The TCO dilemma for fleet owners

Several interviews with manufacturers operating in the GCC all seem to yield the same complaint: customers always focus on initial purchase price, rather than total cost of ownership (TCO).

Whether it’s paying for premium vehicles or shelling out for genuine parts, buyers in the region tend to look only at up-front cost. This is in direct contrast to the approach adopted in Europe, where firms usually prioritise long-term savings and less downtime, over the initial purchase price.

To be fair to both sides, it’s natural that manufacturers would use the TCO argument to justify higher prices. And with the tight margins and cut-throat competition that many in the transportation industry operate under, it is no surprise if they’re under pressure to save where they can. This is one of the key challenges faced by Dubai-based Cardan Shaft Network, which manufactures drive shafts in its facility in Silicon Oasis. Hans Georg Brune, managing partner of the firm, discusses this further as we look at how shafts are manufactured here.

It goes without saying that fleet owners and operators are best placed to decide what’s right for their business. But before making a purchase solely based on price, it would be worth doing a comprehensive cost-benefit analysis to find out whether the short-term saving is worth it. By factoring in other costs such as spare parts
replacement, maintenance, fuel and the money lost during downtime, you might be able to make better-informed decisions.


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