June 13, 2023
Among the most prized assets for would-be employees is a company car. If you’re in the position to offer these, then you might be able to make your workplace that much more attractive. This can make all the difference when it comes to securing the best available talent for a given role.
Let’s take a closer look at the upsides and downsides of this practice, and see whether it makes financial sense for your business.
There are several distinct advantages to providing employees with company cars.
The first is that it will extend the range that a given employee might travel. If you need to send employees to different parts of the country, perhaps to represent the company at meetings and conferences, a company car might allow you to do it without having to rely on the car that the employee already owns.
For some roles, an employee might be expected to drive a great deal. The provision of a company car might allow that employee to avoid the extra uncertainty and costs that come associated with car ownership.
Company cars might be tax-efficient. The Benefit In Kind tax paid by employers, in much the same way as road tax, is linked to the emissions generated by the car. Therefore, the greener the fleet, the more tax-efficient it will be.
The company car is also an opportunity to project the values and branding of the company to which it’s attached. This might mean decorating the vehicle with liveries and logos, or it might simply mean ensuring that all cars associated with the company come in a certain style and colour. When executives turn up to meetings in sleek, grey Audis, then this will tend to reflect well on the company.
Finally, we should note again that company cars are a highly desirable perk. Candidates for jobs might consider them enticing, as might existing employees. The right company car can make it easier to recruit new staff and retain existing ones.
So, what are the downsides to this practice?
To begin with, there’s the cost of the vehicles themselves. If you’re operating a large fleet, then you might be able to benefit from economies of scale, which can drive down your costs. This applies not just to the upfront costs of the vehicles, but the costs associated with keeping them on the road. Insurance, maintenance, leasing costs and the administrative burden of running the fleet will all be lower on a per-vehicle basis if you have more vehicles.
Another often-overlooked cost comes in the form of depreciation. The car you buy will, in all likelihood, be worth less when you come to sell it. There’s a simple way to minimise this cost – you might buy cars on the second-hand market, where depreciation is less of a concern. However, this will limit the scope for customisation, and prevent you from providing your employees with brand-new vehicles.
Businesses looking to manage their fleet costs might consider exploring local options. If you’re based in Kent, for example, you might look for car sales in Blue Bell Hill, where competitive pricing can reduce upfront expenses.
If your company is trying to project environmentally friendly values, then this should inform your choice of vehicle. If you’re claiming to be a green company, in other words, a fleet filled with ailing diesel vehicles might undermine that claim.
For this reason, many modern businesses are making the switch to hybrid or electric vehicles. These vehicles are often cheaper to run on a per-mile basis, which might make them especially attractive to drivers who are commuting long distances. If you can offer charging facilities at your premises, then the deal might be even sweeter. Workers can head into the office for eight hours, and return to the car park to find their vehicles fully charged and ready to go.
The major upside of the company car is the effect that it has on morale and productivity. As we’ve mentioned, the practice makes hiring and retaining staff easier. But it also makes those staff better motivated, and more productive, while they’re at work. Staff will perceive that they are valued, since the company has made a significant long-term investment, and entrusted them with an expensive asset. Employees in this position might be expected to commit more effort to the company, and to ultimately drive it forward.
