Company cars still have far to go

Despite potential threats to its future the company car is here to stay, says Buckingham University’s Peter Cooke

Ever since the business car achieved eminence following the great pay freeze, the winter of discontent and the three-day week of the 1970s introduced by former Prime Minister Edward Heath, commentators have claimed regularly that the company car has had its day. But has it? It seems to be thriving despite changes associated with tax, CO2 emissions, congestion and the plethora of other threats to its future.

The business car is a complex animal, with many stakeholders expressing different motivations over its success, perhaps more than ever as the economy plunges into recession.

The business car is also an expensive, depreciating asset for any organisation and the drivers for change vary over time, influencing not only car provision, but also the type of vehicles that organisations might offer their employees. There is also a broad range of external pressures that may influence organisations’ provision of business cars, or their type.

Beyond the macroeconomic company car issues, there are many more down-to-earth concerns that an organisation needs to review concerning car provision – or even if they are pursuing a draconian policy of no company cars.

Personal business mobility Personal business mobility is, one might suggest, the game plan for the 21st century rather than the almost automatic provision of a car. Personal business mobility can be interpreted as the traditional provision of a company car or access to a pool car, even a daily rental unit – hopefully on a company contract – or through a scheme involving employees using their own cars, whether through a company-backed personal contract hire (PCH) scheme or simply by using their own vehicles for business purposes.

Although the nature of business communications is changing, mobile phones, video conferencing, the internet and intranet are still relatively new kids on the block and are only partial substitutes for face-to-face contact. One may look to substitute technology for face-to-face contact, but employers should question how far that boundary can be pushed without damaging business and client relations.

Not only do organisations need to examine the provision of cars to employees but, because of a change in emphasis surrounding the issue of duty of care, the use of employees’ own cars for business purposes also needs to be reviewed.

With regard to the types of vehicle to be provided, the once-clear hierarchies of business cars have long disappeared. Employees now have a growing choice, but against that must be set economics, both of vehicle operation and provision. Certain questions will therefore need to be addressed, such as: What image does the company want to present? How green does it wish to be considered? What are rival companies offering similar grades of staff? The questions are almost endless. The issues with regard to company car provision are now more complex than in the past. Employers need to ask: What is the most cost-effective way of providing necessary personal business mobility in an increasingly competitive and environmentally-aware business environment? There is no single correct answer, but the range of products from which choice can be made is growing ever wider. Cars are downsizing, economics are changing and fuel alternatives are growing.

But one policy is safe, I am sure. Edward Heath may have unintentionally kick-started the company car revolution, but it is here to stay, even if future provision, management and disposal are ever more quantitative, holistic and professional, with smaller, fuel-efficient cars being driven fewer miles at steadily-escalating costs.

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Professor Peter Cooke is KPMG professor of automotive management at the University of Buckingham

  • Company cars appear to be thriving despite changes associated with tax, CO2 emissions, congestion and many other threats to its future.
  • Personal business mobility rather than the automatic provision of a car is a key issue for employers in the 21st century.
  • Company car provision is becoming evermore complex, with a wider range of products to choose from.