Fleet procurement: how to cut total cost of ownership

Whole-life cost, not purchase price

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