Pros and Cons of Allowing Employees a Company Car

A company car is usually a vehicle that is provided by a firm for both the business and personal use of the employee issued the car. The company car is issued to employees whose jobs require constant traveling such as a sales manager who moves from one region to another to capture the market niche for an organization's goods. The car could also be one of the benefits of the job.

Issuing a car to employees usually has its upsides and disadvantages. In places such as the UK, about a million drivers use a company car. According to recent data provided by HM Customs and Revenue, it indicates that there was a significant increase of company cars driven. There was about close to a million workers paying Benefit-in-Kind tax in the fiscal year 2014/15. These figures indicated a 1% increase compared to the previous year.

 

Pros of Issuing a Company Car

For some time now, issuing a company car to employees has brought along some noticeable advantages. Issuing employees with cars could enhance the staff's private mobility and also give the employees easier and faster access to work; this saves a lot of time and productivity is enhanced at work.

 

Here are some of the advantages of providing company cars.

1. It is of value to the employees

Company-provided vehicles are of high value to the employees. The workforce that does not have their vehicles would benefit a lot because they wouldn't have to rely on public transportation, which happens to be mostly hectic and hardly reliable.

 

2. Controls the Organization's Corporate Image

In some organizations, the corporate image is influenced by the kind of vehicles the employees drive. It at times helps to position the people's perception about a brand. Providing your employees with a company car helps the organization control the view of the people regarding its brand.

 

3. It Gives You Full Oversight

The firm can easily manage both the upkeep and insurance of the employees' cars. It also enables you to fit in the safety features that you would consider necessary. Moreover, an employee's company car can be installed with a device to track the vehicle and help management see the vehicle's location thus minimizes mileage fraud.

 

4. It's Easier to Budget for Transportation Costs

If an organization runs its fleet of vehicles, it's a lot easier to predict the transportation costs, which makes it a lot easier to budget as compared to compensating employees who use personal transport means.

 

Cons of Issuing a Company Car

1. It is a Fixed Extra Cost

Company cars are a fixed cost to a business entity. Company cars depreciate by about 30% in about 3years implying that the company has to replace the old vehicles. Selling old cars, however, may not be viable because of poor resale value.

 

2. They Demand Humongous Upfront Capital

Buying a fleet of company cars involves digging deep into the company's finances, and this can be a big challenge especially for startups and small businesses who may have to juggle between funding for the cars and purchasing merchandise.

 

3. There is Increased Risk and Liability

States such as Texas have strict policies when it comes to motorists. The organization must ensure it sets policies and procedures so that they may conform to the Texas insurance laws in case of an accident. The company, therefore, holds some amount of risk whether it's during or off business hours.

 

4. Employees can't choose the Car they drive

A company car is not flexible to an employee's requirements. Having a car that doesn't meet the specifications desired by an employee may prompt him or her to look for alternative means of transport including buying a personal vehicle.

Company vehicles have both advantages and disadvantages. It is important for organizations to assess both sides and also develop policies that help shape the best driving behavior by the employees with company cars.

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