Don’t understimate the benefits of company cars
Sir – Alistair Whyte’s letter (Fleet News, September 1) has made it very clear that he feels cash alternatives are superior to company cars.
However, we feel that from a number of perspectives, not least financial, company cars remain a valuable benefit.
Given the industry we are in, many will say we have a vested interest. That may be true, but it doesn’t detract from the clarity of the argument.
To begin with, it is worth highlighting that cash takers also pay tax at 22% or 40% on their allowance, reducing its value and making a high-quality used vehicle that much trickier to afford.
In addition, with a company car, drivers do not have to worry about depreciation and disposals at all as both are handled by the employer and leasing provider. Employees taking a cash allowance have the hassle of replacing their car every two years as well as the potential financial hit on its residual value.
Meanwhile, paying tax in the fourth year of a lease that is ‘greater than the value of the car’ should not be an issue: the tax paid for the previous years has been significantly less than the vehicle’s value, even with depreciation, and the tax is being paid on the benefit of having had a well-maintained car for the entire period.
It’s also a source of concern that employees taking cash and buying their own cars are getting hit by severe running cost charges that they might not fully realise. We’ve found that a driver in the 40% tax bracket with a three-year contract, travelling 20,000 miles a year in a diesel BMW 320d, will pay only £1,594 a year – which covers almost all running costs except fuel. On the other hand, the annual costs of running that same car privately (depreciation, road tax, maintenance, etc) will be nearly £5,500.
All of this, of course, is without going into the duty-of-care issues that are making a fleet of regularly-maintained, safe cars a must for employers.
Purely from a financial perspective, a company vehicle offers real value for money. Cash takers may feel that they are getting more flexibility and choice, but the truth is that they are losing out.
Tim Hudson LeasePlan UK, Slough
Citroen RVs the problem?
Sir – Reading your article ‘Poor fleet sales prompt new probe at Citroen UK’ (Fleet News, September 22) leads me to consider that many of Citroen’s problems lie with residual values on their cars.
This is not a new issue, either. As far back as I can remember, Citroen products have always suffered poor residual values compared to their competitors across all sectors when calculating wholelife costs.
This gap increases considerably towards the larger cars in the upper-medium and executive sectors with the C5 model and, seeing the new C6 ‘in the flesh’, it is my opinion that this is not about to change.
Citroen’s fortunes in residual values have suffered largely due to the marque being seen in many people’s eyes as only average quality and a ‘value’ product. Similar issues can be seen with Fiat and latterly with Lancia which of course was eventually forced to quit the UK market.
Such tags are extremely difficult to lose and some might say impossible, although VW Group has gone some way to retrieving this situation with its Skoda brand.
Another area that Citroen loses out on is visual appeal and the new C6 is a good example of this. It is certainly different in today’s ‘Euro-car’ industry and one must applaud Citroen for producing such innovative products. But this is the very start of its problems, because different actually means limited in terms of appeal. That flows from the new through to the used car markets, hence the poor residual values.
So what can it do? Very hard to know how to overcome this image, but maybe a start would be to market the excellent diesel products at the same price, or maybe even cheaper, than the petrol counterparts (which are very rare in the UK).
In the same issue of Fleet News, another article claims ‘Diesel loses edge as car prices rise’. Surely manufacturers can produce diesel cars at least at the same cost as petrol and, with the volumes now moving towards diesel versions, probably even cheaper than petrol. By pricing diesel cars the same or cheaper than petrol versions, Citroen could start to close the gap on whole life costs with their rivals.
Dave Woods Director, XBG Fleet Remarketing
Reliability an issue for our fleet
SIR – I read with interest your review of the Volkswagen Golf 1.9 TDI Sport (Fleet News August 18).
Volkswagen Golfs have long been a popular choice for our drivers and we have several of the new model in our fleet, all diesels.
We have noticed that we are suffering a high level of problems with recent-model Volkswagens. Several of our drivers have complained of high oil consumption in these vehicles. With one, we were talking about one litre every 600-700 miles. Volkswagen at first claimed this was normal. It refused to take any action to resolve the issues until recently when, under mounting pressure, we convinced them to change the engine on the vehicle.
Since then, the car has broken down almost once a week and last week we rejected the vehicle and are awaiting a replacement.
We seem to have suffered problems with about 30% of our Volkswagens, some minor, some more serious, like the Golf. We have also heard that we are not alone in suffering these problems.
As a result, I cannot agree with your closing comment that the Golf ‘works just perfectly’. In fact, I would struggle to recommend a Volkswagen to anyone after my experiences of the last few months. We have now dropped Volkswagen from our car list and substituted Toyota as a replacement. Maybe you should review the reliability of the new Golf in the field?
Philip Relph ThyssenKrupp Materials UK