How to Reduce Business Car Costs: 7 Solutions That Actually Work

A company car often looks like an unavoidable expense that simply cannot be cut. In reality, however, most of the cost is driven not by the car itself, but by how the company manages it. In this article we look at what the true cost of keeping a car is made up of, why these costs have risen in recent years, and which solutions allow a company to make real savings – without losing mobility.

If your company runs anywhere from one to several dozen cars, transport costs quietly climb far higher than fuel invoices alone would suggest. It is worth looking at the full picture. 

What makes up the cost of a company car?

Many companies equate the cost of a car with the sum of fuel and insurance. But the total cost of keeping a car consists of far more components: the purchase price, fuel, compulsory and comprehensive (CASCO) insurance, maintenance, tyre changes and storage, repairs, administration and – often the largest, yet least visible part – the depreciation of the car’s value.

It is depreciation that often becomes the most painful line item. As noted by Swedbank leasing experts, a new passenger car costing around €30,000 can lose 50–60% of its value over roughly four years of use – that means a €15,000–18,000 loss from the drop in value alone. On the balance sheet these costs often remain invisible until the moment the car has to be sold.

Once all these components are added up, the vehicle fleet often becomes the second or third largest expense area in a company. The problem is that this sum never appears on a single line – which makes it easy to underestimate. 

Why has running a car become more expensive in recent years?

Even if your fleet hasn’t changed, keeping it on the road has most likely become more expensive. There are several objective reasons for this.

First, insurance. According to an analysis by Reidas.lt, compulsory motor third-party liability (MTPL) insurance premiums rose by roughly 20–30% for most drivers in 2024–2025, and even more in extreme cases. The broader market trend is confirmed by data from the Bank of Lithuania: non-life insurance premiums (a significant share of which is made up of motor and CASCO insurance) grew faster than written premiums in 2024, and motor third-party liability insurance accounts for about a quarter of the entire non-life insurance market. CASCO insurance, which is especially relevant for newer and rented cars, has also become more expensive over the past year.

Second, repairs and parts. Rising prices for car parts, repair labour, logistics and energy push up overall operating costs. The Bank of Lithuania lists changes in car repair rates and inflation among the main factors driving up insurance premiums. This is felt particularly by companies whose fleet is ageing – and according to data from the European Automobile Manufacturers’ Association (ACEA), Lithuania has one of the oldest car fleets in the EU: the average age of a passenger car is around 17 years, while the EU average is about 12 years. Older vehicles require ever more frequent and more expensive repairs.

Third, taxes. The provisions of the Corporate Income Tax Law that took effect in 2025 have significantly affected companies that own cars. 

Tax changes every business needs to know

From 1 January 2025, companies acquiring new passenger cars (category M1) are subject to new limits on deducting the acquisition price, tied to the amount of CO₂ emitted. According to the explanation provided by the State Tax Inspectorate (VMI), the share of the acquisition price that can be deducted from income through depreciation may not exceed:

• €75,000 – when the car’s CO₂ emissions equal 0 g/km (e.g. electric vehicles);
• €50,000 – when CO₂ does not exceed 130 g/km;
• €25,000 – when CO₂ exceeds 130 g/km but does not exceed 200 g/km;
• €10,000 – when CO₂ exceeds 200 g/km.

The portion of the price exceeding these limits is treated as a non-deductible expense, and VAT deduction on the excess value becomes impossible – which further increases the corporate income tax payable. It is important to know that analogous limits also apply to rental costs under contracts concluded or extended from 1 January 2025.

However, there is a significant exception. As VMI notes, these CO₂-linked limits do not apply when the car is used in rental activity – regardless of whether it is long-term or short-term rental. In practice, this means that the consequences for taxes of how a company obtains a car – buying, leasing or renting it as a service – can be different.

How taxes apply depends on each company’s specific situation, so before making a decision it is worth consulting an accountant or tax advisor. The current provisions can always be checked on the State Tax Inspectorate (VMI) website.

💡 Wondering whether the rental model would suit your company? Find out how operating lease works – and what’s included. 

