- Deloitte report considers the future of the company car market, and the implications for car manufacturers, leasing and fleet management companies, businesses and their employees -Companies must balance cost and business efficiency with corporate responsibility and employee aspirations as the debate over the merits of the company car as a key remuneration benefit intensifies. In a report launched today, Goodbye Company Car?, Deloitte, the business advisory firm, argues that far from abandoning the company car (with the current trend moving towards cash-based alternatives), businesses need to use a combination of funding solutions to ensure cost efficiency for both themselves and their employees.
The report argues that while the latest HM Revenue & Customs’ figures highlight a decline in the number of company cars since the 2002 reforms in company car tax (see notes to editors), this trend could be reversed as the impact of health and safety legislation relating to at-work driving begins to take effect.
Alison Chapman, head of automotive tax at Deloitte, said: “In the future, the company car will not be confined to the scrap yard. The Government has made it clear that it wants the company car to remain a key part of the corporate landscape as it steers businesses and drivers towards choosing the most environmentally-friendly vehicles available.”
The report outlines the fiscal and legal measures already introduced and those in the pipeline from both the UK Government and the European Commission that will impact on the £20 billion UK fleet industry.
“The future of the company car will be determined by a wide range of factors, including congestion charging, fuel prices (particularly a widening of the difference in petrol and diesel pump prices favouring the former), vehicle funding and vehicle taxation, as well as safety and environmental measures and a greater focus on work/life balances by employees.
“Flexibility in the provision of corporate transport solutions has become crucial to both companies and their employees, but both parties have frequently failed to analyse in detail the full implications of opting out or staying loyal to the company car.
“This is because the issue is far from a straightforward ‘in’ or ‘out’ decision. Too many companies have tried to treat the choice as an either or option, and as a consequence have paid the price in terms of rocketing costs, administration overload and disgruntled employees.”
David Rawlings, senior manager for automotive tax, at Deloitte, added: “Successful management of vehicle funding to the satisfaction of both employers and employees – who have different and often conflicting requirements – is undoubtedly more of an art than a science.”
The report includes analysis by Deloitte tax experts on key issues that impinge on the decision-making of Boards of Directors when discussing company cars.
In addition, the report contains exclusive comment from a range of automotive and fleet industry professionals and independent commentators as well as the views of organisations such as the CBI, Department for Transport, the Conservative Party and the Liberal Democrats.
Chapman said: “This publication is intended to assist the company car decision-making process of the Boards of Directors in every company in Britain by outlining the key issues for consideration and how they will impact on their organisation and its employees.”
