The car makes and models an employer chooses for its fleet must be a good fit with its business objectives and its employees’ requirements
If you read nothing else, read this…
- Vauxhall, Audi, Ford and Volkswagen are among the most popular company car brands.
- Smaller-engined, lower CO2-emitting cars tend to be more popular for salary sacrifice-based schemes.
- Employers should be proactive in communicating with their workforce about their priorities.
- Website functionality is critical, rather than the lowest price, especially with salary sacrifice.
No two company car fleets are the same, so it is hard to generalise about what are the most popular makes and models. The most popular cars will be those that fit each organisation, its own particular scheme and the priorities of its employees.
However, speak to most leasing companies and it would be fair to say that Vauxhall, Audi, Ford and Volkswagen will be in the 10 most popular company car brands. Statistics from Fleet Alliance in August, for example, show that the most popular cars ordered by its customers in the first seven months of this year were the Volkswagen Passat, followed by the Audi A3 and the Volkswagen Golf, with the Audi A4 at number seven.
Ian Hughes, commercial director at Zenith, says one of the key things to consider is that what is popular may be quite different between a conventional company car scheme and one based on a salary sacrifice arrangement.
“Unlike a conventional scheme, where employers might create choice around job need or premium or perhaps restrict choice to get economies of scale, with salary sacrifice schemes, we tend to find that one of the key ingredients of success is to have a broader choice for people to commit to,” he says.
“After all, with salary sacrifice, the driver is paying with their own money, so affordability and a wide range of models is essential.”
Hughes identifies the BMW 1 and 3 series, the Ford Fiesta, the Audi A3 and A1, and the Citroen DS3 as popular models with employers running salary sacrifice-based schemes, yet the Citroen DS3, for example, would not tend to be in the top 20 for conventional car schemes.
Similarly, a survey of 1,000 drivers published by provider Tusker in July shows that salary sacrifice drivers tend to opt for cars with lower emissions and smaller engines (1.6-litre or less) to capitalise on tax and national insurance savings, with the Citroen DS3 again in the list, along with the Ford Fiesta, Seat Ibiza, Citroen C1 and Peugeot 107.
Gary Killeen, fleet services commercial leader at GE Capital UK, says: “We are seeing an increasing number of drivers and fleets opting to downsize, something partially prompted by the more attractive choice of medium sized, low-CO2 cars that are now available.
Everyday fleet use
“Models such as the Lexus CT200h, Audi A3, Volkswagen Golf and new Mercedes A Class are extremely suitable for everyday fleet use and are being adopted as company cars by quite senior managers. Manufacturers that have invested heavily in low-CO2 technology are reaping the rewards.
“For example, the new BMW 320d Efficient Dynamics and the Ford Focus 1.0 Ecoboost both have CO2 figures of just 109g per km, making them exceptionally attractive in benefit-in-kind terms and requiring no real compromises on the part of the driver.”
Chris Chandler, principal consultant at Lex Autolease, says Fords and Vauxhalls tend to reign supreme when the priority is simply job need. He adds that 40% of the cars in Lex’s fleet tend to be from these two manufacturers.
“But if the car is more of a perk, then, over the past 10 years, I have certainly seen a significant preference for German premium brands, VWs, BMWs and Audis,” he says. “These are aspirational brands that have kudos, they retain a high residual sales value and are fuel, emissions, and tax, efficient.”
Whatever the final choices an employer makes, it needs to consider how to integrate new models into its existing fleet. The key here is communication, both between employer and provider, and employer and driver.
Autolease’s Chandler says: “We will go in to the organisation and chat about what it wants its fleet to look like, what the specific requirements for the job are, what is its motivation for the fleet, whether the cars will be a perk, and so on. We will also run a whole life cost analysis, so it is not just about the list or rental price of the car.
“The key for employers is to understand what they want to do with their fleet and what people’s motivations are going to be. So they need to be looking at what type of car they can afford and knowing, simply, what their workforce is going to want.”
Zenith Provecta’s Hughes adds: “Selecting a new car is a big, difficult decision, so it needs to be made as intuitive as possible. The employer’s website needs to have good filters so the driver can gauge things such as personal circumstances, monthly budget, diesel or petrol, number of doors, small or big, miles per gallon and so on, and from there to be able to see what cars fit their criteria.”
CASE STUDY: SANTANDER
Bank’s scheme takes account of staff preferences
Since launching a company car salary sacrifice scheme for its 30,000 UK staff in October 2011, banking giant Santander has seen take-up accelerate rapidly, says fleet manager Tom Manahan.
The Zenith-run scheme had 226 cars in January and this has now risen to 410, with a further 106 on order. The scheme runs alongside, but is separate from, a conventional company car scheme for high-mileage essential business users.
When it comes to models, Santander offers a range of Volkswagen, Audi, BMW Minis, Vauxhall and Ford models and in February extended the mix to include Kia, Hyundai, Mazda and Volvo.
Manahan says: “The most popular choice is still the Ford Fiesta, which accounts for about 25% of the salary sacrifice orders.”
The scheme has a CO2 cap of 120g per km, which restricts model options. So premium, higher-emitting Jaguar models, for example, are not in the scheme, says Monahan.
“We are constantly discussing with manufacturers ways to widen the scope of the offer as well as working to improve the website. I want an employee to be able to go on the site and say, ‘I want to spend £250 a month: what can I get for that?’.
“We are also looking to add more filters so that you can, for example, filter out or in three-door or five-door models or look solely at things such as miles per gallon, which can be an important part of decision-making.
“We can introduce every single sub-120g per km CO2 car, so it doesn’t make that much difference to the procurement process. The key, when it comes to take-up, is really just speaking to employees.
“We hold regular events for staff and a lot is done by word of mouth, but the website is also very important. The quoting tool must be very clear and it also has to be clear what the risk is if an employee leaves the firm and becomes liable for early termination.”
TOP 10 COMPANY CARS
This is how motoring magazine What Car? rated the top 10 company cars in its April 2012 review:
- Britain’s most popular fleet car is the Ford Focus, “a superbly rounded family hatchback that is well specified, competitively priced and great to drive”.
- The Ford Fiesta gets a big thumbs-up for being “refined and fun to drive, while the engine is clean and it’s cheap to run”.
- The Hyundai i30 is admired for its “spacious, well-finished cabin”, its general quality and “frugal and relatively smooth” diesel engine.
- The VW Golf is another consistently popular option with company car drivers. It is “one of the best all-rounders” because of its “desirability, refinement and enjoyable drive”.
- The Ford Mondeo is “another hugely popular fleet car” that is “great to drive, smooth and comfortable to travel in”.
- At the executive car level, the BMW 5 Series is recommended for having “just the right balance between comfort, refinement and dynamic excellence”.
- The BMW 3 Series, meanwhile, remains “the best compact executive around” with “superb” engines, good fuel economy and CO2 emissions.
- The 4×4 Nissan Qashqai is included for its “funky” styling but, probably more importantly, its competitive price and “strong resale values”.
- The Volkwagen Passat made it into the top 10 for its purchase and running affordability, flexible diesel engine and general all-round quality.
- The Vauxhall Zafira Tourer, despite being a multi-purpose vehicle (MPV), is the only one with CO2 emissions below 120g per km, “which makes it the MPV for company car buyers”.