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HR special: Find the right balance on car choice lists

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Perk cars are rising up the agenda again as the economic situation eases and companies seek to attract and retain staff.
Employers are being warned that staff are prepared to vote with their feet if they are not happy with their current package.
A report from the Chartered Institute of Personnel and Development (CIPD) reveals that 24% of employees in the private and voluntary sectors, and 23% in the public sector are looking for a new job.

The intention to look for a new role increases with job dissatisfaction, with 62% of dissatisfied employees currently looking for a job, compared to 10% who are satisfied.

Job satisfaction levels in the private sector have declined steadily over the last few quarters as the economic recovery has not been reflected in improved conditions and pay.

Claire McCartney, research advisor at the CIPD, says many employees are on the move again, signalling a decline in fear around job security as the recovery strengthens.

“However, this should also signal a warning to employers to up their game when it comes to retaining key talent,”
she said.

For fleet and HR managers, the question is how a company can reconcile an attractive car benefit scheme, which is essential for recruitment and retention, with best practice fleet principles, focused on low wholelife costs, minimising brand choice to enhance buying power and strong driver management policies.

It can be done, with the right level of expertise. Aviva fleet manager Paul Murdoch used a carefully-constructed offering to combine cost efficiency with an attractive fleet proposition.

The majority of the insurance company’s 1,000-vehicle fleet is perk vehicles and Murdoch recognises that minimising vehicle choice to a more economical range might be an easy way to generate savings, but would also be a quick way to make drivers disgruntled.

To combat this, he worked to offer drivers the same vehicle range and yet encouraged them to opt for a more fuel-efficient, environmentally-friendly vehicle by passing the cost of less tax/fuel-efficient vehicles on to the driver.
As a result, drivers are now choosing more tax and fuel-efficient vehicles of their own volition.

GE Capital used employee and driver feedback to completely redesign its fleet policy and communications strategy, which achieved its aim of encouraging drivers to shift from cash allowances to company cars, where risks could be more effectively controlled.

The policy delivered benefits on both sides, with cost savings for the fleet and an attractive choice list for drivers, based on offering the most fuel and tax efficient vehicles.

Damion Bennett, company car compliance advisor to GE’s 219-car fleet, says: “We have been able to create a choice list centred on low CO2 models that has proved highly attractive to the legacy cash-taker population.

“Very importantly, and central to the success of cash-taker penetration, has been the comprehensive programme of driver feedback where we listened to and acted upon the specific needs of all our drivers.”

Company-wide driver surveys combined with smaller focus groups enabled GE to establish the needs of the workforce and create a policy that was attractive to staff while being extremely cost effective.

For most fleets, the key is to ensure that drivers feel as involved as possible in their choice of fleet vehicle, even if their final decision is being guided in the background by company policies.

At Fleet News Award-winning Red Bull, a new sales force provided the opportunity to combine an attractive company car offering with a fleet designed around low CO2 priorities (see profile on page 66).

A CO2 limit was set at 99g/km, leading to a Volkswagen Golf 1.6 TDI SE being selected based on its low running costs, class-leading safety features and low CO2 emissions.

Although some sales staff said this reduced the storage capacity they had access to compared to the Nissan Qashqai cars they had previously driven, the fleet team worked with employees by agreeing to change the way they carried product, therein overcoming the final barrier to adoption of this change.

To reinforce the company’s focus on reducing CO2, new starters that are eligible for a company vehicle are advised as part of their induction on the relationship with CO2 and their tax, as well as the way fuel economy of the car affects their cost for private mileage.

David Oliver, purchasing manager for Red Bull, says: “This change was introduced by procurement to ensure that sales and marketing managers were not overlooking this and concentrating on the badge aspect only.

“In the case of the new 99g/km Golf, we highlighted that for a 20% taxpayer the tax bill was equivalent to buying a large latte three times a week, not bad for a £20,000 car they could use privately.”

In most cases, companies guide drivers towards the right vehicle through simple initiatives, such as restricting choice lists to vehicles that meet company standards.

For example, the majority of companies impose some form of restriction on the types of vehicles that can be included on the fleet.

According to Sewells Research & Insight, nearly two-thirds of fleets ban convertibles, with off-roaders blocked by around half.
Coupés are off-limits for one-third of fleets, with an almost equal proportion demanding that cars are chosen in ‘conventional’ colours.

Only 17% of nearly 1,000 fleets questioned said they didn’t impose any restrictions.

Although many companies need to ensure their fleet choice lists help to attract and retain the right employees, they should not be afraid to guide that choice using company policies.

Sewells’ research among company car drivers shows that although the company often takes away choice through policies and restricting choice lists, drivers don’t detect the employer’s influence during the car-choosing process.

Most accept the choice list for what it is, rather than thinking about how and why it was created in that way.

Sewells believes this is successful because the restrictions that help companies to reduce their costs often also benefit the driver by encouraging more tax efficient vehicles, with lower emissions and better fuel economy.

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  • Peter Crabtree - 23/07/2014 14:06

    An opportunity exists for fleet operators to reduce cost and risk by restricting manufacturer choice for the essential user element of the fleet in order to increase manufacturer discounts. However for those drivers requiring more choice an option should be made available for them to take a cash option and to select a vehicle of their choice through a salary sacrifice arrangement thereby reducing the grey fleet risk that would normally arise in these circumstances. By working with a provider offering a Novated leasing structure, avoids any risk falling on the employer. As many organisations are now focussing back on their people agenda, salary sacrifice also represents an excellent way to enhance the overall employee benefits package and again by adopting a novated leasing structure this can be done with no risk or cost to the employer.

  • Bob the Engineer - 05/08/2014 09:20

    The problems come when fleet decision makers apply the same rules across the board, it doesn't affect the perk drivers much but as has happened at our company cause greater discontentment and resentment of the company. A sales rep doesn't have to get to a customer in bad weather, it can be postponed, an account manager doesn't have to get into the office today, the books can wait, an engineer attending an emergency breakdown does have to get there. Yet we all have the same car choices and costs applied to us. The engineer also needs a big and practical boot, estates are much more expensive than saloons that the other drivers can take. In the name of Eco policy CO2 limits have been pushed down, tax pushed up and our engineers have taken BMW and Mercedes vehicle to limit their tax hit, understandably. We were then left having to mess around with winter tyres so they could actually get out to the customers in dire need. All we are left with is the drivers that do the most miles (so at greater risk), need the most robust, larger, capable vehicles are paying the most out of their own pockets to subsidise the ones that go 20 miles to the office and sit in the company car park all day. How is this right?

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