Fleet News

Cash-for-car shows north-south divide

FLEETS in northern Europe are more likely to offer their drivers a cash alternative over a company car than their southern European counterparts.

This north-south divide has been identified in the Company Car Report 2004/5, produced by consultancy Watson Wyatt. It found that UK employers are ahead of the rest of Europe for allowing employees to take cash as an alternative to a company car.

Almost 50% of UK companies offer a car/cash alternative and a further 14.5% offer a cash allowance only, according to the report.

It adds that only 22% of employers provide company cars without the option of cash instead, while a further 14% reimburse expenses for the use of a private car for company business.

In Belgium, Greece, Italy and Portugal, more than 70% of employers have a policy of providing company cars only. It found that offering alternatives to a company car is rare outside of the UK, Ireland and Scandinavia.

'With the growing needs for flexibility, transparency and equity across Europe, the whole question of providing either business cars or cash allowances as an alternative is attracting more and more attention,' said Anne Severeyns, a senior consultant at Watson Wyatt.

'The balance is typically between it being a working tool versus personal and family mobility; company image versus down-to-earth and cost-conscious image; employee safety versus employee expectations for specific car features; environmentally friendly initiatives versus cost implications; and local tax context versus pan-European vehicle policy.

'Defining the best possible car strategy, thereby allowing organisations to attract key talents, minimise costs to the company and manage a tax-effective policy for both the employer and the employee, is a major challenge.

'In recent years, when companies looked at reviewing their vehicle policies as part of their aim to reduce costs, car/cash alternatives were highly considered. Employees have opted for cash in countries where the legal framework clearly offers tax efficiencies for such choice. The UK is definitely the most advanced in that direction.'

The price of the full pan-European report is €1,750. It is available in single country and pan-European formats from Watson Wyatt Data Services, contact: customerservice@ eu.watsonwyatt.com

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