Traditionally companies have based car selection around rentals alone but with changes in tax, technology and fuels available, the expert team here at OVL believe a Whole Life Cost (WLC) calculation is essential.
We have developed a Whole Life Cost Calculator that takes into account all of the facts and figures that are part of leasing a vehicle. Including:
· Finance costs
· Fuel costs
· Service, maintenance and repair (SMR)
· Insurance
· Benefit-in-Kind Tax
· Class 1A National Insurance Contributions (NICs)
· Plug-in Car Grants
In the table below we have shared an example of how OVL’s Whole Life Cost Calculator brings all of the above into account when comparing three vehicles.
The calculations speak for themselves when it comes to not focussing on the monthly rental cost alone and not assuming the smallest figure means the best value lease.
However, whilst Whole Life Cost is a great starting point, it doesn’t necessarily tell the full story. Some areas that absolutely should be considered when looking at the Whole Life Cost of vehicles are not black and white. For example, when looking at servicing and maintenance it is important to remember that not all vehicles cost the same to maintain and service.
Benefit in Kind is another tricky area. Yes there are massive savings to be had for company car drivers by choosing the correct vehicle, but is the vehicle that’s best for the driver, the most cost effective vehicle for the business? This is an area that we investigate fully for our customers to give them all of the facts, not just the top line figures.
One of the biggest areas of confusion today is the sheer choice available – not only between makes and models but in engine sizes and fuel options. Never have there been so many options available and knowing the best option for you and your business is often not straightforward.
For example, looking at which fuel to choose, how do you make your decision? Diesel hasn’t been getting great press over the last few years but the fuel efficiency of a new Diesel engine and the introduction of RDE2 engines means that Diesel still has a place and can be the correct choice for many.
A petrol engine, or even a hybrid (electric and petrol) might seem like the ‘better’ choice on paper but if your drivers are eating up the miles every day, a small electric range on a hybrid will disappear quickly and if the petrol engine isn’t particularly efficient, costs can sky rocket and time can be wasted having to fill up, the often smaller petrol tanks, more often.
We’ve mentioned hybrids already and we need to again – hybrid is most definitely
the buzz word at the moment and we are spending a lot of time helping customers to understand the differences between a Plug in Hybrid Vehicle (PHEV) and a Self-Charging Hybrid. We look at the driver profiles in detail and analyse whether a Hybrid will save money in areas other than just Benefit in Kind Tax, or be a potential hindrance.
With more 100% electric vehicles available than ever before – the Tesla Model 3 was our most enquired about car over the summer – we are answering a lot of questions to businesses and individuals interested in the pure electric option.
There are of course savings to be made with fuel but, in this instance, it’s not all about cost. What mileage is being driven in one journey? Will the range be suitable? Will the driver suffer from constant fear of running out of charge? Will time be wasted plugging in at public charging points.
A great example here are drivers who covers 20,000 miles a year. Now, on the face of it, you wouldn’t think an electric car with a range of around 200 miles would suit a high mileage driver. The question to ask is, how do they do those miles? Are they commuting 150 miles a day? If so, the car might work for them. Are they driving less frequently, but higher distances in one go? The car might not be the right choice.
All of these questions, and more, are explored and answered by us, leaving our customers certain of the decision they are making. Of course, we are impartial, we don’t have any affiliate ties to particular manufacturers, so our advice is purely based on what is best for our customer.
If you are feeling at all confused about the most cost effective vehicle that will fit your business and driver needs, contact us today.