Ogilvie True Cost
When it comes to vehicle choice and policy setting, the most commonly used method is to compare and select vehicles based on monthly lease rentals. However, there is a better way. A way where there could be a 'win' for the company and a 'win' for the driver. Our recommendation is that you set your policy based on the Ogilvie True Cost (OTC).
Ogilvie True Cost takes the principle of Whole Life Cost as a base and then adds in additonal elements that are, incorrectly, not always used in a traditional whole life cost calculation. The example below explains how we calculate the Ogilvie True Cost:
Land Rover Freelander 2.2 TD4 GS 5dr - 36 mth/75,000 Mile Term - Full Maintenance - C02 = 165g/km
|
Cost Element (monthly) |
NEW OTC |
OLD WLC |
|
Effective Rental |
£ 631.91 |
£ 631.91 |
| plus |
Cost of Fuel (£1.19 per litre plus VAT) |
£ 247.43 |
£ 247.43 |
| plus |
Employers NIC |
£ 83.91 |
£ not inc |
| equals |
Gross True Cost |
£ 963.25 |
£ 879.34 |
| less |
Corp. Tax Saving (24% rate) |
£ 231.18 |
£ not inc |
| plus |
Lease Rental Restriction |
£ 16.89 |
£ not inc |
| equals |
Ogilvie True Cost |
£ 748.96 |
£ 879.34 |
As you can see, Ogilvie True Cost includes the critical costs associated with NIC and then applies the applicable corporation tax saving to these actual and direct costs before adding back in any applicable lease rental restriction. The Ogilvie True Cost then becomes a far more accurate representation of the actual costs associated with the operation of the vehicle and allows a far more precise comparison to be made between different models. We would also be happy to tailor the Ogilvie True Cost to your specific requirements should you wish to include additional information.
Innovative Quotations
To help you use Ogilvie True Cost as the basis of policy choice, the OTC is shown on each of our individual quotations. This is clearly detailed to help you make the best decision for your company. We can also help you set a car policy that works around Ogilvie True Cost to ensure that all future vehicles maintain the restrictions that you choose.
Most importantly, we can also provide a full, bespoke, online driver quotations system that allows drivers to select only those vehicles that fall within their OTC band. This is now becoming the preferred method of operation for the majority of our clients operating in excess of 50 vehicles.
To find out more about Ogilvie True Cost and to see fully worked examples of how it can work for you, please contact us.
