Fleet News

Car choice lists come under scrutiny

Increases in contract hire prices and funding costs will trigger a huge shift in company car choice lists or leave fleets facing increased costs, according to Fleet Operations.

As a result, employees’ company car aspirations must be carefully managed to avoid problems if vehicle status is downgraded to save money.

Ross Jackson, managing director of Fleet Operations, explained that the global recession and the disparity between sterling and the euro, which has resulted in manufacturers increasing prices, would see fleets paying more for their vehicles.

In addition, the cost of borrowing money and the decline in residual values will further impact on costs, claimed Jackson.

“Businesses that provide their staff with a company car choice list based on whole-life costs, vehicle prices, a fixed cash allowance or monthly rental rates must review current available options,” warned Jackson.

“If they maintain the status quo then the penalty will be a substantial increase in funding costs.

“However, if they downgrade or downsize company cars made available to employees then they must clearly communicate the decision to drivers or the consequences for staff recruitment and retention could be significant.”

But, considering the current economic climate there has never been a better time to makes these changes when employees are more concerned about job prospects rather than car choice, according to Mycompanyfleet.

“While we are not necessarily advocating a hair shirt approach, now is an the ideal time for fleet managers to take a more pragmatic view, and look at introducing choice lists that cut costs and reduce the corporate carbon footprint at the same time,” said Mycompanyfleet business manager Andrew Leech.

“Moving as many cars as possible into the 160g/km or less category will not only offer clear financial cost benefits, but also fuel consumption and NIC savings, driver P11D benefits, and a reduction in a fleet’s carbon footprint – and this in the perfect time to do it.”

Property adviser DTZ operates a user-chooser fleet rather than a fixed list of cars for employees to choose from.

Case study

If employees are above a certain grade, they are entitled to a company car or allowance and DTZ prides itself on providing an excellent benefits package, including company cars.

However, with a UK fleet of around 430 vehicles, plus another 900 employees taking a cash allowance, it is investigating restricted badge options.

No decision has been made, but Liz Hollands, fleet manager at DTZ, explained the “current economic climate” was behind the move.

“I am always looking for ways to improve on what we already do,” said Hollands.

A money-saving move it has already employed is rarely terminating leases when employees leave.

It instead reallocates cars to new employees or others who become entitled to a company car.

“It saves us short-term hire costs whilst waiting for a new car and reduces our overheads should the employment not continue for any reason, explained Hollands.

“If we had simply terminated leases, we would have spent another £180,000 a year, based on average reallocations.”
 

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