Asda reports move from cash to car

The Asda company car fleet has grown rapidly by 76% over the last 2 years, following a shift from employees taking a cash allowance to entering the company car scheme. 

Asda now has a fleet of 1,100 vehicles funded by contract hire, with the funding and vehicle management provided by Zenith.

The company has 1,500 eligible cash allowance takers and between January 2010 and January 2011 over 53% of the orders placed were from drivers entering into the company car scheme, rather than opting to take a cash allowance. 

The move has resulted in substantial cost savings to Asda as they are able to provide a company car for less than the cash allowance required to get the same vehicle on the retail market. 

Asda has been able to pass this advantage back to colleagues and improve the value and choice of cars available on the scheme.  The enhanced company car vehicle choice list is further encouraging more drivers to move into company cars.

Asda gains through cost savings, improved duty of care compliance by reducing the size of the ‘grey fleet’ and the ability to provide staff with an improved company car. 

Employees benefit from an all inclusive package and a brand new reliable and safe car.  They also obtain protection from increases in insurance and unbudgeted costs, including maintenance spend, along with removal of credit access problems that have increased during the downturn.

Zenith worked with Asda to encourage the move into cars by developing an online calculator.  This helped demonstrate the costs of the driver’s chosen company car, and highlight potential expenditure incurred in private car ownership that is commonly overlooked.

Asda was able to use the Zenith calculator, combined with a communications strategy that included in house road shows and newsletters, to promote the company car scheme to staff.

Over the past few years many companies have seen a shift from cash allowance takers to those who chose to enter into a company car scheme, says Zenith.

One of the many drivers for the change has been changes to tax legislation, including the introduction of CO2 emissions based Benefit in Kind and other taxation, including capital allowances and road duty. 

This, coupled with the increase in low emissions cars is making it significantly more cost effective for many to enter a car scheme, rather than take a cash allowance and source a car elsewhere, reports Zenith.

Mike Hazelgrave, reward manager at Asda, said:  “When Zenith demonstrated the cost and duty of care compliance benefits of actively encouraging colleagues into the car scheme, it was clear that both the business and our colleagues would benefit. 

“It was important to highlight the advantages to colleagues.  Many of them had not considered additional costs, particularly from driving an older car, such as fuel costs and higher maintenance costs. 

“They do not have to worry about unbudgeted costs arising, or from market or other increases in insurance. 

“We have been able to improve the value of the benefit to our colleagues, by increasing the allowance for each grade to provide them with higher specification cars.  This has been all because of the savings we have made from a reduction in cash takers. 

“It has also been a great way for us to improve employee safety whilst on the road and assist with duty of care compliance.”

Ian Hughes, commercial director at Zenith, added:  “The work we have done with Asda to illustrate the benefits of entering the car scheme has meant that they are able to offer an improved value benefit, which colleagues are opting back into at a substantial rate. 

“It has been a win-win for Asda and their colleagues.  We look forward to continuing to work together, to give Asda the support they require to ensure both the colleagues and the company continue to reap the benefits of the scheme.”