Fleet Management

Everything You Need to Know About Fleet Operating Cost Analysis

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Like any business owner or manager, your goal as a fleet manager is to increase profits and reduce costs. Right now, this is a challenging task in the fleet industry, as prices are higher than ever before. However, before you start cutting expenses, you must first understand every element that contributes to your fleet costs, so you know where to begin. This article will explain how to complete a fleet operating cost analysis and give you tactics for saving money as a fleet operator. 

Total Cost of Ownership

The most critical number to know as a fleet owner is your TCO or total cost of ownership. This number comprises the purchase price of your assets plus the cost of operations. Whenever you make investment decisions or are looking to better understand your expenses, the first thing you need to look at is your TCO. You should be looking to reduce this number, both short-term and long-term. Your business’s TCO is constantly changing, so it is critical to keep a sharp eye on this figure to know where you stand. 

Fleet Costs

What costs make up your fleet’s TCO? There are a lot of elements to consider. Here are some everyday items that you are likely spending on: 

  • Vehicle price and associated interest
  • Operating
  • Maintenance
  • Downtime
  • Driver pay

Think of these costs and other places you may be spending money. Now, decide how you want to measure what you’re spending. You’ll need to define metrics for tracking your spending and learn about how you can obtain data. Fleet management software is often helpful in this endeavor. Determine the cost drivers for each of the metrics you will be tracking, and compare your metrics against three or more benchmarks to get a complete picture of your spending habits. 

How to Reduce Fleet Costs

Once you’ve determined your spending, consider where you need to cut back. See if any of these methods for saving money may be helpful to you. 

Financial Alternatives

Your fleet is likely involved in many financial agreements, particularly regarding its vehicles. Do you lease or own your vehicles? If you lease your vehicles, can your contract be improved? Perhaps you can buy leasebacks or extend lease terms to free up excess equity and lower your monthly payments. 

Asset Management

Proper asset management is crucial for ensuring you get the most out of your fleet for the lowest costs. Make sure you have the right amount of vehicles. Having too many or too few can be wasteful. Order directly from motor companies and a single manufacturer when you can. And most importantly, optimize your replacement policy and replace old vehicles when they begin to drive up your repair costs. 


Operational policies have a massive impact on what you spend. Review your policies on personal use of vehicles and fuel purchases, and strengthen the policies if necessary. It is also critical to ensure you have a preventative fleet maintenance policy that keeps your vehicles in their best shape. If you don’t already have a single fleet manager running operations, this may be the time to implement that strategy. This keeps things organized and consistent. 

Save Money With the Right Tools

Cost savings is impossible without the right tools and technology at your disposal. Azuga offers fleet management software that gives you all the data you need to accomplish your savings goals. Learn more by scheduling a demo with one of our experts today!