Fleets are finding it hard to convince drivers of the benefits of taking a company car due to delays in orders and legislative uncertainty. And that the perk car is most ‘at risk’ said managers at the September 2018 Fleet200 Executive Club meeting.
Provision of the company car
Fleets acknowledged that there are challenges in continuing to make the company car scheme attractive:
- WLTP – issues around cancellation of cars on order
- Delaying of new car orders
- Third year uncertainty on BIK tax
- Administrative burden of running a car scheme
Despite these issues, fleets have taken measures to make the company car scheme more attractive, these include:
- Reducing replacement cycles on cars to provide more certainty that the driver is aware of the BIK tax rate that they are going to pay
- Removing restrictions of car body shape for example coupes
- Broadening the car choice list to empower drivers to make the right choice for them.
Fleets also had suggestions on how the Government could help support the company car.
- Bring forward plans to introduce bands for lower-emission cars from 2020 to 2019
- Realign BIK taxation to the new WLTP calculations (as opposed to charge more tax for the same car).
Overall fleet decision-makers at the meeting concluded the area ‘at risk’ is the perk car driver.
However, the essential use driver still adds value through their face-to-face relationships and the frequency of contact remains a key business KPI for most fleets.
Drivers opting out to cash allowance
There does not appear to be universal agreement in the criteria for drivers opting-out, in most cases the availability of a cash alternative is available.
Fleets identify a profile of senior personnel as most likely to opt-for cash; this is influenced by the current BIK policy, reducing attractiveness of the choice list and the requirement for a more frequent change cycle, than being offered through the car scheme.
The headline prices for cars driven through the media, peaks curiosity amongst company car drivers to explore options for models that were previous unobtainable.
Examples of drivers doing in excess of 20,000 business miles and opting out were cited as a trend, whilst examples of established fleets switching their fleet to a cash for car only policy.
Alternatives to the company car
Overall awareness of established alternatives to the company car scheme is high; the Fleet200 debated the merits of various offerings.
Salary sacrifice - there is an acceptance that salary sacrifice schemes are less viable for private sector fleets since changes to employee tax incentives were introduced.
However, local authorities and public sector are still planning to continue to offer these.
ECO schemes are a product that fleets are aware of, with the expectation that their importance as an alternative to offering cash will increase.
Structured schemes for cash for car are available through leasing companies, the introduction of used car leasing to employees is acknowledged as a welcome addition.
Affinity solutions provided by leasing companies and manufacturers are recognised by the Fleet200 as an attractive benefit to employees.
However, there is a view that access to good deals through leasing brokers and local dealers are being pursued by employees.
Formal business travel solutions are not widely available; however, examples of formal booking procedures for flights and trains being adopted.
Where company expenses are analysed, travel spend by company, car users vs. non-company car users are benchmarked to inform future travel policy.