Shift focus to ‘whole life’ costs, says fleet management firm
Tax hikes, fuel duty and plans to increase National Insurance have added to the burden on fleet operators at a time when they are struggling, fleet management specialist CLM has said.
The increases have prompted CLM to contact its clients and recommend that they look to review their fleet policies and develop strategies to reduce operating costs, with ‘whole life’ costs being one of those strategies.
Whole life costs reflect all projected, vehicle-specific costs associated with operating a vehicle over its fleet life, including depreciation, funding, service, maintenance and repairs, Vehicle Excise Duty, insurance, fuel (for business mileage), CO2 taxation impact, Class 1A NIC payments and VAT on the fuel scale charge for private use, if provided.
CLM manages around 20,000 cars for corporate clients and its head of sales and marketing Rob Wentworth-James said: “The cumulative effects of the various tax increases are starting to hit home, and will continue to do so for the next few years. Businesses will see their fleet costs rising in future unless they take action now.
“Without taking a holistic approach to vehicle selection, it is easy to make the wrong decisions. That’s why using whole life costs to inform selection is essential in getting vehicle choice right now – and for the medium term.”
A key component of the whole life cost approach is assessing the tax and environmental impact of each vehicle. And with capital allowance rules linking them to carbon emissions at 160g/km per vehicle, setting a CO2 ceiling for fleet choice lists is also becoming more commonplace amongst fleet operators.
CLM is now recommending that companies start to look at levels around the 140g/km limit, because Government is not going to stop in its drive to reduce emissions and any policy decision taken by fleets at this time, will impact on company costs and driver taxation for years to come.
Wentworth James added: “The message that lower CO2 equals intrinsically lower costs and lower taxes is now gaining impetus. By making the right vehicle choice now, fleet decision makers can make cost savings running into several thousand pounds over the typical three year life of a vehicle.
“With the newly announced tax rises starting to take effect, there has never been a better time to instigate a fleet review aimed at selecting the most cost efficient vehicles and cutting overall operating costs.”
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