Company car popularity down to financial security and convenience

The financial benefits of operating a company car, followed by convenience, are driving the popularity of the company car, according to fleets.

Research from the Arval Mobility Observatory’s suggests almost a third (31%) of fleets without an alternative mobility policy in place believe that employees not having to finance their own vehicle is the greatest draw.

That was followed by the ease of motoring with all services provided by the company (18%) and no risk of ownership such as residual values (16%).

Low company car tax when choosing an electric vehicle (EV) (12%) and delivery of a new car every 3-4 years (3%) were also listed.

Shaun Sadlier, head of Arval Mobility Observatory in the UK, said: “It is highly informative to look at the reasons why fleet decision-makers without an alternative mobility policy in place, believe that so many drivers choose to stay with a company car rather than funding and maintaining their own vehicle.

“The vast majority of the factors mentioned by respondents are based around financial security and convenience.

“For example, not having to finance your own vehicle is the top result, as in previous years, and it is clear that drivers view this as a major advantage.”

Sadlier says it is worth bearing in mind that this avoidance of potential risk becomes potentially more attractive during times of economic uncertainty.

It is perhaps telling that four times as many fleet decision-makers as in last year’s survey mentioned the very low personal taxation applied to EVs as a factor in opting for a company car.

“This bears out predictions widely made in the fleet sector in recent years that drivers who have taken cash options in the past will return to company cars and other employees will enter salary sacrifice initiatives as a result of the current minimal benefit-in-kind taxation rates and higher initial purchase price for EVs,” said Sadlier.

“This is something that is being seen at Arval in the UK and which we expect to grow in the coming years.”

Arval Mobility Observatory’s Barometer also asked which solutions businesses offered to employees to finance a personal car.

Respondents mentioned salary sacrifice (23%), cash allowance (23%) and personal contract hire (5%).

 “When it comes to the methods offered to employees who do not choose a company car as a means to finance a vehicle, cash allowance and salary sacrifice are the joint top options listed, which is a repeat of recent years,” Sadlier continued.

“Again, we expect to see a growth of the latter in future reports.”

Arval Mobility Observatory carries out its research of key trends in the fleet and mobility sectors every year.

The 2022 Barometer talked to fleet decision makers in 26 countries and the figures shown here cover UK responses to this section of the survey.