Total Cost of Ownership (TCO)

What is included?

• depreciation or lease amount;
• interest;
• fuel or charging costs;
• insurance and taxes;
• maintenance, tyres, and damage.

Why?

A cheaper car can ultimately be more expensive due to consumption or residual value. For example, compare electric cars based on TCO.

How does lifespan affect TCO?

The lifespan of a vehicle is a crucial factor in determining the Total Cost of Ownership. A longer period of use can initially lead to lower annual depreciation costs, provided that maintenance costs remain manageable. However, it is essential to consider that older vehicles often incur higher operating costs, particularly in terms of repairs and fuel efficiency.

When planning the lifespan of a lease car, it is therefore important to strike a balance between the initial investment and the expected long-term costs. Factors such as intensity of use, vehicle type, and the company's renewal strategy play a role here. A realistic estimate of the optimal replacement period contributes to an accurate TCO analysis.

What role does residual value play in TCO?

The residual value of a vehicle is the estimated value it still has at the end of its period of use, or after the lease contract expires. This factor has a significant impact on the Total Cost of Ownership, as a higher residual value directly leads to lower annual depreciation costs. Good forecasts of residual value are therefore essential for an accurate TCO calculation.

Factors influencing residual value include the make and model, mileage, maintenance condition, and general market demand. Lease contracts with a higher expected residual value can often offer a lower monthly rate. It is advisable to make clear agreements about this with the leasing company to avoid surprises afterwards.

• Brand reputation and popularity
• Mileage and signs of wear
• Maintenance history and condition
• Market developments (e.g., electrification)

Frequently asked questions