ECONOMIC ACQUISITION OF VEHICLES BY HIRE OR LEASE

Vehicle purchasing falls into three separate categories: cars, industrial trucks/mechanical handling equipment and commercial vehicles, and the author suggests that this is a very specialized field which should be left to an expert in vehicle technology to enact. A technical expert is required who has the facility of seeking financial and purchasing advice, rather than a purchasing expert who does not possess and can rarely express operating requirements in technical terms to meet the law relating to commercial vehicles. The problems associated with vehicle acquisition are discussed, and guidance is given on finance and financing facilities in relation to such terms as discounted cash flow analysis (dcf), outright (direct) purchasing, conditional sale, leasing, open-ended leasing and contract hiring. It is suggested that in comparing or evaluating projects that the capital employed is frequently ignored, and a method involving discounted cash flow is described which overcomes this problem in that the time value of money is taken into account. Examples are quoted on the financing of a saloon car fleet where outright (direct) purchasing was compared with open-ended leasing and contract hire; and in financing a commercial vehicle fleet where outright (direct) purchasing was compared with conditional sale and a straightforward leasing arrangement. With the car fleet the answer was in favour of open-ended leasing closely followed by contract hire, and way behind came outright (direct) purchasing. In the commercial case the final result showed that outright (direct) purchasing and conditional sale (paid quarterly in advance over 4 years) were fairly even net present value (npv) wise and both beat leasing. /TRRL/

  • Corporate Authors:

    Institute of Transportation Engineers (ITE)

    Washington, DC  United States 
  • Authors:
    • Duncalfe, R H
  • Publication Date: 1977-3

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00172531
  • Record Type: Publication
  • Source Agency: Transport and Road Research Laboratory (TRRL)
  • Files: ITRD, TRIS
  • Created Date: Jun 28 1978 12:00AM