7 ways to reduce business car costs

1. Start by measuring the true costs

You can’t manage what you don’t measure. The first step is to calculate how much each car actually costs per year, including not just fuel but also insurance, maintenance, tyres, repairs and depreciation. It often turns out that a few old cars cost more than newer ones – because of frequent repairs and higher fuel consumption.

2. Renew an old fleet

Newer cars usually consume less fuel, break down less often and have more safety systems. An ageing fleet only looks cheaper on paper – the real costs of repairs and downtime often outweigh the apparent savings.

3. Consolidate and automate expenses

Fuel cards, unified expense accounting and fleet management systems let you see all costs in one place. This helps you quickly spot sources of inefficiency – more expensive fuel stations, unsuitable routes or excess spending.

4. Outsource maintenance and administration

Every hour spent arranging insurance, scheduling servicing or administering claims is a hidden expense. Handing these processes over to a service provider frees up the company’s internal resources – time and people – for its core activity.

5. Replace variable costs with a fixed payment

An unexpected repair or a sudden rise in insurance disrupts budget planning. Models with a fixed monthly payment turn unpredictable costs into a single predictable line – which makes financial planning easier throughout the contract period.

6. Match the car to the actual need

Business mobility needs change due to seasonality, growth or project-based work. Solutions that make it easy to add or return cars as needed help you avoid paying for downtime and an unnecessary fleet.

7. Consider long-term rental as an alternative to ownership

For many companies the biggest savings lie not in small optimisations but in the ownership model itself. Instead of buying a car and taking on all the risks associated with it, you can use it as a service with a fixed payment. When such a solution pays off more than your own fleet – we discuss in the next section. 

Own fleet or long-term rental – which to choose?

The main difference is who takes on the risk. With an own fleet, the company bears not only the initial investment but also the depreciation already mentioned, unpredictable repairs and disposing of the car once its use ends. With long-term rental, these risks pass to the service provider, while the company pays a fixed, known-in-advance payment.

This model is especially suited to businesses whose car needs change due to growth or seasonality – the fleet can easily be scaled up or down without the hassle of selling. In practice it works like operating lease: the monthly fee includes insurance, maintenance, tyre changes and roadside assistance, so the company is left with just one task – to use the car.

💡 Want to see which cars are available for your business? Browse the car selection and monthly fees. 

How MyBee helps reduce car costs

MyBee is a long-term car rental (subscription) solution built precisely to implement this model. Instead of many separate invoices, a company receives a single fixed monthly payment that includes:

• insurance;
• periodic technical servicing;
• replacement of worn parts;
• tyre changes and storage;
• claims administration support;
• 24/7 roadside assistance.

The number of cars can be increased or decreased according to business needs, without long-term financial commitments. To read more about why this service can be a financially efficient choice, read here, or browse the offers for business.

💡 Ready to look at specific numbers? Submit a request – within 1 working day we’ll prepare an individual offer based on your fleet’s needs.

Frequently asked questions

Which part of a company’s car costs is most often forgotten?

The most commonly underestimated cost is the depreciation of the car’s value. Unlike fuel or insurance, it doesn’t appear on invoices and only becomes visible when the car is sold – even though over several years it can amount to thousands of euros in losses. That is exactly why it’s important to factor this expense in when planning.

Is long-term car rental cheaper than buying?

It depends on the company’s situation. Rental allows you to avoid a large initial investment, the risk of value depreciation and the administrative burden, and turns costs into a fixed, predictable monthly payment. For many companies, especially where needs fluctuate, this is a more financially efficient solution.

How did the 2025 tax changes affect company cars?

From 2025, the deduction of the acquisition price of new passenger cars and of rental costs is limited according to CO₂ emissions. However, according to VMI’s explanation, these limits do not apply when the car is used in rental activity. The specific impact is worth verifying with your accountant or VMI.

What does a long-term rental monthly payment include?

It depends on the provider and the package, but the payment usually covers insurance, periodic maintenance, tyre changes and storage, and roadside assistance. This way, most of a car’s separate costs are replaced by a single predictable sum. 

Want to find out how much your company could save?

Every business is different, so the best solution is an individual one too. Submit a request and within 1 working day we’ll prepare an offer based on your fleet’s needs. You can also simply browse the cars or read about how operating lease works.

Have questions? Get in touch directly – tel. +370 700 77024 or email info@mybee.lt.