Total Cost of Ownership
TCO is an abbreviation for Total Cost of Ownership, which in practice means that consideration is taken for all costs borne by the company in regards to the vehicle during the period the vehicle is used. TCO is often presented as a monthly cost during the 24-60 months that a lease contract lasts. The following are examples of what we include when we calculate the TCO of a vehicle:
- Leasing cost
- Tyre cost
- Service and repair cost
- Fuel
- Insurance
- Taxes
- MOT
- Parking
- Car wash
The size of the cost is influenced by:
- The price of the vehicle
- Selected extras
- Size of tyres
- Service intervals and cost
- The vehicle’s estimated second hand value after the agreement period
- The number of months the vehicle is leased
- Driving distance
- Fuel consumption
- Vehicle tax
- Insurance premium
The above factors indicate the reasons why TCO can vary greatly when comparing different car
models/car makes with the same purchase price. The advantage of using TCO as a cost standard
instead of purchase price is because it is clearer for your company to see which vehicles are
most cost effective for the company’s needs. This in turn leads to improved control over costs
and often lower total costs for the fleet.
The cost for a standard passenger car for the company lies often within the range SEK 5,000 to
10,000 per month taking into consideration all vehicle related costs.