TCO approach provides sound basis for company car choice lists
By adopting such an approach, fleets can show employees that company car choice lists are transparent and have been compiled fairly, according to Helen Fisk, manager AutoSolutions, ALD Automotive.
AutoSolutions team is a specialist division within ALD consisting of experienced analysts, experts in the fields of vehicle funding and fleet choice lists and the deployment of cost effective and practical car policies. The team uses a unique total cost of ownership fleet software programme that analyses in fine detail every single factor – both corporate and personal – impacting on vehicle funding, car choice and services to be offered.
Ms Fisk said: 'The software enables ALD to identify the base fleet cost for companies and then identify vehicles that meet that criteria. As a result we can deliver substantial funding and operating cost savings to employers and benefit-in-kind tax savings to drivers.
'In the event of any company car choice list queries from drivers, employers can then highlight that all costs were taken into account when making decisions.'
The total cost of ownership approach enables organisations to review their fleets in terms of the total cost to the business, eg finance and maintenance, business fuel, motor insurance, Employer National Insurance costs, etc. A post VAT and corporation tax position can also be established and discounted for time (Net Present Value) if appropriate.
Ms Fisk said: 'As our total cost of ownership approach takes into account every single aspect of cost within vehicle operations it will identify the optimum solution from both the employer's and employees' perspective and which cars are the "most attractive" for both parties.'
Following the recent Budget, Ms Fisk said: 'It is crucial that vehicle funding processes are reviewed. Next year's VAT increase coupled with changes in capital allowances, corporation tax rates and National Insurance increases will change the cost parameters for both employers and employees.
'Our initial analysis would suggest that the changes will strengthen the financial standing of traditional company car provision, which includes salary sacrifice. However, only by taking the total cost of ownership approach will companies be able to identify potential funding operations and then be able to truly justify them to employees.'