20 juin 17

TCO in France at historic low

The Total Cost of Ownership (TCO) for vehicles is at an historic low in France. That is one of the main conclusions of the sixth edition of TCO Scope, an annual survey by l'Observatoire du Véhicule d'Enterprise, the French pillar of Corporate Vehicle Observatory (CVO) - the independent think thank of Arval.

The new figures confirm the previous downward trend of TCO, driven mainly by the fact that companies and organisations are diversifying the usage of their fleets, taking care to match vehicle types to the best possible application of their qualities. 

Rising and falling

Corporates (not counting OEMs and short-term rental companies), public-sector fleets and long-term rental companies together registered 789,783 new vehicles (cars and LCVs) in 2016, up 8.1% over 2015. Cars increased 9% in to 467,294 units, LCVs were up 6.7% to 322,489 units. The corporate share of the total has never been larger than last year: 32.56% of the total market, versus 31.85% in 2015 and 30% in 2012. 

But general manager of l'Observatoire du Véhicule d'Enterprise, Bernard Fourniou (pictured) warns that the increase does not seem to be sustaining itself throughout this year: "For the first months of 2017, the monthly figures alternate between rising and falling, with the first quarter showing an average decline of -0.8%”.

Three factors

The TCO Scope 2017 report did indicate that the Average Price Per Kilometer last year as compared to the previous year declined by 0.87% for cars (to €0.34/km), and by 1.16% for LCVs (to €0.254/km).

According to Mr. Fourniou, “that trend is powered by three main factors: fuel prices have fallen, and so have interest rates and other financing costs, and the second-hand market remains strong, ensuring good residual values for the vehicles at the end of their first life”. But that fortunate state of affairs will not last forever, he says. 

Another finding of the CVO's sixth annual TCO Scope for France: diesel remains the favourite fuel for corporate vehicles, with an 86% share of the total corporate market, but on a slight downward trajectory: losing 1.36% against 2015. 

Tax reform

However in absolute figures, the number of corporate cars and LCVs using diesel rose by 6.4% over one year to a total of 679,136 units. Again in absolute figures, the number of petrol cars and LCVs registered to French corporations rose by 29.7% from 2015 to 2016, but that amounts to a total share of the corporate market of no more than 10.77%.

However, the tax reform defavourising diesel should put petrol on a more level playing field, leading to an increase of its share in corporate fleets over the coming years. 

Hybrids did not do well last year, losing 17.5% to represent no more than a 1.93% share of the corporate market in France last year. Electric cars progressed by 26.4%, but in the end amounted to no more than a 1.20% share of French corporate fleets in 2016.

Image: Fleet Europe

Authored by: Frank Jacobs