Economical alternatives to company pool cars

Pool cars can be a costly way to provide staff vehicles and there are better alternatives, says Nic Paton

If you read nothing else, read this…

  • Pool fleet cars need to be in use 50% of the time just to break even.
  • Pay-as-you-go car clubs can be an alternative to pool vehicles, but will not suit every business.
  • Other options include daily rental, minilease contracts or putting cars into storage.
  • Employers need to bear in mind real fleet costs, such as insurance, petrol, maintenance, administration and even taxi fares.

It is January, the roads are icy and an employee is wrestling with a car whose gearbox keeps slipping into reverse when they try to pull onto a roundabout. There is also a huge scratch across the windscreen where a previous driver tried to clear some ice using a broken bottle. Such can be the delights of the company pool car.

Duty-of-care perils apart, with the economy improving very slowly, employers are still searching everywhere for savings, and the pool fleet sitting idly in the car park for half the week is firmly in their sights.

Gavin Jones, services manager at Masterlease, says: “Employers need to look at the logistics of running a pool fleet. How much is it costing them to have these vehicles sitting around and do they have the resources to manage it properly? The car really needs to be in use a minimum of 50% of the time, sometimes more, just to break even.”

Pay-as-you-go clubs

One alternative is pay-as-you-go car clubs. The concept is simple enough. An employer sets up a business account with the operator and employees book a car online for anything from 30 minutes to six months. The driver can then collect and return the car using a smartcard and the employer receives a monthly invoice. The savings can be considerable.

For example, Surrey County Council has seen its cost per mile driven fall by 22% since it switched to a pay-as-you-go arrangement about a year ago.

This method of offering cars has grown in popularity with employers. For instance, operator Streetcar, which offers cars for hire in seven cities and towns, has more than 2,000 businesses signed up. Andrew Edgar, head of corporate at Streetcar, says: “[Employers] are looking very closely at their costs, particularly lease or fleet industry costs where they may be tied in on a contractual basis, to see whether they can change to something they can dip in and out of.”

But although car clubs manage all duty-of-care, maintenance and insurance matters, employers should not assume they can completely replace a pool fleet. Keith Kelly, commercial manager at operator City Car Club, says: “Employers may need to retain a pool car or have a car hire arrangement if someone is going to a conference and needs to come back the next day, for example. So it complements or may reduce the number of pool cars, or can be a flexible top-up.”

Short-term hire

Such an arrangement may also not be ideal if a business operates nationwide or staff have to travel around the country, because car clubs tend to be based in or near large conurbations, particularly London. Employers should also be aware of other alternatives to a pool fleet, with short-term hire or daily rental being popular options. Given a car club car can cost about £4 an hour, employers may be able to hire a Vauxhall Corsa for about £20 a day, which might work out cheaper, depending on how long the driver requires the car.†

Another possibility is mini-leasing, essentially a longer-term form of daily rental (normally for a minimum of 28 days), which could bring the cost of a Corsa down to about £12 a day, says Jones. Employers that have an excess of cars, perhaps because of redundancies, can put them into storage for future or on-and-off use, rather than (expensively) terminating a pool fleet contract. Storage normally costs £2 to £3 a day on top of any regular leasing cost.

Whatever option an organisation chooses, it is essential to have a realistic handle on its actual fleet costs, taking into account fixed leasing or procurement costs. They should also consider hidden costs such as insurance, petrol or taxi fares (which may be processed through different departments) or administration, says Streetcar’s Edgar. “If an employer needs a car reserved for exclusive access 24/7, 365 days a year, we are not going to be competitive against leasing,” he says.

“But within the areas we operate, we are competitive with daily rental rates.”

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