Finding the best car to buy or lease for your business

5 key questions when buying a company vehicle

Choosing the right car can be difficult. There are untold makes and hundreds of models to choose from in the New Zealand market, with new models appearing all the time.

Finding the right vehicle is about asking the right questions.

  1. 1. What will be the main use of the vehicle?

Asking the right questions will help ensure you choose the right vehicle. What is its major use? How many kilometres do youtravel annually? Will you need to take passengers? Will it be used off road? Once you are clear on the main use requirements of your vehicle, you can narrow down on models within a segment.

  1. 2. What do car reviewers say?

There are any number of places to find New Zealand car reviews, ranging from the government’s Right Car with its safety and fuel economy information to private vehicle review sites.

Doing some research by reading reviews and checking user ratings on the cars you’re considering can help you to identify key features and differences between models. This will also help you focus in on a few that fit your budget and requirements. These websites will get you started:

  1. 3. What will the residual value be?

The residual value of a vehicle is the estimated resale value of a car at the end of your lease’s term. The lessor assumes the risk on this residual value in an operating lease, and the lessee assumes the risk in a finance lease.

In an operating lease, LeasePlan sets the residual value based on factors including the age of the vehicle at the end ofthe term, how many kilometres it is expected to travel during the term, the make model lifecycle, and the expected vehicle use.

LeasePlan manages 21,000 cars in New Zealand and over 1.7 million worldwide. We have data and expertise that will help you choose the right mix of makes and models, set accurate residual values and implement a planned fleet replacement program that delivers cost-effective business mobility.

More on effective fleet replacement

  1. 4. What are the running costs likely to be?

When you start looking at new vehicles, your first cost consideration is purchase price. But there are many more considerations that are just as important. The car will need to be maintained and kept legal on the road.

Fuel consumption, maintenance costs, insurance, registration and depreciation all differ from car to car. So, it’s important to understand at the total cost of ownership using a tool like the one offered by the EECA.

When you lease with vehicle leasing professionals like LeasePlan, our extensive experience and data allows us to accurately calculate running costs. We can then bundle costs into a monthly lease figure. This means you avoid cashflow pressures and have a simple oversight of your true costs of mobility.

  1. 5. Does the car have a clear return on investment?

Any vehicle you choose will be a depreciating asset with running costs. Maximising your ROI on the investment you make in that asset will require you to make efficient use of it and derive maximum value for your business from it.

Maybe your cars are fit for purpose, but under-used? There are alternatives to increase ROI in such circumstances:

Pool car management:
Have a look at our Pool Car Management system and see if a shared car could be used in your business.

Novated Leasing:
Fleet cars more employee benefit than essential tool for your business? Offer staff novated leases instead. This is cost-neutral to your company, while providing tax benefits, a new car, and significantly discounted rates to your employee.

Fleet replacement

When should you replace your fleet?

More on optimal fleet replacement timing

Financing a vehicle

 

Vehicle replacement: When to buy a new car for your company

Timing is everything. Putting employees in cars that are right for them is just the start of managing a vehicle fleet. You need to maximise value while minimising costs. And recognising when your fleet is no longer providing good value and costs are rising is key to effective fleet management.

Capital costs fall and operating costs increase as a vehicle ages. So, there will be a point where it is no longer cost-effective.

  • Vehicle capital costs are the monthly market value depreciation or decrease in secondary market value attributed to vehicle age and mileage.
  • Vehicle operating costs are all those costs incurred in keeping the car on the road – like fuel, tyres, registration, insurance, scheduled or non-scheduled maintenance, out-of-warranty repairs and temporary replacement rentals.

Vehicle replacement schedule

Optimum replacement timing will vary across vehicle models, and depend on fleet policy, funding costs, accident occurrences and other variables, known as ‘soft factors’.
Identifying that sweet spot in the whole-of-life cycle of your vehicles, when it is the optimal time to replace those vehicles, is key.

Are your cars performing their best?

More on the fleet management tools you need