Business Car Leasing Total Cost of Ownership (TCO) Explained
Total cost of ownership, or TCO, is one of the most useful ways to compare business car leasing options. Instead of looking only at the monthly rental, TCO brings together the wider costs of running a company car, such as lease payments, tax, fuel or charging, maintenance and insurance.
This gives businesses a clearer view of the real cost of each vehicle and helps fleet managers and decision-makers compare petrol, diesel, hybrid and electric cars on a like-for-like basis.
In business car leasing, two vehicles can have very different monthly rentals but a similar overall cost once tax and running costs are included. That is why TCO is especially useful when comparing electric vehicles with petrol or diesel alternatives, or when choosing cars for a wider fleet.
An effective TCO approach brings together the key costs of running your fleet such as Business Lease Costs, Fuel, Taxation, Maintenance and Accident spend to ascertain the total running cost of vehicles and fleet, once this is done it makes different vehicles, products and services much easier to evaluate and compare.
When comparing vehicles its common place to exclude costs such as accidents as they will on average apply similarly to all vehicles.
The simple task of calculating TCO is a great way to compare vehicles as it allows car lease comparison by a single cost figure, which is especially helpful when comparing Electric Vehicle Leasing against Combustion Engine Vehicles for example.
These factors vary but generally include:
Business Car lease Costs
VAT Disallowance
Fuel Spend (Business Miles only)
Maintenance (Budgeted spend works best)
National Insurance Costs
Vehicle Insurance
Corporation Tax
TCO can also apply to commercial vehicles and is simpler to do as the company van taxation regime is more straight forward.
TCO brings into focus all the costs associated with each company car, allowing a better understanding of the total cost of running that vehicle. Looking at one figure, rather than looking at costs in silos without ever consolidating them to one cost line, means a tighter focus on spend and value.
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Current Top 5 Business Lease Total Cost of Ownership (TCO) Car Rank
Car Rank 1 - Hyundai Ioniq 6 Coupe 239kW Ultimate 77kWh Auto AWD - Business TCO £399
Car Rank 2 - Peugeot 5008 SUV 73kWh 210 GT - Business TCO £396
Car Rank 3 - Skoda Enyaq SUV 82kWh 210kW 85 SE L Auto - Business TCO £371
Car Rank 4 - Ford Mustang Mach-E SUV Mach E 73kWh Select Tech Plus Standard Range - Business TCO £489
Car Rank 5 - Volkswagen ID. Buzz MPV 210kW 79kWh Style Pro Auto - Business TCO £608