Company cars 'better value' for staff than car allowance - Fleet200 roundtable discussion

Fleet operators discussed the various funding methods available for vehicle procurement, including contract hire, rental and outright purchase.

• The group consisted of a mixed approach to funding; some fleets used a single funding method while others found a blended solution suited them better.
• New lease accounting rules, which will see contract hire vehicles appear on a company’s balance sheet, have prompted some businesses to consider outright purchase as an alternative to contract hire.
• The group agreed that outright purchase may not be suitable for an entire fleet due to the capital investment required, but some businesses found it more effective for specialist or low-usage vehicles that would be kept for longer periods.
• Most fleet managers felt that contract hire gave them better control over costs - it was advised that fleets try and fix as much as possible into the monthly fee, such as maintenance and repair.
• Cash allowance was also discussed as some fleets had a high proportion of cash allowance drivers. Fleets were concerned that they had less control over those drivers using their own vehicles and some have implemented policy to ensure cars being driven on business meet certain criteria.
• Many fleets use rental to complement their owned and leased vehicles. Some for occasional business drivers to minimise grey fleet usage, others for emergency replacement of accident damaged or broken down vehicles or for new starters.
• One fleet rented all its cars on a need basis. Employees are encouraged to use public transport and taxis where possible with hire cars provided on request.
• It was felt that leasing providers offered wider choice of vehicles than dealing directly with manufacturers, although sole supply contracts direct with manufacturers often result in cheaper vehicles.
• Company cars were deemed better value for an employee than a car allowance and some fleets had experienced a large number of employees joining car schemes once introduced.
• Restricted choice lists were deemed more likely to push employees towards a cash option.
• Personal PCP deals were highlighted as attractive in comparison to company car tax for more prestige vehicles, but when running costs were considered the group felt a company car still makes more sense.
• Fleet managers said that leasing companies must offer a range of funding options and flexibility to be at a greater chance of winning their business.