Getting a corporate car scheme off the ground - and managing a business fleet
It seems like Business fleet management has become a renewed talking point as the solution to corporate transportation and driving for business recently.
Research and consulting firm Frost & Sullivan anticipate that over 100,000 new car leases will be launched onto Ireland’s roads in 2018 - with the business community likely to be the biggest player in this trend.
Why should companies have a corporate car scheme, anyway?
For companies who currently don’t operate a car scheme, but interested in doing so, leasing offers a variety of benefits. Complete vehicle management is key among these.
Peace of mind for employers aside, company cars have returned to the fore as an employee benefit since the 2008 recession. The offer of a company car can help sweeten the deal when trying to recruit the best people to positions within an organisation.
However, stylish, modern vehicles are more than a golden carrot to entice top talent.
If well planned and managed, businesses can reap financial rewards - both for their employees and themselves.
The wide range of vehicles on offer from business car management companies means that businesses can choose the best value cars for their specific employee needs. Complete fleet managed services also means that administrative, practical, or maintenance issues are covered as part of the contract.
Tax breaks on various makes and models also make fleet management an attractive option (with the caveat that these vehicles must only be used for business purposes.)
Because business fleet leasing companies sometimes seek to highlight environmentally friendly vehicle options, recipient companies can be exempt from tax or given a sizeable tax break for pioneering and participating in the establishment of ‘green’ schemes. Therefore, it makes good business sense to fully explore all the options in relation to setting up a corporate car scheme.
Shifting gear in the move to corporate car leasing
Companies that need a corporate fleet to function are the obvious clientele for fleet management services. However, there are many challenges to implementing change to a current corporate car system such as the operation of grey fleets (those who drive their own vehicle for work.)
Traditionally, many businesses operating a grey fleet haven’t examined the benefits of switching to a business fleet management scheme. The complications of making the change can seem too costly in terms of both time and resources. In addition, if driving a brand new vehicle doesn’t figure highly in their priorities, employees are less likely to be swayed by the proposition of a company car - particularly if it would affect their take home wage. Therefore, there’s little impetus to make the switch. However, this perpetuates a whole series of problems for companies (many of which we discussed at our event How to Avoid the Road to Ruin.
For those still on the fence, we take a closer look at the incentives on offer around business fleet leasing.
- What are the benefits of switching up our company car ownership model?
Unlike companies implementing a car leasing scheme from scratch, there must be clear-cut benefits in place to transition from a pre-existing ownership model to new models of ownership or even car sharing models.
WhatCar.com noted that often in instances where business car fleets are used, employees stick with whatever scheme their employers have implemented for reasons of convenience: ‘the employer's lease company takes care of all the housekeeping. For some people, this lack of effort can justify the cost of company car tax on its own’.
The 24/7 care and communication offered by fleet management companies puts leasing in a strong position comparatively for both companies and their employees. Below we have weighed up the pros and cons of various corporate car ownership models and their tax implications.
A business fleet management scheme means that employees can avail of a ‘Benefit-in-Kind’ (BIK) such as a car. While they must pay a tax on their BIK, choosing a low C02 emission car can reduce such bills substantially. With a wide range of electric and hybrid cars to choose from, a BIK vehicle means that the days of disorganised, dented and dismal grey fleets are eradicated by the vibrancy, flexibility and choice offered by fleet leasing.
These are just a few of the benefits of moving to a corporate car scheme - or even a corporate car sharing scheme. It’s important that all the issues pertaining to your business are laid out on the table when you’re considering which leasing vendor to choose. For others who already drive a car for work, making changes to what they drive also requires a subtle change in company culture that many require negotiations and management - your company car leasing agent should be able to help you navigate all of this.