewer vehicles in total, reducing acquisition, maintenance and storage costs.

Automation cuts fleet management time

By using automated car-sharing platforms, fleet management becomes more efficient, requiring less time and resources. This allows fleet managers to focus on cost control and optimization rather than administrative tasks.

Eco-driving and reducing CO2 emissions

One way of reducing fuel costs and CO2 emissions is to promote eco-driving within the fleet. Training and incentives can be put in place to encourage more fuel-efficient driving and control road risk.

In conclusion, assessing the cost of a fleet of vehicles is essential for effective management. TCO and TCM are crucial tools for understanding and optimizing these costs. Carsharing is an innovative solution that can help reduce direct and indirect costs, while improving the efficiency of business fleet management.