The recent growth in personal contract hire (PCH) being used as an alternative to traditional company car provision is creating a range of potential issues for employers, warns FleetCheck.
The move has been prompted by a number of current problems, with the biggest being how continuing uncertainty over WLTP and benefit-in-kind taxation will impact on drivers.
Peter Golding, managing director at FleetCheck (pictured), said: “We are seeing a small but steady number of company car drivers taking a cash option and switching into PCH but it is something that many employers have often not thought through in sufficient detail.
“The fact is that someone moving to PCH is essentially becoming a grey fleet driver. The extent to which their employer manages this fact is crucial. Some take a very structured approach, creating affinity PCH schemes that closely mirror company car policies. However, others adopt a hands off attitude which creates a whole host of potential problems.”
The issues inherent in poorly managed PCH on fleets ranged from employees choosing models that were unsuitable for company car use through to duty of care and compliance difficulties surrounding maintenance.
“It is very easy for PCH to bring the same headaches as grey fleet. Our advice to employers who want to provide a PCH option is to ensure that it is as closely controlled as possible.
“Many major leasing companies now have PCH affinity schemes that help to recreate some of the control inherent in company car schemes and these can be a good option but they do take a fairly high degree of setting up and administering. It’s a commitment.”
Golding said that it was difficult to decide whether the swing towards PCH was indicative of a long term trend or a shorter term reaction to current circumstances.
“It is very probable that the current WLTP-benefit-in-kind situation is the main driver behind what we see currently occurring. However, it is worth remembering that this has happened before in the fleet sector on an almost cyclical basis in response to short term uncertainties, and that many drivers end up returning to their conventional company car scheme.”