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Total cost of disposal is ‘missing piece in running costs equation’

Fleets and leasing companies are being urged to factor in total cost of disposal (TCD) as part of their total cost of ownership calculations to get true picture of running costs.

Adesa UK managing director Jonathan Holland

That’s the call from online remarketing specialist Adesa UK, which warns that vendors and fleets incur ongoing disposal charges because they have not assessed how much the traditional de-fleeting process is costing them.

Jonathan Holland, Adesa’s UK managing director, said: “Fleet cars start racking up costs the moment they reach the end of contract, which is why we advise vendors and fleets to consider TCD as part of their Total Cost of Ownership calculations; this is the missing piece in the running costs equation.”

The firm is advising that TCD should factor in the costs typically amassed between end of contract and resale including charges for vehicle movements, storage, inspection and refurbishment as well as depreciation.

“End of contract cars are not always collected the day they become available and can also spend time in compounds awaiting the next available auction date. All the time they are losing value through depreciation, third party stocking costs and daily interest charges accrued whilst the vehicle is moving through the traditional remarketing process.

“From de-fleet day to a car’s appearance at auction can often take weeks, so vendors and fleets risk being hit by a month’s book drop and costly daily stocking charges which are seriously downgrading the returns they are achieving.

“Vendors need to start factoring in TCD to achieve the best possible returns on their assets,” added Holland.

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.