Fleet News

Car schemes: employee ownership

In the early 2000s, construction company Morgan Ashurst had a number of different company car schemes for its employees.

But such variance across the company was proving inefficient, and the firm decided to move to an employee car ownership (ECO) scheme.

“Under our previous schemes it was difficult to keep track of individual mileage and thus difficult to ensure value for money,” says John Homer, Morgan Ashurst’s managing director (East).

The firm underwent a review of its operations, and eventually settled on a scheme offered by Provecta.

Provecta’s scheme works by offering employees a variety of cars depending on their level within the company, but restrictions ensure the vehicles are fit for their business purposes.

Each employee’s personal circumstances are taken into account, such as tax bracket, annual mileage and car grade, and a monthly salary advance is worked out.

From that advance, the employee pays for a car and is given full servicing, road tax and insurance.

Crucially from an employee benefit point of view, drivers are given the option to choose a smaller or cheaper car than their car grade entitles them to, and any money left over is theirs to keep.

Conversely, if the employee wants a more expensive car, or to add options to their vehicle, they can do so by adding funds from their own salary, up to 20% of the tax list price of their benchmark car.

Provecta guarantees the final value of the vehicle, which means employees can renew their contract for a new car, hand the car back or buy their ECO vehicle outright to keep, or sell on at a profit.

They can also continue to make payments and keep the vehicle should they leave the company.

Unlike many other schemes, the drivers’ contracts are with Provecta and not their employer.

It is open to all employees with a car benefit entitlement.

Since the scheme was introduced, Morgan Ashurst has seen its estimated yearly savings rise dramatically.

One previous problem, the risk associated with early termination, has been tackled using an early termination insurance scheme which provides cover should a driver resign.

The scheme is mandatory on all ECO cars.

To cover the problem of reconciling estimated and actual mileage, Provecta provided a management system called MyMiles, which keeps checks on each drivers’ mileage to ensure the individual contracts are operating economically.

Mr Homer added: “We have been extremely pleased with how the ECO scheme has worked out for us.

"We have converted 95% of qualifying drivers over to the Provecta ECO, promoted not only by the flexibility it offers our drivers, but also I believe by the green incentives we have offered.

“Our average CO2 rating for the ECO fleet is now 153g/km, significantly lower than the CO2 average for the UK’s private cars at 164.9g/km and even lower than the UK’s company car average of 157.4.

"This, coupled with the expected reduction in mileage that comes with an ECO fleet, will have a significant and measurable impact on our carbon footprint.”
 

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