What the future holds for company car schemes

The fleet market is constantly evolving to cater for employees’ changing needs, so employers need to understand future market trends and changes. Here are a few matters for them to consider. 

If you read nothing else, read this…

  • Mobility and flexibility will be at the heart of future fleet schemes.
  • Employers must be mindful of the cost-conscious Generation Y.
  • Mobile apps will help staff service their vehicles while on the road. 
Fleet supplement

Mobility and flexibility will be at the heart of future fleet schemes, according to Nadeen Jackson-Barker, reward consultant at Axa UK and one of eight guests at the Employee Benefits Fleet roundtable debate hosted in July.

“We will have five generations working in our organisation before we know it, so our benefits package needs to be mobile, flexible and we need to have a mobility policy to meet employees’ varying needs,” she says. “Mobile workforces present one of the biggest challenges to employers.” 

Flexible funding options will be a key consideration for employers fighting to attract and retain top talent. David Hosking, chief executive at Tusker, says: “Wouldn’t it be great if employers could offer staff a bike or car by the hour on a long-term agreement with the ability to upgrade to, say, a seven-seater vehicle for when they want to go away on holiday? It’s about being able to give employees that choice.”

Younger generations are more cost-conscious

Jonathan Smith, a relationship director at Zenith, thinks employers will have be particularly mindful of Generation Y, which he believes are more cost-conscious than previous generations. “They tend now to procure and buy things more on a monthly fixed-price basis,” he says. 

Smith adds that employers must also align their fleet choice with employees’ location, with London-based staff perhaps wanting access to rental cars for hire by the hour, whereas more regional staff continue to prefer a more traditional fleet car. “And their preferences will change as they go through their life,” he says. 

Technology will play a greater role

Chris Chandler, senior consultant at Lex Autolease, believes mobile technology will play a bigger role in fleet schemes of the future as providers strive to cater for more mobile employees. For example, Lex Autolease has developed a mobile app that enables employees to, say, order a new tyre or book a service from their mobile device, be that a mobile phone or iPad, while on the road. “It’s about making employees’ journeys easier and simpler,” he says.

Employers will need to manage these developments, but not necessarily through a dedicated fleet manager, says John Pryor, group fleet and travel manager at Arcadia and chairman of the Association of Car Fleet Operators (ACFO).

“Employers will no longer need fleet departments, but they will need someone to manage that process and suppliers,” he adds. “They could call them anything, but they need someone there to manage the process because it’s very complicated and needs to be managed properly.”

Accounting changes are being implemented  

Employers must also beware of new international accounting standards, which require employers to include leased assets, such as cars, in their report and accounts. Alastair Kendrick, director at MHA MacIntyre Hudson, says: “Inevitably, a lot of employers are now looking at whether to take contract hire because it’s on the balance sheet, or do they look at other funding methods?”

Pryor says employers must also be prepared for future UK tax changes affecting fleet.

Market growth will continue

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The roundtable debate guests all agreed that the company car market will continue to grow, not least because of the perk’s effectiveness as a substitute for pay rises. Caroline Sandall, fleet manager at Barclays and deputy chairman of ACFO, says: “I quite often read articles about the company car being dead, but a car can mean lots of different things to lots of different people now.

“There are different sorts of funding models and types and engines that employers can now offer staff that they couldn’t offer 10 years ago, but the starting point should always be an employee’s need.”