The fleet manager's guide to whole-life costs

Whole-life costs offer a complete oversight of a company car purchase

Understanding the whole-life costs of your company cars is essential for any fleet manager. That’s why we’ve teamed up with Kia Business to make it simple

Think of fleet ‘whole-life costs’ as the complete ownership picture. Split between your fixed costs and your flexible costs, it encompasses the entire lifespan of the company cars in your fleet from day one to de-fleet.

That means an oversight of everything from the total cost of acquisition and depreciation, through to servicing and maintenance, company car tax, insurance, and fuel (or electricity, of course).

The further you can plan ahead, the better position you’ll be in at the end of a typical three to five-year period. Careful forecasting can exponentially improve your fleet’s efficiency, your bottom line, and will help you identify the strengths of an all-electric solution for your business.

And that’s where Kia Business comes in. Kia’s wealth of fleet and company car experience and expertise – allied to the brand’s confidence-inspiring residual values, ultra-efficient vehicles and dedicated aftersales services (including Kia Business Service Promise and Kia Charge) – ensure that you’re always ahead of the curve. Let’s take a closer look.

*Learn more about Kia Business*

*Fixed costs: always consider the cost of acquisition*

Whatever type of company car you’re planning to add to your fleet – petrol, diesel, hybrid or electric – you’ll need to consider the balance of your upfront expenditure vs. long-term costs.

You’ll pay a slight premium for the advanced battery tech in all-electric and hybrid models. But, they’re likely to cost you less to run over their lifespan compared to a petrol or diesel – with big long-term savings coming through fewer maintenance costs, reduced or free road tax and lower BIK rates.

"There's no doubt that the upfront acquisition cost of an all-electric car or a plug-in hybrid (PHEV) is higher than its pure petrol equivalent,” says John Hargreaves, Kia’s head of fleet and remarketing. “However, over the lifetime of the vehicle, there will be other factors that will compensate for the initial higher acquisition costs. It’s worth remembering certain tax benefits are immediately applicable to new EVs and PHEVs, and company National Insurance Contributions reduce significantly with vehicles producing little to no tailpipe emissions."

Using Kia’s heartland family SUV as an example, the entry-level Kia Sportage 1.6 T-GDi 2 costs from just £27,800 OTR. Producing 152g/km of CO2, you can expect BIK rates as low as £158 per month for a 20 per cent taxpayer or £317 per month for a 40 per cent taxpayer.

Alternatively, you can add a bit of electrification with the Kia Sportage Plug-In Hybrid. Starting from £39,910, it benefits from an incredibly low 25g/km of CO2, sending your BIK rates plummeting to just £53 per month for a for a 20 per cent taxpayer and £106 per month for a 40 per cent taxpayer.

Thanks to an electric range of up to 43 miles – and the fact that an average fleet driver will only do around 20-45 miles on a typical day – the Kia Sportage Plug-In Hybrid can do many of its daily journeys on electric power alone, meaning drivers can significantly reduce their running costs by cutting down on trips to the petrol station making the most of cost-effective home charging, instead. More on that later.

Go fully electric, and you could see your bills fall even further. The all-new Kia Niro EV (priced from £36,795) boasts 285 miles of all-electric range with zero CO2 emissions at the tailpipe. That rock-bottom 0g/km of CO2 means BIK rates fall to a scarcely believable £12 per month for a 20 per cent taxpayer and £24 per month for a 40 per cent taxpayer.

If a little extra space and added long-distance capability are top priority, The Kia EV6 will take your drivers and their occupants up to 328 miles* (WLTP) on one charge – those are enough zero-emission miles to get a driver from Bristol to Glasgow in one go. And with an equally impressive 0g/km of CO2, BIK rates remain equally compelling – just £15 per month for a for a 20% taxpayer and £30 per month for a 40% taxpayer, respectively.

For businesses who operate in urban areas, the Kia Soul EV, Kia Niro EV and Kia EV6 are exempt from all urban clean air zone (CAZ) and ultra-low emissions zone (ULEZ) fees – which, in the case of London’s congestion charge, means an instant saving of £15 per car per day.

All three of those models are also exempt from road tax and will, in most UK boroughs, be free to register for residential street parking permits – a helpful perk for busy fleet drivers.

*Fixed costs: An appreciation for depreciation*

Fact: depreciation is the most significant aspect of the whole-life costs equation – impacting overall fleet costs more than all other elements combined. “Depreciation accounts for roughly 47 per cent of your total expenditure,” John explains, making it a vitally important part of your planning.

