34ChallengingconventionalwisdomonwholelifecostsHowdoyouworkouthowmuchacompanycarcostsabusinesstorun?SewellsResearch&Insighthasidentifiedavarietyofways,fromrunningcostswhichincludedepreciation,towholelifecostmethodsthattakeintoaccountnon-reversibleVAT,corporationtaxandfuel.Therearealsomethodsjustbasedonleasingrates.Oneofthemostcommonwaysistouseapencepermilefiguretoidentifythecomparativecostsoftwomodels.Ifonecarcosts52ppmandthesecond38ppm,thecheaperoneislikelytowinifallcostshavebeenincludedcorrectly.Butathink-tankatSewellsResearch&Insighthaschallengedconventionalwisdomandsuggestedanewmethodforconsideration-costperhourorcostperday.Unlikemostothermeasures,whicharedistance-based,thismeasurementistimebasedandrecognisesthatvehiclesdon'tjustcostmoneywhentheyaremoving.Vehiclescostmoneywhentheyareparked(forexample,insurance,depreciationforageandevenparkingdamagefromothercarusers)butthisisn'trecognisedinamileage-basedmodel.Byusingatime-basedmodel,whichishowmostotheraspectsofbusinessareaccountedfor,acompanycanaccuratelyreflectthecostofthefleetinitspricing.Calculatingtheoverallcostisexactlythesameasformileage-basedcalculations.However,oncetheoverallcostofthevehicleisestablished,say£15,000overthreeyears,thisisdividedbythenumberofdaysitwillberun,notbytheexpectedmileage.Soinsteadofthevehiclecosting35ppm,itactuallycosts£13aday.Multiplythisby200carssittinginthestaffcarparkdoingnothingandthevalueofthismethodstartstobecomeclear,asthatisequivalentto£13,000aweek.Theysaytimeismoneyandthisapproachshowsthisiscertainlytrueofcompanycars.Toregisteryourviewsontime-basedwholelifecosts,emailsewells@bauermedia.co.uk |