The Pros and Cons of Providing Company Cars to Employees

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The Pros and Cons of Providing Company Cars to Employees

by ICC on October 29, 2018
October 29, 2018 / by / in

If some of your employees travel around town on a regular basis, you may currently be reimbursing these individuals for mileage. As you review this expense, you understandably may wonder if it is more advantageous to purchase a company car for your team to use as needed. While some companies have a single vehicle for employees to share, others have an entire fleet that gives all remote workers access to their own business vehicle during work hours. When you compare the pros and cons of buying a company car, you will be able to determine if this is the right move to make.

The Cost
When reviewing the disadvantages of buying a company car, the cost of vehicle ownership should be considered. Keep in mind that the cost multiplies if you purchase an entire fleet of vehicles. In addition to the cost to buy the vehicle, you also must pay for commercial auto insurance, gas for the vehicle, maintenance, repairs and more. Some of these expenses may be controlled by shopping around. For example, you can choose to buy a more affordable model for your team to use. Keep in mind that commercial vehicles may accumulate many miles, and this will company with depreciation to decrease vehicle value at a potentially rapid rate.

Liability Risk
By purchasing a commercial vehicle for your team to use, you face multiple types of liability risks. For example, an employee may be injured in an accident that is caused by poor vehicle maintenance. Unless you get in the car daily yourself to inspect its condition, you may not always be aware of pending liability concerns related to vehicle condition that require prompt attention. In addition, the company could be held liable if employees cause an accident. While you may be required to pay for all accident-related repair bills, medical expenses and more, there is also a chance that your company may be sued for negligence or for other reasons. Auto insurance may pay for some of these expenses, but your business may still suffer financially and have to deal with public relations issues.

Tax Benefits 
While there are disadvantages and risks associated with buying a company car, there are also a few benefits. For example, when you own a company car, the company can take advantage of tax benefits. These may include writing off depreciation as a financial loss, deducting insurance and vehicle repair costs and more. These various benefits may dramatically offset the cost of ownership, and they become more significant with each vehicle you add to your fleet.

Employee Perks 
Some employees are unhappy about being required to drive their personal car for business purposes. They are aware of the wear and tear that extra mileage places on their car. When you provide your team with access to a company car, they may view this as a perk of employment. More than that, they may appreciate the ability to drive someone else’s car rather than their own. In some cases, a company car may be more comfortable and better equipped than their own vehicle. Keep in mind that this perk or benefit may help you to improve your employee retention rating and to attract more talented individuals to join your team.

Tracking Capabilities 
When your employees have the freedom to roam around town, you understandably may be concerned about their activities and movements during a workday. You could assume that they are on task at all times, but a better idea is to install high-quality GPS tracking devices in your company cars. By doing so, you will be able to track the location of your vehicles as they move around town. In addition to ensuring that your team is always working while they are on the clock, the use of a reliable GPS tracking device also may help you to provide better customer service to your clients and customers. For example, you may be able to estimate the arrival of a service professional based on their exact location.

While there are numerous benefits associated with purchasing at least one company car for your team to use, there are also a few downsides. Because each situation is unique, you should spend time researching the options and crunching numbers before you determine which transportation option is a good fit for your company’s needs going forward.