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Whole Life Costs
What are Whole Life Costs?
To calculate the total cost of operating each vehicle in your fleet over a given mileage, you need to consider not just the purchase price. You’ll also need to take account of the Whole Life Costs – in other words, the total costs of running and owning the vehicles.

Here’s why. Car A may seem like a bargain if it costs £1,000 less than Car B. However, if Car A then costs £3,000 more to run over a given period, when taking into account depreciation, servicing and fuel, then Car B will be the more cost-effective option.

The Whole Life Costs take into account all the related factors over the holding period: the acquisition price, level of depreciation, servicing and maintenance costs, plus running costs – including likely fuel expenditure. They’re the only accurate way of calculating the true cost of running a vehicle. Which means you need accurate Whole Life Costs if you’re to make the most cost-effective decisions when acquiring fleet vehicles.

Depreciation is one of the largest elements of Whole Life Costs, for more information on this and the other elements of Whole Life Costs please use the tabs below.

Alternatively, to calculate the total cost of operating each vehicle in your fleet, use our Whole Life Cost calculator.

Launch the Whole Life Cost calculator
Vehicle depreciation is the largest element of the Whole Life Cost equation and, according to Carcost, can account for around 45% of the total cost.

Depreciation is simply the difference between the retail price of a new vehicle and the price it achieves at disposal - this is the residual value.
There is certain information we can use to estimate a vehicle’s residual value, such as: information from vehicle manufacturers, auction prices and historical residual data for vehicles.

Leading providers of residual value forcast figures include CAP Motor Research ‘Black Book’ and Glass’s Guide – but please bear in mind, the figures are only an indication.

However we try to predict it, a vehicle’s actual residual value comes down to how much a used car buyer is prepared to pay for it.
Fleet Disposal
As depreciation is the biggest single cost of running a company vehicle, the most effective way to reduce this cost is to ensure you achieve the best prices for your vehicles when defleeting them.

There are a number of ways to defleet your vehicles. To help you choose the most profitable solutions for your company, read our Fleet Disposals Guide.
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