At the same time, the ongoing uncertainty in the world has raised fuel prices to levels that have been outright impossible to fathom. What options are left for those whose vehicles are necessary for the exercise of their profession?
Capital costs and expenses related to the use of cars keep increasing. Especially when it comes to vans, pickups and other vehicles that are acquired for commercial use, the price development of fuel is not the only thing to blame for the situation that seems to get worse by the day. The price of tires, for example, has risen by 15 per cent during 2022. This is especially significant for vehicles that spend a lot of time on the road.
It goes without saying that companies can’t transfer the vastly increased vehicle costs to their invoices. Getting the expenses under control is the only way to maintain competitiveness.
The first thing is to do is to get a thorough look at the big picture, with particular interest on all those hidden costs.
“Cutting down the number of kilometers driven is seldom an effective tool when it comes to decreasing the costs of commercial vehicles”, Tiina Märijärvi, Head of Commercial Development at LeasePlan points out. “The primary step is to find out, what the overall cost consists of and what elements can be addressed in a way that brings results.”
Cost savings can be achieved by paying close attention to a wide variety of details in the existing fleet – and by making the entire organization responsible for doing the same. Decreasing driving speed saves fuel, checking pressure on a regular basis saves tires. All service work does not have to be handled by authorized (i.e., more expensive) service center. And so on.
“Planned, centralized management helps follow costs, as well as minimize them”, Vesa Kalske, Commercial Director at LeasePlan adds. “When the entire fleet can be taken into the same data system, advanced research tools and reports for follow-up become both available and useful.”
Shifting the focus to the long run
The same data system adds value when the time comes to get a new car for commercial use. The key lies in the ability to look – and calculate – beyond the one-only moment of purchase.
“In choosing a new car, attention should be paid to total lifecycle cost”, Vesa Kalske explains. “Commercial vehicles are often kept for a longer time than conventional company cars, so the role of purchase price in the total cost becomes less significant.”
Even a little improved fuel economy of a little more expensive car can add up to significant savings over a 5-year period – the more the vehicle is driven, the greater the savings. Maintenance cost and reselling price are other factors that must be carefully considered.
LeasePlan’s comprehensive data base includes detailed information of actual life cycle costs for most vehicle models – according to the purpose they have been acquired. Based on accumulated use costs, different models, fuel systems, motor sizes, contract periods, and other relevant variables, the ideal solution for every need can be discovered.
As electric vehicles are becoming increasingly popular also in commercial use, the choice of the fuel system assumes a more significant role in both lifecycle costs and the organization’s responsibility targets.
“The more a vehicle is driven, the greater the advantage of electricity becomes."
“As of now, electric vehicles have a higher purchase price than their counterparts running on diesel”, Tiina Märijärvi agrees. “However, in spite of the price of electricity rising sharply at the moment, the sheer cost of use is still significantly lower.”
The more a vehicle is driven, the greater the advantage of electricity becomes. However, considering Finland’s cold winters and long distances there are still situations and types of use where diesel is, at the end of the day, more reliable and even less costly alternative.
Quite often, an electric vehicle is chosen for the responsibility’s point of view. In that sense, it is an investment that deserves an even wider interpretation than simply a tool for taking care of business.
The zero-emission target is excellent for the world in the long run but comes at a short-time cost. Then again, reaching that target may result in a payback with interest, in more ways than one.
Don’t follow the change – drive it!
The world is changing for good, and the market for commercial vehicles is by no means different. Companies should be able to leave themselves some leeway so that their financial situation would not end up in the limit even if the costs of doing business increased unexpectedly.
Even the most seasoned decision-makers find themselves in an entirely new situation. Best practices from others provide much needed support for determining what kind of an overall solution might work best.
The ability to anticipate what will come next becomes an essential tool also in fleet management. The sheer fact that the demand for car leasing agreements is on a rise clearly proves this.
“The most important thing in choosing a commercial vehicle is to ensure that it is well suited to its purpose and correctly sized”, Vesa Kalske emphasizes. “This is where LeasePlan’s comprehensive cost and expense comparison system can be extremely helpful.”
“We have plenty of benchmarks that are set by similar companies who have been in similar situations and have made the same kind of decisions”, Tiina Märijärvi concludes. “They help understand the big picture – and that is essential in modern fleet management.”
Thorough planning based on comprehensive overview of the fleet is the best way to slow down the cost of driving. The earlier you can turn the plans regarding your fleet into action, the better chances you have to ensure the productivity of your commercial vehicles. Once again, the best place to control the inevitable change is the driver’s seat.