Fleet procurement strategy: how to cut total cost of ownership
Fleet procurement is how a business funds, buys and runs its vehicles at the lowest whole-life cost. This guide is for UK businesses running company cars or commercial vehicles. It compares leasing and buying, covers electric vehicles, fuel and maintenance, and explains how we tender fleet contracts.
By Matt Buckley · Updated
Assessing fleet whole-life cost
Total cost of ownership includes depreciation or lease cost, fuel or energy, maintenance, tyres, insurance, tax and downtime. Comparing vehicles on this basis often changes the choice, particularly between diesel and electric.
Funding options
- Outright purchase: lowest total cost if vehicles are kept long, but ties up cash
- Contract hire: fixed monthly cost, residual value risk sits with the lessor
- Finance lease or hire purchase: ownership options with different accounting treatment
- Salary sacrifice: can suit company car schemes, especially for electric vehicles
Electric vehicles
Electric vehicles usually cost more to buy but less to run, and company car tax rates for EVs have been set low. The case depends on mileage, charging access and duty cycle. Check current tax rates and grants on GOV.UK before modelling.
Running costs to tender
Fuel cards, maintenance, tyres and insurance are often bought separately and renewed without review. Grouping them, or tendering them against clear service levels, is a common source of savings. Track supplier performance against those service levels.
How to run a fleet tender
Build a vehicle list by role, not by current model. Set out mileage, term and service needs. Invite leasing companies and brokers to quote on a like-for-like basis and compare on whole-life cost. See our cost reduction consultants page for how fleet fits a wider indirect review.
Frequently asked questions
What is fleet procurement?
Buying or leasing business vehicles and the services that support them, such as fuel, maintenance and insurance.
Should we lease or buy our fleet outright?
Buying outright ties up cash and leaves you with the risk on resale value, but suits vehicles kept for a long time or driven high mileage. Leasing spreads the cost and moves resale risk to the lessor, but excess mileage and damage charges apply. Compare both on whole-life cost, including VAT treatment, maintenance terms and expected mileage.
Further reading
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Sequenced strategies for UK SME, larger, manufacturing and PE-backed businesses, with sizing and quick wins.
Discuss your procurement priorities
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