Company car choice lists that put too much emphasis on CO2 emissions risk driving employees down a cash allowance route.
Arval says it is increasingly being asked to structure car selection lists to aggressively reduce emissions by capping CO2 at very low levels.
Restrictive CO2 caps could be bad for the environment, it claims, because it shortens the list of options for drivers. Many will decide to take a cash alternative which could be used to buy a more polluting car.
“There is no hard and fast rule in terms of what level a CO2 cap should be set at as it will differ from fleet to fleet,” said Jon Mackney, head of consultancy at Arval.
“A company needs to consider the range of vehicles it is making available, the attractiveness of any cash allowance and the amount that it will reimburse employees that take the cash and complete business mileage in a private car.
“There is scope for getting this wrong, and the associated cost can be significant. We recently worked with a company that had shifted its CO2 cap from 160g/km to 120g/km; a move that was encouraging many drivers away from company cars and into cash allowance.”
According to the Fleet News CO2 tool – www.fleetnews.co.uk/co2-emissions/ – more than 70 models offer emissions below 120g/km.
Take engine variations into account and the list lengthens considerably. From Astra diesel 1.7CDTi at 119g/km to the 109g/km BMW 320d, the options are many – and growing. In addition, almost 30 models sit below 100g/km, including the Audi A3 1.6TDI (99g/km) and Volvo V50 DrivE (99g/km).
However, Arval insists that stringent limits are resulting in more staff taking the cash option, if available.
Overall, 16.4% of vehicles being leased by FN50 companies have emissions below 120g/km, while the average emissions of Fleet200 vehicles is 143g/km.
Energy Saving Trust (EST) research shows that when an employee opts out of a company car scheme, their car emissions rise by 20% on average.
Nigel Underdown, head of transport advice at EST, said: “If the list is so restrictive that the cars within it are no longer attractive to employees then they will end up in the grey fleet, which is always a more polluting option.”
Emissions can’t be easily managed either and when Arval analysed the cost of providing cash allowances and reimbursing business fuel in a private car, it discovered the cash allowance was regularly costing more than the benchmark company car.