Fleet News

Company car more essential than ever

A NEW report shows the company car is cementing its place at the heart of business, but there are challenges ahead for fleet bosses.

British business needs the mobility and transport practicality of the company car more than ever, according to a new survey.

Company vehicles necessary for business use now account for 70% of the fleet car parc, while perk cars account for 30%, the GEE Guide to Company Cars 2002 revealed, following interviews with 236 UK companies that operate a combined fleet of 17,371 vehicles.

More than two-thirds of fleets expect both the business-to-perk ratio and business mileage to remain static over the next year, despite Government expectations that employees will make fewer business journeys following the scrapping of the business mileage tax discounts last April.

Only 20% of employers questioned for the survey said they had formally incorporated changes to their policy in recognition of the new company car tax regime, although it is mainly fleets of under 10 vehicles that have not taken action.

All organisations with more than 50 vehicles have made some changes.

More than three-quarters of companies have informed their drivers of the new rules and half have provided drivers with advice, but the report claimed few were allowing drivers to change cars.

Only 10% of companies felt their business-need drivers would be better off under the new tax regime, with 73% saying they would be worse off.

However, 43% said perk drivers would be better off, with 29% saying they would be worse off.

Two-thirds of firms said their drivers were trying to move towards lower CO2 emission cars, the key method of restricting their tax liability in future.

The report said: 'The research indicates that the new tax regime will not detract from the popularity of the company car with drivers.

'Employees are now paying more attention to their choice of car, opting for those with lower CO2 emissions.'

Third of firms are thinking green

FLEET decision-makers are tackling fuel policy and environmental issues in earnest. The survey revealed that 36% of firms have introduced some form of green initiative in the past year, with 40% preparing to follow suit in the next 12 months.

Initiatives include downsizing, car sharing, 'no car' days, staff parking charges and investing in new fuel technology, such as low emission diesel models.

The most popular green initiative is investing in low carbon dioxide emission technology (such as diesel cars), a measure taken by 72% of firms that had introduced any new schemes in the past year.

Diesel now accounts for 30% of fleet vehicles, up from 28% last year, with the rest driving petrol apart from a 1% demand for alternative fuels.

However, in two years' time, fleets suggest up to 50% of their vehicles could be diesel powered, while only 2% envisage using alternative fuels.

Car eligibility linked to company seniority

THE more senior the employee, the more likely he or she is to be entitled to a company car.

According to the GEE survey, 78% of company heads are eligible for a company car, 78% of senior management, 57% of middle management and 45% of sales representatives.

The amount companies are prepared to spend on their staff has increased since last year, the report shows, with the median list price of cars rising from £34,000 to £35,000 for company chiefs.

Senior management car benchmark allowances have also risen from £21,200 to £21,700, middle management from £17,900 to £18,300, area sales managers from £17,600 to £18,100 and sales representatives from £15,600 to £16,600.

Only 4% of firms have no restriction on employees' vehicle choice, with most imposing a price ceiling, 14% banning convertibles, 12% limiting choice by lease cost, 10% banning 4x4s and 9% limiting choice to certain manufacturers.

Only 6% of firms have CO2 limits on their fleets, while 4% limit engine size. When benchmarking, 42% of companies use the vehicle's lease costs, while 27% use list price and only 13% use wholelife costs.

The average replacement cycle is 3.5 years, almost the same as the 3.6 years reported in the previous survey.

Company car entitlement
Job title % 1999 2000 2001 2002
Chairman/CEO/MD 71 72 79 78
Other directors 81 76 73 73
Senior management 78 77 78 78
Middle management 42 48 34 57
Sales representatives 48 44 53 45
Area sales managers 41 44 48 42

Car price allocation
Job title Median cash limit (£'000) 1999 Median list price (£'000) 2000 Median list price (£'000) 2001 Median list price (£'000) 2002
Chairman/CEO/MD 33.0 37.8 34.0 35.0
Other directors 25.9 27.2 27.1 27.1
Senior management 19.6 20.8 21.2 21.7
Middle management 16.7 18.2 17.9 18.3
Area sales managers 17.8 18.3 17.6 18.1
Sales representatives 15.5 16.7 15.6 16.6
Other 14.6 15.1 14.0 15.0

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