Survey of UK company car policies

COMPANY CARS

Survey of UK company car policies

Seven in ten companies now offer employees the choice between a company car and a cash allowance, according to a new survey by Mercer Human Resource Consulting.

Cash allowances

The survey, involving 245 UK companies, found that:

• The average annual car allowance for company heads is £10,300.
• Senior managers, middle/junior managers and sales representatives receive £8,200, £6,500 and £5,200 a year on average respectively.
• Professionals receive the lowest average allowance of £4,600 -- less than half the allowance for company heads.

Nature of car benefit

For employees who opt to receive a car instead of an allowance, the typical purchase price varies significantly according to job role. For example, the average cost of a car for company heads is double that of a car for professionals -- £32,800 and £16,000 respectively.

As many as 40% of organisations allow employees to purchase the car at the end of the replacement period.

"Company cars represent one of the most expensive items in an employee benefit package,"said David Wreford, European principal at Mercer. "Company car policies now tend to focus on providing better value for both employers and employees.

Additional and alternative benefits

More than eight in ten companies pay for all fuel used by company heads and senior managers (85% and 83% respectively), while the remaining organisations pay for fuel used for business purposes only. In contrast, less than four in ten companies (37%) pay professionals for all fuel used.

The survey found that car use also depends on workplace status. For example, 94% of company heads can use their cars for business and personal purposes, compared with 47% of sales representatives and 35% of professionals.

Want to know more?

Title: International Car Policies Report 2005, Mercer Human Resource Consulting.

Survey details: The results are part of an international survey involving 5,100 companies in 45 countries. The report covers nine core benefit areas including overall prevalence of car benefits, private versus business use of car, typical make and model, car allowance, number of years until replacement of the car, typical purchase price, prevalence of employer-paid fuel expenses, prevalence of employer-paid maintenance, tax and insurance services and amount reimbursed per kilometre.

Availability: Copies of the report cost &#8364 750 and are available from Client Services, Mercer Global Information Services, Geneva, tel: +41 22 869 3000 or www.imercer.com/carpolicies

Mercer Human Resource Consulting is the "global leader for trusted HR and related financial advice, products, and services." It is the largest consulting firm of its type in the UK, with some 3,000 staff in 15 office locations. For more details visit www.mercerhr.com

Posted 7 September 2005