Fleet News

Future of company car grows more and more questionable - FN50 2017 ICFM view

Paul Hollick, ICFM

The status quo has governed the fleet industry for a number of years with little innovation from suppliers and, as a result, in many cases, fleets have ‘done what they have always done’.

But huge changes are afoot – potentially the biggest since the radical transformation of the company car benefit-in-kind (BIK) tax system to a carbon dioxide (CO2)-based one in April 2002.

The significant changes fleet decision-makers must get to grips with in the coming months include, in no particular order:

■ Year-on-year increases in company car BIK tax through to 2020/21 and potentially beyond when the Government announces rates for those years.

■ The impact on fleet company car choice lists and vehicle-related taxation of the introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP), the new vehicle CO2 and mpg test procedure that replaces the long-established New European Driving Cycle (NEDC).

■ Sign-posted changes to the taxation of diesel vehicles, which could be announced in the forthcoming budget

■ The result of the Government’s ongoing consultation on the taxation of BIK and employee expenses that includes an examination of Approved Mileage Allowance Payments made to employees who drive their own cars on business journeys.

■ ‘Big data’ and all it entails – the connected car, the internet of things, cyber security concerns and the May 25, 2018, introduction of the General Data Protection Regulation (GDPR), which notably impacts on the sharing and usage of personal vehicle user data.

■ The January 1, 2019, introduction of new international lease accounting standards, which require leased assets to be reported on company balance sheets. Of course, the leasing industry argues that fleets contract hire for many other reasons than balance sheet implications, but businesses must recognise and understand the change.

■ The introduction of the London Ultra-Low Emission Zone (ULEZ) and, potentially, Clean Air Zones (CAZs) in many other towns and cities nationwide.

■ Government pressure for the increased inclusion of plug-in vehicles on fleets, analysis of the actual efficiencies of running plug-in vehicles, and how they can be best deployed in businesses.

The above list is far from exhaustive and I’ve not even touched on Brexit and the impact it could have on fleet operations notably in respect of potential new vehicle price increases and a rise in service, maintenance and repair (SMR) costs if trade agreements with the European Union are not reached; or the rise of mobility as a service (MaaS) and the move to a total cost of mobility concept and the importance of understanding the full cost of employees travelling from A to B – not just the vehicle cost.

The move to MaaS is further underpinned by the rise of Generation Y – those born in the 1980s and 1990s – in the working world and assuming management positions influencing business and corporate mobility. For these people, the traditional hierarchical company car does not necessarily have the same attraction to employees as was the case in years gone by. 

Meanwhile, we have witnessed the phenomenal rise of personal leasing – at the expense of ownership –while car clubs and car-sharing also offer corporate opportunities in the mobility arena. 

Allied to BIK tax rises (is the Government trying to kill all but the job-need car?) and changes in employment demographics, the long-term future of the company car as we have known it since the 1970s is questionable.

It is critical, therefore, that fleet leaders, who must increasingly becoming mobility providers, embrace the new world and the ICFM is part of that change and will continue to provide training, insight and advice. 

It is a world not for the faint-hearted. The traditional fleet manager role of managing vehicles and drivers is almost over – some would argue even now that it is already a footnote in history books. 

Author: Paul Hollick (pictured), chairman, ICFM

> READ MORE - the 2017 FN50 supplement

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