Typical fleet management service offerings cover the entire vehicle lifetime
From a customer perspective the total cost of ownership (TCO) is the key to identifying cost saving potential and reducing operating expenses. Figure 2 shows a typical TCO split for a European fleet vehicle. Depreciation takes the largest slice over the lifetime of a company car. Fuel costs make up about 20% of the TCO while maintenance, tires, and repair management add up to an additional 15%. Interest expenses comprise 12% of total costs. The remaining costs can be attributed to additional services and management fees. In total, only 40% of the TCO is related to the actual vehicle, 60% of the costs are incurred during the use of the vehicle itself. Fleet management companies pursue a strategy of reducing these costs for their customers. To tackle the key cost drivers, FMCs follow different approaches. Their large purchasing volumes grant them a strong market power to negotiate high discounts with OEMs. Price reductions of 15–25% are quite standard. Profound knowledge about residual values and remarketing enables FMCs to achieve higher remarketing prices for their used cars. Part of these gains is passed on to customers, helping to reduce monthly charges and leading to a highly competitive price environment. Furthermore, providing fuel cards can lower fuel expenses by a few percentage points. FMCs also leverage their service and maintenance network to offer better prices than authorized or OEM-affiliated repair shops, in order to reduce the TCO costs for FMC customers. Today, more and more companies tend to analyze and optimize the total cost of mobility (TCM) rather than the TCO. While the TCO gives a cost calculation per vehicle, the TCM is calculated per mobility user (employee) and takes holistic multi-modality mobility models into account. The TCM calculation considers all costs ranging from the vehicle itself and its related costs to other mobility options such as taxis, flights, car sharing, or rental cars. Most recent innovative products from fleet management companies focus on the TCM and offer comprehensive solutions for their customers to reduce their total cost of travel expenses and fleet-related costs rather than just TCO. While doing so, fleet management companies are expanding their core competencies from vehicle management to total mobility management.