Company cars from the outset may seem like an expensive perk. However, having a company car scheme may be a better solution for your company for a number of reasons. According to research by XpertHR, 73.4% of businesses consider an employee’s job role when implementing a company car scheme, 38% consider the frequency of travel – with daily being the most popular, followed by travel on approximately three days a week. And 34.4% of companies consider the need to carry equipment.
Company cars are also a very powerful benefit for employees and can be great for attraction and retention. They can have a significant impact on not just the employee’s professional life, but personal life too, as many employees will use their cars for family use.
In this article we will go into these points in more detail.
If you have a field-based sales team
Many organisations have a field-based sales team that require vehicles to travel to customer meetings, particularly those covering a wide geographic area. But in many organisations, employees can use their own vehicle with the company paying a car and fuel allowance. However, introducing a company car scheme for a field sales team may be a better idea.
High mileage is a factor which can greatly reduce the value of a car. An employee using their own car may be reluctant to carry out as many face-to-face meetings because of the impact it could have on value of their car – reverting instead to phone calls and emails to communicate. This doesn’t necessarily support the building of strong customer relationships and may end in reduced productivity.
Introducing a company car scheme removes the impact of mileage on their behaviours, making them more productive and more likely to make the number of customer visits in order to hit their targets.
It makes sense, after all, you have a field sales team for a reason – they are carrying out a job which isn’t possible over phone and email.
As a recruitment strategy and increase employee satisfaction
Company cars are a great way to attract new employees. GE Capital survey revealed that more fleet managers are seeing company cars as a recruitment and retention tool than before. More than two-fifths of managers value company cars as an important part of employee recruitment and retention. In a survey of 750 people, 33% of them said that a company car is the deciding factor for 19% of respondents when taking a job. 16% say that not having a company car is a deal breaker, 41% say company cars let them drive a car they otherwise would not have the opportunity to.
When employees get company cars, they save money on car ownership, in terms of tax, insurance, service, maintenance and repair and breakdown. – Creating a company car scheme is a great way to increase employee satisfaction and it often means employees get to drive a car of greater value than they’d otherwise be able to afford if they were acquiring it themselves.
’Perk’ company cars can be a big deal for an employee because it can add value to their personal lives. For employees with perk cars, it means they have a car that they can use with their families, and they don’t have to worry about extra costs such as insurance. This can be a huge burden lifted off your employees’ shoulders. People can also have an emotional attachment to their cars, so company cars could be a key element in increasing employee retention.
It’s often a cost-effective fleet solution
If your employees are already using their own cars to carry out their job, for example field engineers transporting equipment, you will be paying fuel allowances for their business mileage. The cost of fuel may vary greatly depending on the type of car your employee has, the type of fuel it uses, and how many miles they are doing which in the long run could be expensive. For example, overloaded vehicles can be less cost effective because they consume more fuel. Research suggests that a 200-pound weight in your car ! On average, a van travels 12,811 miles a year. If you were driving a Citroen Berlingo for example, your annual fuel costs would increase by over £28. Driving overloaded vehicles is also illegal, and if you have an accident, your insurance is void. These factors can be a huge risk to your business, and by having vehicles of your choice, that are more fuel efficient and the appropriate size for your employee’s job, you will be able to accurately estimate and manage the running costs of your fleet.
With business cars, there are many cost benefits. Businesses are encouraged by the government to incorporate electric or hybrid vehicles into their fleet which cost very little to charge and are more economical. For example, you can claim back the cost of purchasing a car through capital allowances. If you have a car with emissions between 50g/km to 110g/km, you can claim back 18% capital allowance. Businesses can claim 100% first year allowance on low emissions cars which are cars that emit less than 50g/km of CO2. Plus, you can receive full tax relief on maintenance, other running costs and interest paid on a loan to buy the car.
Additionally, if you lease or rent a car for your fleet, you can accurately budget and manage your monthly cost.
If you lease a car for business use only, with CO2 emissions below 110g/km, all the leasing costs can be
Building the best company car benefit scheme for your company
If you are looking to create the best company car scheme for you employees, download our free whitepaper. Our whitepaper compares company cars with cash allowances and helps guide you through making the right decision for your business.