A Study Of State-financed Vehicles’ Optimal Renewal Period Policy Based On Pespective Of Life Cycle Cost

State-financed Vehicles are important tools to complete the official activities. To acertain extent, Vehicles improve the work efficiency and ensure the efficient operation ofthe administrative organs. On one hand, they are beneficial to the construction anddevelopment of the institutions and the prosperity of the country. On the other hand, theirhuge spending brought quite great fiscal pressure. State-financed Vehicles’ optimal renewalperiod policy can influence the finance of the administrative institutions in the very greatdegree. Traditional vehicle management focuses on the initial investment, ignoring thestudy of the running cost. In addition, they retire the vehicles according to the vehiclescrapping mandatory policy, and not based on the vehicles’ actual situation. It will result inthe excessive use of the car and bring a huge fiscal pressure.This paper introduced the traditional method of optimal renewal period policy. Itshows commonly used of several decision methods: the maximum yield method, theinferior value method, value method and the minimum annual cost method. It analyses ofthe shortcomings of the various methods, and put forward some suggestions forimprovement:(1) changing the time coordinate to the mileage coordinate;(2) refining costmodel according to the development trend of the costs and estimating the expenses not yetoccurred;(3) constructing the model of the wear value transfer rate on the mileagecoordinates.In consideration of the above some suggestions for improvement, in order to improvethe traditional decision methods, we sum up the all expenses incurred in the life cycle of thestate-financed vehicles, and classify them on the basis of the state-financed vehicles’ lifestage. After analyzing the change tendency of each unit cost, we put analysis methods intouse, such as linear regression and nonlinear regression. Then we built life cycle cost modelsfor the cost of unit to achieve the accurate estimation of the costs not yet occurred. Finally, amodel of state-financed vehicles’ optimal renewal period policy can be structured based onthe life cycle cost model and the characteristics of the state-financed vehicles. In order toverify the model, we regard research data as samples. By the empirical analysis of the model, the model is verified the reliability and operability. The state-financed vehicles’optimal renewal period decision model can be used as a reference for administrativeinstitutions’ departments related to state-financed vehicles’ management.