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Many whole life costs are not 'real picture'

Date: 05 May 2011

Whole life costs predicted by many fleet suppliers do not include all the relevant data, according to research from Ogilvie Fleet, meaning that the "real picture is not fully clear".

As a result, the fleet provider has introduced a new calculation to create a more accurate cost basis and deliver a better comparison tool for fleet managers.

Ogilvie True Cost takes the principle of whole life costs as its base and then adds in crucial elements to provide customers with a far more accurate representation of the actual costs associated with vehicle operation, according to the firm.

"Whole life cost calculations from contract hire and leasing companies are often based on a just an effective rental plus the cost of fuel," said Ogilvie.

"But Ogilvie True Cost also includes the critical cost associated with employer Class 1A National Insurance contributions and subtracts a corporation tax saving before adding back in to the calculation any applicable lease rental disallowance."

Ogilvie Fleet sales and marketing director Nick Hardy said: "Ogilvie True Cost is a far more accurate representation of the actual costs associated with the operation of the vehicle and allows a far more precise comparison to be made between different models.

"Ogilvie True Cost is now shown on every individual vehicle quotation we produce. As more of the correct data is used to calculate the figure, a far clearer cost of ownership is shown, resulting in a far more accurate, and often lower, representation of the net cost of contract hire.

Hardy added: "Many fleet decision-makers and drivers use monthly rental rates to compare and select vehicles but unless all applicable figures are included the real world financial picture is distorted. We believe that Ogilvie True Cost delivers a win-win benefit for both businesses and their drivers and enables the right vehicle choices to be made."

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