23 Apr 19

TCO and car selection in Uruguay

Calculating total cost of ownership (TCO) in Uruguay – just like any other country - is certainly a prerequisite before deciding on which 0km vehicle to acquire for your fleet.

Among the main factors to scrutinize are the initial price, fuel efficiency, maintenance costs, post-sales support, length of guarantee, and the origin of the car. However, before anything else, fleet managers should determine the use of these vehicles first (Utility).

For instance, a driver in a large city such as Montevideo needing a day-to-day work car is not the same as a driver with six children living in the outskirts of the city (e.g. El Pinar)
Once Utility is defined, fleet managers must decide on how much money to invest. For instance, an Audi A1 is a nice vehicle but its US$48,000 price tag in Uruguay may not fit within all corporate budgets. Maybe the Chery QQ could be an option. Some models are priced at less than US$10,000.

Chery QQ (source: Wikimedia Commons)

However, the initial price is not everything. Some of the most important determining factors to help you decide are fuel consumption, the cost of maintenance and insurance, vehicle depreciation, and safety features. Although these are commonly overlooked by the average car buyer, a seasoned fleet manager would consider all of these factors first.

"After having a car for about five years, maintenance throughout the period should total around 10-15% of the value of the car and it should depreciate 30-40%," local automotive consultancy Autodata director Jorge Martinez De Boni was quoted as saying by regional paper El Pais. 

Finally, personal taste and feelings can also influence purchasing, but this is more so for benefit cars for executives or for the average car buyer.

Length of Guarantee

It is often believed that a longer guarantee is more favorable, but it is necessary to look at it from an economic point of view. There are vehicles that have one-year warranties and others that have five. Although the latter sounds better, it could end up costing you more, says Mr. Martínez De Boni.

When you have a five-year warranty, you are obliged to use an official service shop and cannot really go price shopping. According to the executive, being able to choose which shop to go to is better.

Chinese Vehicles

In recent years, there has been a firm growth in the Chinese car market in Uruguay. While brands from Asia’s largest economy were of concern in the past, they are starting to gain more acceptance in the region, and this is highly influenced by their lower price points.

Among the Chinese models in the country are the Chery QQ 1.0 (US$10,490), and other models from brands such as BYD, Geely, and Zoyte.

On the opposite end of the spectrum are premium cars offered by OEM’s such as Mercedes Benz. Its top model is the GL400 Blue Efficiency which is priced at US$174,500.

Authored by: Daniel Bland