TCO is a term we often hear in fleet management, but what does it really mean? What purpose does it serve? And how does calculate TCO?
What is TCO?
Definition
The term TCO stands for Total Cost of Ownership. This cost of ownership combines all the expenses linked to the purchase and use of a vehicle, or more globally of a vehicle fleet.
In general, the TCO includes several elements such as :
- Purchase or lease price
- Registration fees
- Fuel costs
- Insurance costs
- Maintenance costs
- Taxation
- Resale cost
Please note that these elements of the TCO calculation may vary from one company to another, depending on the way they are managed.
What is the purpose of this indicator?
TCO is therefore a way of calculating all the parameters that impact the cost of owning a vehicle. Its analysis enables the fleet manager to choose between several car models, depending on the company’s specific needs. As a result, the TCO helps optimize the Car Policy.
In addition, tracking TCO enables the manager to more accurately assess the cost of his vehicle fleet. Subsequently, he can see whether his fleet is in line with his management objectives, and adjust anything that doesn’t fit within the required framework.
This makes TCO a real tool for managing your vehicle fleet.
Fleet management software: a major tool for calculating TCO
Calculating the TCO of your vehicle fleet is no simple matter. As we saw earlier in this article, several indicators are taken into account. And depending on your fleet or your strategy, these indicators can vary.
Today, fleet management software simplifies the task of managers in this respect, among others. In fact, they enable in-depth analysis of the various data linked to vehicles and their use, and thus offer reliable data for optimizing the calculation of one’s TCO.
With fleet management software, the fleet manager can calculate his TCO in 1 click
The fleet management software, such as GAC Car Fleet, automates the retrieval of supplier data and centralizes it within the tool. In this way, the fleet manager can, with a single click, calculate his TCO with all the desired information. This is a real time-saver for the manager. Without a TCO calculation tool, they can spend a lot of time performing this operation manually.
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