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Whole Life Costs

WHOLE LIFE COSTING

Understand all the costs associated with running a fleet vehicle beyond the initial transaction price. 

WHOLE LIFE COSTING

Understand all the costs associated with running a fleet vehicle beyond the initial transaction price. 

WHAT ARE WHOLE LIFE COSTS?

As a Fleet Decision Maker you will evaluate a wide range of costs associated with running a vehicle before making a purchasing choice. This analysis is often referred to as a vehicle's Whole Life Costing / Whole Life Cost (WLC). Don’t forget to use our award-winning Whole Life Cost calculator to run calculations of your own.

 

For a company that operates cars on its fleet, there are many more costs to consider than just the initial purchase price. Throughout a vehicle’s operational life there is a wide range of costs that will be incurred which, in order to make comparisons between vehicles easier to understand, are brought together under one umbrella known as Whole Life Costings (WLC). Using Whole Life Costs as a metric for vehicle comparison is an easy way to bring together all the various headline figures such as MPG, CO2emissions and servicing costs into one manageable figure.

FACTORS TO CONSIDER WITH WHOLE LIFE COSTINGS

  • Purchase price. This is not the manufacturer list price, but the price paid for the vehicle including any discounts.
  • Fuel costs. Total fuel costs over the life of the vehicle. If the car is available for the private use of an employee, then the fuel costs will depend upon whether or not free fuel is supplied for their private use. To calculate fuel costs for your vehicle, use our fuel costs calculator.
  • Service, maintenance and repair (SMR). Projected SMR values for cars are set by data providers to the Automotive industry. These projected costs will take into account the manufacturer’s regular service schedules, together with an allowance for tyre replacement, based on how long and over what distance the car will be operated.
  • Vehicle Excise Duty (VED), Commonly known as road tax. The first year's tax, based on the car's CO2 emissions, is included within the purchase price, but the standard rate of VED will have to be paid in subsequent years. For vehicles with CO2 emissions above zero the standard rate is a flat £140 per year. However, cars with a list price (including factory-fit options) above £40,000 are subject to an additional charge of £310 per year in year's two to six
  • Finance costs. If the car is paid for in full upfront, then there won’t be any finance costs. Otherwise, these will be based on the purchase price and the rate of interest charged.
  • Insurance. Whether the vehicles in question are insured on an individual model basis or on a Fleet policy, insurance is an important cost to recognise within the Whole Life Cost.
  • Residual or Resale value. The proceeds from the sale of the car, subtracted from the purchase price. The difference between the two is known as depreciation. Estimated residual values are set by data providers to the Automotive industry.
  • Registration Fee. When a vehicle is first registered and taxed, a fee must be paid to the DVLA. This is currently charged at £55 for all cars.

 

Analysing all these costs together will give you an informed view of the real costs of buying and operating different cars. Use our Whole Life Cost calculator to compare the Whole Life Costs of different vehicles using independent data supplied by CAP.

OTHER CONSIDERATIONS WHEN CALCULATING WHOLE LIFE COSTS

  • Class 1A National Insurance Contributions (NICs). This is an important element when looking at the tax owed on a company car. If the car is made available to the employee for their private use, this is deemed to be the provision of a benefit and the employer will have to pay Class 1A NICs on the value of this benefit. Similarly, Class 1A NICs are payable if free fuel is provided for the employee’s private use.
  • Plug-in Car Grant. The plug in car grant takes the form of a government contribution towards the cost of an electric car, but only if it meets certain conditions. The grant is designed to help make the whole life costs of qualifying cars more comparable with their petrol or diesel equivalents. Please note, any allowances received from the grant, are not included in any P11D calculations. Not all electric or hybrid vehicles are eligible for the grant - only vehicles approved by the government – but those which do are categorised as follows:

 

Category 1 cars

These vehicles have CO2 emissions of less than 50g/km, can travel at least 70 miles with zero CO2 emissions, and benefit from the maximum grant allowance available. This pays 35% of the cars value, up to a maximum amount of £3,500.

 

Category 2 cars

These vehicles have CO2 emissions of less than 50g/km and can travel at least 10 miles with zero emissions. No longer eligible for grant support.

 

Category 3 cars

These vehicles have CO2 emissions of 50 to 75g/km and can travel at least 20 miles with zero CO2 emissions. No longer eligible for grant support.

 

Category 2 and 3 carry a list price maximum of £60,000. Any vehicle costing in excess of this amount will not qualify for the grant.

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