Talk of the extinction of the company car has been somewhat exaggerated.
While numbers have been slowly falling over the past decade, the most recent figures from HMRC regarding the number of people paying company car tax show a slight increase.
What’s more, new research has shown that nine out of 10 UK businesses are unwilling to give up company cars.
It’s not hard to see why. For both businesses and employees a company car is often the simplest solution to transport, and for the company that means control. It’s no good simplifying things by giving employees cash if you later on have far more paperwork and less control over the vehicles used.
“The key advantages of running company cars rather than simply providing cash are control and visibility,” explains David Bushnell, mobility product manager for leasing giant Alphabet.
“Having a company car fleet means that you have an unparalleled level of transparency and insight into your vehicles and their business journeys, in terms of costs, emissions, safety, reliability and fuel efficiency.
“It also means that you have real ‘levers’ that give you the ability to influence, control or change driver behaviours, such as through risk management or fleet policy. These levers also give you the reassurance that you can meet your statutory duty of care obligations as an employer.”
He adds: “It would be easy for some fleet decision-makers to regard company car programmes as ‘more hassle than they’re worth’ but this takes for granted the huge benefits such schemes provide to an organisation, not just to their employees.
“It’s difficult to put monetary costs on the financial and legal value of a company car programme. The visibility, control and ability to deliver against duty of care that such schemes provide are invaluable. Aside from the significant benefits for recruitment and retention, the value of a company car programme to an organisation is only truly understood when it is not there or something goes wrong.”
That value is understood within British businesses.
Shaun Sadlier is head of Arval’s Corporate Vehicle Observatory in the UK, whose research showed that 90% of businesses are unwilling to part with their company cars. He said: “It is worth underlining the contribution the company car continues to make, providing a cost-effective, flexible and efficient transport solution – as well as serving as an employee incentive.”
“Having a fleet gives you insight into vehicles and their journeys”
The Arval research showed that support for the company car remains strong across all fleet sizes. Just 13% of larger fleets (more than 50 vehicles) would even consider giving them up, alongside 13% of medium fleets (10-49 vehicles) and 10% of smaller fleets (1-9 vehicles).
Sadlier said: “Right across the board, the appeal of the company car is emphatic, from the smallest businesses to the very largest.”
John Pryor, ACFO chairman, takes a pragmatic view: “Providing you understand what the company wants, then there are still advantages to the company car. They offer control of costs, good safety levels and present a strong image. And they are also essential for job-need roles.
“The more you outsource the car to the individual, the more they are likely to cut back on running and servicing to save money because there is some openness to how the employee treats it.
“Cash has its place, but it’s a fine line. The disadvantage of company cars is dealing with all the paperwork, checks and administration. However, if you’re a smaller company and don’t want to do this or can’t gain the skills to do this, then you can easily outsource it to an expert. Also, the admin involved isn’t really any more than any business already has to do for payroll or health and safety checks for other areas.
“The biggest disadvantage to the company car is people leaving and handing back a car. That’s not an issue with cash.”
“What this means is that companies need to do the sums every time there’s a fiscal change. This is where ACFO can help – with advice, guidance and information,” says Pryor.
Speaking to Company Car Today ahead of the Government’s recent clean air plans for 2040 announcement, David Rawlings, director of consultancy BCF Wessex, said that even if the traditional company car with an employee paying benefit-in-kind reduces in numbers, other company car schemes will take its place.
“To get the CO2 down it costs the government a lot of money. If it wants to hit diesel and it wants to incentivise hybrids and ultra-low-emission vehicles, will it be worth the loss in tax?
“If this happens, PCH and employee car ownership-like schemes will increase. People will have things that look like company cars, but aren’t.”