Can you operate a greener, more environmentally friendly company car fleet and save money and fuel for your business at the same time? How do you really know which cars are best for your fleet and your bottom line?
The answers can be found in Total Cost of Living calculations, as they provide an irrefutable means of selecting the right vehicles at the lowest total cost to the business.
Why Life Insurance Cost Decisions Are So Important
The “credit crunch” has forced increased pressure on companies to run greener fleets and save money on their car fleet operations. And for companies, there are stronger incentives than ever to reduce CO2 emissions from their fleet of cars, not just from an environmental stance, but also as a way to minimize the impact of volatile operating costs and rising taxes. about the fuel.
Therefore, choosing the right vehicles is vital; every fleet decision you make “locks in” CO2 emissions and running costs, like fuel and tax bills, for the life of the vehicle in your fleet and, in the case of some tax charges, long after . However, commonly used criteria such as purchase price or up-front lease-rental costs will not help you define and operate a low-cost, low-CO2, low-tax fleet.
The alternative, the use of Lifetime Costs, is the only proven method when it comes to maximizing financial, environmental, and fiscal efficiency. A full cost lifetime auto fleet policy shapes your fleet around the full range of known fixed and variable costs. It takes into account future changes, such as the write-off of CO2-based emission allowances, which will undoubtedly have a significant effect on the viability of many currently popular models.
Real savings for companies and employees
- Whole Cost of Living policies give your organization three “gains”:
- An ecological victory by running cars with low CO2 emissions, which reduces fuel consumption
- A financial gain by selecting vehicles with optimal financing, operating and tax costs
- A personal gain from lower P11d tax bills and lower fuel bills
How are whole living costs calculated?
Unlike list prices or lease rentals, total cost of living calculations accurately compare the full life impact of each vehicle choice on your business’ bottom line by taking into account all the factors that make up the total cost of life.
We can help you model all of these factors and assess lifetime costs against a wide range of variables, such as contract length, lifetime mileage, and expected future fuel prices.
Our calculations can help you do much more than just compare vehicles. By modeling the relationship between prices, financing costs, taxes, depreciation, and mileage, a total cost of living approach helps you establish the optimal replacement cycle and financing method for your business, as well as the best cars for your options list. Some companies find that they can reduce costs substantially by using different financing methods for separate parts of the fleet, for example, a personal lease plan for high-mileage commercial users and cars with a higher CO2 rating and high-performance vehicles. contract rental for cars with CO2 emissions of 160 g/km or less.
Whole Living Costs and existing allocation policy
Can you use the Whole Living Cost calculations with a list of fixed allowances or with a user-selected policy? The answer is a resounding yes!”
If you have a fixed allocation list, using the Cost of Life calculations allows you to specify the right vehicles for your fleet in every respect, whatever the application. If your priority is simply minimizing overhead costs, our total cost of living calculation illustrates the options with the lowest overall costs, accurately accounting for all costs, many of which are often overlooked at the planning stage. fleet acquisition. On the other hand, if condition is also a factor, you can take advantage of the fact that a low-CO2 premium model can have a better lifetime cost than many typical high-volume models; This gives you the opportunity to bring more desirable brand cars to staff at a lower cost to the company, with clear recruiting and retention benefits.
For users who choose, grade benchmarks can be set according to lifetime costs, which will ensure driver choices fairly reflect the relative cost of providing vehicles and help avoid poor choices. such as selecting cheaper vehicles with high fuel consumption or low CO2.
Implementing a Whole Cost of Living Policy
And we can also help you implement a Whole Cost of Living policy in your business. We’ll review your fleet, specifically focusing on option lists from both the company and driver perspective. Using our Cost of Life calculations, we’ll develop recommendations to address the costs of your existing vehicles, improve efficiency, and achieve green goals. We have a successful track record of implementing innovative solutions, each of which has been tailored to the needs of our clients by leveraging our extensive knowledge and experience, using proven products from our comprehensive portfolio of fleet financing products.
Act Now on Rising Company Car Fleet Costs
Fleets risk increasing losses from rising fuel prices and the impact of CO2 taxes if they continue to base their policies on list prices or lease costs. To find out how switching to a Whole Cost of Life policy would help your fleet, call us today on 0800 458 0113.
Change in commercial vehicle leasing legislation
Company vehicles leased after April 1, 2009 are treated in two ways:
- Cars with CO2 emissions of 160 g/km or less have no leasing restrictions, meaning the cost of leasing is fully deductible from taxable corporate profits.
- For cars with CO2 emissions of 161 g/km or more, there is a 15% lease restriction. This means that businesses can only deduct 85% of rental payments from their taxable earnings.
exclusions
For leases commencing before 1 April 2009, all car lease payments costing more than £12,000 will be subject to the above rules until termination of the lease.