So, without seeing into the future, what can you do? Well, it helps to plan for depreciation, and that means buying smart. The best cars to consider are those that lose the least amount of value during the period you’re running them, and it helps to know what to look for. Efficiency, reliability, safety and cost of maintenance all contribute to strong residual values, and Kia’s latest line of electrified models are proof you needn’t compromise.

If you ever needed a reason to consider your all-electric options, the fact that the new Kia Niro EV placed 6th on a What Car? list of the ‘Top 10 slowest-depreciating electric cars on sale’ could be it. The What Car? research team predicts a 58.77% retained value after 36,000 miles and three years on the road.

*Variable costs: maintenance and repair*

You should factor in the cost of pro-actively keeping your company cars serviced and well-maintained. After all, no savvy financial planner likes surprises, and the expense and inconvenience of an unexpected problem far outweigh the simple predictability of a service plan.

Renowned for their reliability, Kia placed seventh in the discerning What Car? Reliability Survey with a score of 95.5 per cent. Add to that Kia’s comprehensive seven-year/100,000-mile warranty as standard and it becomes easier than ever to focus on the bigger picture.

“This is where all-electric company cars make real sense” says John. “The simplicity of an electric vehicle helps substantially towards lower maintenance expenses. Service maintenance and repair costs (SMR) are around 22% lower for an EV than a comparable ICE vehicle.” With fewer moving parts and a total sum of zero oil changes, models such as the Kia Soul EV, Kia Niro EV and Kia EV6 can save businesses thousands of pounds over their lifespan and even more of those hours off the phone.

Take the Kia Niro EV for example: the Kia E-Care 1-3 High Mileage Service Plan provides fleet managers with three years’ worth of Kia scheduled annual inspections covering the vehicle for up to 60,000 miles. And you’ll pay as little as £379 for the supreme convenience that provides.

Aftersales support is also where Kia goes the extra mile for fleet managers and company car drivers. Every Kia fleet customer has the option to sign up for Kia Business Service Promise – a fleet manager’s one-stop-shop for all things aftersales. Offered through Kia’s extensive network of 192 UK dealers, it’s designed to help you keep your fleet on the road (or get them back on it) as quickly as possible. In addition, all service centres use genuine Kia-approved parts, fitted by specialist Kia technicians and all at the most cost-effective prices. Win, win, win.

“The Kia Business Service Promise provides a genuinely enthusiastic network of service centres keen on delivering the best service possible for fleet managers” says John. “That means efficient low-cost maintenance and a real no-quibble commitment to ongoing mobility in the unfortunate case of vehicle problems. It’s about having respect for fleet managers and giving them the priority they deserve if a vehicle does need to go in for service.”

*Variable costs: your fuel and electricity*

There’s no getting around it, fuel and daily running costs are a significant expense for any fleet and managing them is crucial for controlling your whole-life costs. But what can you really do to reduce this outlay? Well, it starts with the model(s) you choose.

Kia’s latest line of hybrids use sophisticated battery technology to make the most every mile, providing a great option for those fleet managers requiring the long-distance flexibility of a petrol engine. According to the RAC, driving a hybrid could mean using 30 per cent less fuel per mile than a conventional petrol or diesel, which bodes well for the mega-mileage inclined.

Equally, you’d be hard-pushed to beat the flexibility and efficiency of the Kia Sportage Plug-In Hybrid. With an impressive 252mpg (WLTP) drivers will spend more time passing pumps than stopping at them. And, for those routes where small towns and cities beckon, the option to drive on electric power alone (for up to 43 miles) without waking up the engine, means even less fuel burnt.

Fully electric fleets, meanwhile, could cut your fuel expenses even further. “The fact of the matter is, is if you're able to charge economically at home, you're still saving on every mile” says John. And he’s right, according to the Energy Saving Trust, for company car drivers who can use off-peak home charging, running an EV could be up to 66% cheaper than a comparable petrol vehicle.

But since home top-ups won’t be an option for every driver, fleet managers will need a simple system to keep track of charging events across the country and even outside of it, and that’s where Kia Charge (coming later this year for business fleet managers) could offer a solution. “It helps facilitate access to multiple different charging networks across the country,” John explains, helping avoid pay-as-you-go premiums and making it easier than ever for a driver to separate work and family travel.

However big or small your business and whichever model suits it best, Kia Business provides you with the confidence you need to focus on the bigger things. A clearer head to plan ahead means less money spent long-term and Kia Business is always on-hand to help.

*Learn more about Kia Business*

* Vehicle range was determined according to the standardized EU measurement procedure (WLTP) based on 77.4kWh battery pack, rear wheel drive, and 19” wheels. The individual driving style and other factors, such as speed, outside temperature, topography and the use of electricity-consuming devices/units, have an influence on the real life range and can possibly reduce it.