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Operational leasing versus purchase

In case of purchase the company becomes the owner of the car fleet. The car fleet is entered in the books as a “fixed asset”. When the company purchases vehicles, it blocks a significant part of the assets that could be used for other purposes.

There are some, often significant, but sometimes hidden costs connected with this kind of large scale investment:

Fleet purchase costs
  • capital lockup – alternative use of capital and the cost of credit
  • purchase cost– time, purchasing (bargaining) power
  • sale cost – to sell a second-hand vehicle is not an easy task
  • cost of additional investments – additional equipment, parts, materials, etc.
  • cost of time connected with awaiting for vehicles delivery
  • fiscal costs – registration, taxes, VAT deduction or not
  • vehicle depreciation

Operating costs connected with fleet purchase
  • cost of entering in the books and ‘administrative' costs of purchase and sale (orders, faxes, etc.)
  • the employee travel cost to the workplace in order to collect and return the vehicle (time)
  • fleet record cost

Fleet maintenance and exploitation costs
  • reparations cost – also those not included in the manufacturer's warranty
  • unnecessary reparations cost (dishonest service station)
  • cost of latent vehicle defects
  • tyre and substitute vehicles cost
  • administrative cost (making out invoices, keeping statistics, etc.)
  • cost of staff

Insurance and damage costs
  • cost of insurance and changes of insurance premiums
  • deductibles cost (damages after exceeding deductibles value)
  • administrative cost connected with insurance
  • negotiations cost connected with insurer

Control and management costs
  • Control of expenses, statistics keeping, cost assessment.