What does it cost to run a van?
17/03/2022
10 minutes read
How much does it cost to run a van? The businesses we talk to are often surprised to learn how much they’re spending.
The costs don’t just stop at fuel, there’s depreciation, vehicle downtime and ongoing maintenance – and the list goes on – tyres, road tax and breakdown cover to name just a few.
Not to mention the time spent dealing with various suppliers or contractors. If your vehicle is off the road for any reason, you might have to re-route other vehicles on your fleet or resort to expensive spot hires.
Don’t forget your hidden costs
Hidden costs are often overlooked by businesses when weighing up costs. Depending on whether you are hiring, purchasing or leasing, and whether the vehicle is new or used, prices can vary based on what’s included.
Cheaper prices often mean less after-sale support. With used vehicles, the costs might reflect whether a warranty is offered – if it is, the covered mileage or length of time can differ. When pricing out the cost-effectiveness of newer vehicles, considering depreciation is essential. Whether you’re pricing out a new or used vehicle, these factors are among many other hidden costs to consider
There are also hidden costs that will vary based on your business’s needs. For example, what value would your business put on flexibility? Flexibility can mean:
- The ability to hand back the keys if needs change, meaning you’re not locked into ongoing payments
- Having agreed upon SLAs that you can rely on to deliver a quality service to your customers
- Spreading out your costs to keep hold of your cash, so you’re taking on less risk
Total Costs of Ownership or Usership
To get an accurate idea of running costs, there are several ‘hidden costs’ that need to be considered.
Some costs are easier to put a value on, such as depreciation and fuel. However, with the transition to EVs and fluctuating fuel costs, the residual value of a vehicle and costs to refuel at the pump is less predictable.
There are also those costs that depend on your business’s needs. Flexibility is a good example of this, in that some businesses will have more predictable needs than others. For any business, it’s worth viewing the value of flexibility within the context of recent events; COVID-19 and the resulting lockdown placed even more importance on flexibility for many businesses.
Hidden Costs
Cashflow
The best method might simply come down to whether you need cash flow or assets on your books. For businesses looking to grow, hiring your business vans can be one of the best options for keeping hold of your cash – whether you’re looking to make investments elsewhere or reduce your liabilities.
Depreciation
The newer the vehicle, the more depreciation there will be. If you were to drive an average of 10,000 miles annually, depreciation occurs at a rate of around 20% per year.
Newer vehicles will often depreciate more quickly – with the highest rate of depreciation usually occurring in the first year. With vehicle hire, these costs are already accounted for – the difference being that you are not tied into an ageing vehicle.
Flexibility and changing Needs
If it’s possible that your needs could change, the ability to easily scale your fleet size up or down and change vehicle types is invaluable. Here’s are a few of the common scenarios where flexibility is key:
- Winning new business
- Seasonal demand
- Changing types of jobs
- Businesses looking to grow
Regardless of needs, vehicle hire can be one of the best acquisition methods to add vans to your fleet quickly.
Policy Changes: Environment
With the government’s Road to Zero policy, it is worth considering how your business can keep pace with Environmental policy changes.
London’s Ultra Low Emission Zone (ULEZ) introduced a financial charge for vehicles that didn’t meet the Euro 6 emissions standards. Clean Air Zones (CAZ) being rolled out across other major cities are establishing similar policies, with the first already launched in Bath, Birmingham and Bournemouth.
Purchasing your vehicle may leave you with older, polluting technology that is subject to existing or future financial charges.
Electric Vehicles (EVs)
With the 2030 ban of new sales of petrol and diesel vehicles, the nation will be making a gradual transition to EVs.
Developments in technology mean that there are increasing numbers of practical EV alternatives for businesses and a growing number of benefits to switching. Many businesses are already finding that the lower running costs of EVs are ideal for their needs.
Avoiding long-term investments in petrol or diesel vehicles can allow your business to be more flexible in assessing when’s the best time to transition to EVs. With vehicle hire, there’s also the potential to trial EVs on your fleet – without fully committing to a purchase or long-term agreement.
COVID-19 Situation
The coronavirus is also creating situations where businesses are having to react quickly to policy changes and economic uncertainty.
With new variants emerging, it’s unclear on when we will fully return to the normal. For aspects of our lives, such as expectations of more flexible working, there’s a possibility that we are now entering a phase of the ‘new normal’.
Whether it’s a lockdown or health and safety requirements at work, having a partner assisting you in meeting your commercial vehicle needs can enable your business to keep driving forward.
Life-changing events such as the COVID-19 pandemic and national lockdown are also reminders of the advantages of maintaining vehicle flexibility.
Economic Uncertainty
Depending on the market, it might not make sense for your business to commit to long-term investment by purchasing a van. With the economic uncertainty of the coronavirus and semi-conductor shortages affecting supply, many businesses are having to form strategies without fully knowing what the future holds.
Hiring a vehicle is one of the best options for businesses who are looking to react quickly to any upcoming changes, due to the flexibility of being able to change your vehicles or flex your fleet size up or down.
Looking for a vehicle hire quote for your business?
Our fleet consultants can provide you with a tailored quote for your business that is based on your requirements.
Here are some of the advantages of hiring a business van with Northgate:
- Peace of mind with servicing, maintenance, loan vehicles and breakdown cover included.
- Convenient access to workshops and expert technicians across the UK
- As much flexibility or extra fleet support as you need
- Dedicated account manager to help you spot cost and time saving opportunities
- And, you won’t need to consider depreciation and vehicle disposal costs
Ready to explore if vehicle hire is a more cost-effective and time-saving solution for your fleet needs?
Get a quote and solution tailored to you.
