Feature – Focus on cars: Personal contract plans

If you read nothing else, read this …

Under a PCP, employees have the option of owning the car rather than just leasing it.

A PCP can give employees a greater choice of car, making it a useful recruitment and retention tool.

A PCP may be more attractive to larger organisations due to the number of cars involved.

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A personal contract plan (PCP) is a type of car ownership scheme, whereby an employer either wholly or partially sacrifices the responsibility for the company car and offers employees the opportunity to own a vehicle, tax efficiently. In short, PCPs are an unstructured agreement between a dealer and staff.

For many, defining a PCP is rather a murky business. The transporting of the concept of a PCP from a consumer market, into an employee market, perhaps explains why a precise definition is hard to come by. Graham Rees, managing director at consultancy Fleetworx, believes a PCP can be used as a “competitive benefit, giving employees increased choice”.

However, it is vital for organisations to ensure they are getting the best deal, because there are potential pitfalls with a PCP. “Duty of care is important. With employers losing the control over the type of vehicle their staff are purchasing how can they be sure they are safe?” admits Rees.

With this being the case, leasing companies are looking to tailor deals to suit organisations, which employers should be aware of when searching for the best PCP option.

Robin Makonochie, head of communications at the British Vehicle Renting and Leasing Association (BVRLA), believes that with careful planning, organisations can find the best deals. He advises employers to “spend time looking at what the leasing company can do for your specific company as they can work around company objectives. Lay down your requirements and the leasing company will arrange a plan to suit them.”

Gerry O’Neil, commercial director at Car Benefits Solutions, confirms: “Which deal fits best is defined by the corporate objectives and our line of engagement is always with the employer and not the employee.”

Most leasing companies now offer a range of deals, integrating various PCP options to try and cater for the needs of a range of different companies.

Ian Smith, marketing manager at Lex Vehicle Leasing, explains: “We assess the needs of the employer and create a bespoke deal to satisfy those needs. For instance, larger organisations usually have a good relationship with one or two manufacturers, and we can liaise with those manufacturers to get the best deal for a wider range of staff.”

And because it comes down to buying power, the number of employees involved in a car scheme is a huge factor in negotiating a deal that delivers value.

Michael Gater, market development manager at Lex Vehicle Leasing, admits that smaller companies can suffer. “Obviously Siemens, Woolworths and BHS who we deal with, are requesting up to 1,000 cars, and can get the best deals, whereas smaller one-man-bands will [miss out somewhat].”

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But it’s not all gloom for small companies. “Though the large companies are more attractive to the manufacturers, smaller companies must remember that a leasing company is buying in bulk, and so have good relationships with many manufacturers,” explains Gater.

Large corporations may be able to negotiate advantageous deals, but by shopping around and setting clear objectives, organisations of any size can find a PCP to suit.