COMPANY CARS
New survey on fleet management
Company cars are often described as the manager’s favourite benefit and their popularity continues, according to the results of the latest survey by Employee Benefits magazine.
Over the years, tax and other changes have meant that the future of the benefit has been called into question many times but such predictions have proved premature. Instead, as the survey shows, today’s main concerns surrounding cars relate to health and safety and the state of the environment. This and the other main findings of the survey are outlined below.
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Health and safety concerns have come to the fore as a result of the Corporate Manslaughter and Corporate Homicide Act 2007 becoming law last year while environmental issues are now a serious consideration in all areas of business. In addition to these two topics, the other subjects the survey highlights as ranking high up on companies’ agendas included minimising costs and administration levels, while a lack of a return on the investment of cars was also a concern.
In contrast, a significant minority of the respondents still viewed a company vehicle as an effective recruitment tool and, despite such concerns, a further 39% say that cars will always be part of their benefits packages.
2008 a difficult year for cars
Taking the survey’s findings as a whole, Stephen May, from the survey’s sponsor, SureFleet, provided a useful overview of the most pressing issues for fleets in 2008. Overall, he believes that 2008 presents an increasingly tough challenge with a number of difficulties emerging for those operating fleets. The reasons for this include the fact that lifetime costs of vehicles are increasing, fuel prices are spiralling upwards and the recent credit crunch will place pressure on bottom line profits in the coming year. As a result, he argues, imaginative cost control measures from fleet managers, HR chiefs and financial controllers will be necessary.
May adds a few words of warning as well as providing some advice on possible paths to follow. In particular, he cautions against a wholesale move to cash allowances as this will not reduce an organisation’s statutory responsibilities with regard to the health and safety of drivers using their own cars on business. In his view, such a course of action may be hazardous, especially since many companies do not realise they have a duty of care to cash allowance as well as company car drivers.
The issue of understanding also emerges with regard to the actual management of the fleet. May believes the survey’s finding that fleet management is increasingly being wholly or partially outsourced is a reflection of the appreciation of the complexity of the task and as well as an awareness that a specialist resource is often necessary for a business to deliver its fleet objectives.
Safety issues move up agenda
With a greater weight now placed on safety issues, this means that firms also need to manage the amount of time drivers spend on the road, ensure the safety, service schedule and suitability of each vehicle, and verify that vehicles are insured correctly. Companies must also be able to demonstrate such procedures are in place and a failure to do so could potentially lead to prosecution of the company or the person responsible for its fleet. This level of responsibility is leading many firms to turn to fleet specialists for help.
Key survey results
Carried out in November 2007, 480 survey responses were received from readers of Employee Benefits magazine and users of www.employeebenefits.co.uk.
Health and safety
Respondents were asked what changes they will need to make in the light of the corporate manslaughter legislation. Replies included:
54% need to regularly check that cars’ MOTs/service records are up-to-date
48% will need to introduce driver training
39% say they will limit the number of hours that employees can drive on business.
Looking to the future, respondents were asked what they plan to do in the future in the light of the new legislation. Replies included:
just over a quarter plan a comprehensive risk assessment of all work-related car use
26% intend to introduce driver training
just under a fifth intend to ensure drivers are sufficiently fit and healthy to drive safely
a similar number plan to start eyesight tests for their drivers.
Environmental issues
The environment remains an important influence on policy as illustrated by the findings that:
45% of respondents say that environmental issues are a concern to consider in their fleet policies
just 17% of companies monitor the carbon footprint of their fleets while 24% plan to do so
47% of companies measure the environmental impact of their fleets via carbon emissions, 32% use fuel consumption measures and the same proportion mileage covered.
Perhaps not surprisingly, environment considerations are strongest among large employers: 62% of respondents with over 10,000 employees say that they take these into account, compared with 21% of organisations that employ 100 staff or fewer.
Fleet management
Management of fleets was quite diverse as illustrated:
39% of fleets are managed in-house, while 26% use outsourcing
29% use a combination of the two, while 11% say that employees use their own cars on business so there is no management necessary.
Cash allowances
Despite the popularity of a company vehicle, cash allowances remain a popular alternative:
67% offer allowances as an option, 13% provide them on a compulsory basis while a fifth did not offer this option
46% of respondents provide the option to all drivers, two-fifths to status/perk drivers only, while 15% to business users only
cash allowances are popular with 38% of respondents reporting that over half of their drivers choose cash, while 22% report that take-up was between 40% and 50%.
Sourcing cars
the most popular method of fleet acquisition is contract hire with a half of respondents using this method
in 27% of companies, drivers buy their own cars using a cash allowance
23% use outright purchase, 20% finance lease, while 10% contract purchase
the most important considerations in choosing acquisition methods are costs and ease of management.
A final word
Commenting on the two main themes found from the survey, Surefleet’s Stephen May states that:
“New legislation and an increasing awareness of how existing legislation applies to a company car as an extension of the workplace requires a proactive approach from employers to understand and meet their duty-of-care responsibilities. Furthermore, companies will be determined to demonstrate their environmental credentials and minimise their carbon footprint – a significant agenda for a function often accused of distracting administrative resources from profitable, core activities.”
Want to know more?
Title: Employee Benefits/SureFleet Fleet Research 2008.
Methodology: Questionnaires were sent to readers of Employee Benefits magazine and users of www.employeebenefits.co.uk from all major sectors in November 2007.
Sample size: Completed questionnaires were received from 480 organisations.
Availability: To download the report, free of charge, in PDF format visit the Employee Benefits magazine site at www.employeebenefits.co.uk and choose the “Research” section.
Employee Benefits Group consists of the UK's leading benefits publication, Employee Benefits. This magazine is published monthly and is written for benefits practitioners in large UK companies. To find out more visit www.employeebenefits.co.uk.