Fuel Set To Overtake Depreciation

Fuel could become the highest pence per mile cost of running a company car in less than five years, says CFC Solutions.

Fuel Prices Rise

Fuel Prices Rise

The fleet software industry market leader points out that petrol and diesel prices have risen by roughly 50% in the last five years and there is every reason to expect that they will increase by the same amount before 2016.

Currently, depreciation is the most expensive cost for a typical 2.0 litre upper medium petrol company car at around 25 pence per mile with fuel costs around 16 pence. Depreciation is unlikely to change substantially within the next five years, says CFC, so it is very likely to be overtaken by fuel costs.

Neville Briggs, managing director at CFC Solutions, explained: “Depreciation has been by far the highest cost in company cars since anyone seriously started measuring whole life costs on a pence per mile basis in the 1970s.

“Being overtaken by fuel would represent a complete change in fleet economics and could cause a paradigm shift in fleet management thinking.”

Briggs added that continuing increases in the cost of petrol and diesel could mean a change in priorities when it came to management priorities.

He said: “There could be a number of effects. Firstly, there could be an increased accent on reduced fuel use through active journey management including car sharing, and on improved driving techniques.

“Secondly, there could be a much higher than anticipated degree of take up for the new wave of alternative fuel vehicles, such as EVs. They have a completely different cost profile compared to a conventional vehicle with a higher upfront cost but the pence per mile fuel costs are much reduced.

“Also, the continued political pressures felt in the Middle East could shorten this cycle by an amount which is nearly impossible to predict. Those able to reduce fuel use within their business operations should do so as soon as possible and consider additional fleet investment to lessen the impact.”