The hidden cost of choosing the wrong vehicle

Choosing a vehicle for your fleet sounds straightforward. Look at the list price, check the monthly rental, review the specification and choose the option that looks to offer the best value.

In reality, the cheapest vehicle on paper can quickly become one of the most expensive to run.

As more vehicles enter the UK market, including lower-cost models from newer manufacturers, fleets have more choice than ever and vehicle selection becomes more complex.

Why list price can be misleading

A common assumption is that a more expensive car will cost more to lease and run in the long run, but this is not always the case.

The rental price can be affected by many factors, including expected depreciation, residual value, manufacturer discounts, mileage and maintenance requirements. For example, a car with a higher list price may attract a lower rental than a cheaper vehicle if the leasing company expects it to retain more of its value.

Rental costs can also vary between leasing providers as they may have different views on the future value of a vehicle or have access to different manufacturer terms.

A multi-bid leasing approach allows fleets to compare quotes from several funders, which can help businesses secure a better deal.

The lowest rental, however, will not always represent the best overall value. Looking at total cost of ownership (TCO) gives fleets a more complete picture by considering the costs associated with running the vehicle, including energy, insurance, tax, servicing, maintenance and downtime.

The importance of reliability and downtime

It’s important not to forget about maintenance, reliability, downtime and driver suitability when choosing a vehicle.

Downtime can result in the business needing to arrangement a replacement vehicle or reschedule work, so reliability and SMR costs should form part of the decision-making process.

It’s also worth considering how easy the vehicle will be to maintain. Can routine servicing be completed locally? Are replacement parts readily available? How long do repairs usually take?

When maintenance is not included in the lease cost, a pay-as-you-go (PAYG) approach can offer greater flexibility and help fleets save up to 20% on service and maintenance costs. Instead of paying a fixed cost each month, fleets only pay when work is required. This can offer greater visibility over expenditure and help prevent unnecessary work or inflated charges.

Look beyond the badge

A growing number of Chinese manufacturers are bringing well-equipped, competitively priced electric vehicles to the UK market. Many offer impressive performance and tech capabilities, and are often seen as excellent value for money.

Fleets shouldn’t discount a vehicle simply because the brand is unfamiliar but, at the same time, they shouldn’t just opt for it on price and spec alone.

Some emerging brands are still developing their UK networks, meaning drivers might have further to travel for routine servicing or repairs. Parts availability and aftersales support can also vary, which can result in lengthy repair delays and increased costs should a replacement vehicle be needed.

Moreover, higher claims and repair costs can also influence insurance pricing for a particular model or manufacturer.

Does it suit the driver and the job?

Vehicles also needs to work in the real world.

For EVs, it’s important to look past the official range provided by manufacturers. Fleets need to consider daily mileage, weather conditions, payload, charging access and whether drivers can realistically fit charging into their routines.

Charging access also matters, with EVs invariably being more expensive to run if drivers can’t charge at home and have to rely on the public network.

In addition, consideration should be given to comfort, ease of use, boot space, payload and accessibility matters. Poorly matched vehicles can lead to driver dissatisfaction, reduced productivity and pressure to change vehicles before the end of their planned replacement cycle.

Bringing costs together

The best-value vehicle is not always the one with the lowest price or monthly rental. It’s the one that suits the job, works for the driver and remains cost-effective throughout its time on the fleet.

Fleet Operations helps businesses make this assessment by reviewing vehicle choice lists, comparing funding through multi-bid leasing and analysing whole-life costs. To find out how we can help you, contact our team of experts here.