Do certain industries prefer reimbursement over company cars?

In today’s economic climate, there are numerous industries looking for effective ways to reduce expenses while maintaining efficiencies and encouraging a positive work environment. One of the ways that businesses are doing this is by migrating away from fleet management and toward vehicle reimbursement programs. VRPs offer a more efficient means of reimbursing employees who drive for business purposes. They also reduce the risks associated with managing company cars and allow for more nimble administration.

Here are a few industries that seem to prefer reimbursement over company cars


Manufacturers were among the first to recognize the extra cost associated with company cars. A reimbursement program reflects variable conditions, such as gas prices, determined by a driver’s precise geographic location.  Reimbursements are calculated monthly reflecting changes in market conditions.

Medical Device Industry

The medical device industry has been subjected to significantly higher taxes since 2013.  Large to small corporations are seeking alternatives for cash and tax savings.  One area is the industry’s mobile workers who travel frequently.  A reimbursement policy eliminates FICA tax liability.  There is no income tax reporting, capital depletion, or over-payment.  Company’ risk is significantly reduced outside regular business hours.

Retail Consumer Products Industry

VRPs are extremely adjustable and respond quickly to change.  Businesses with high employee turnover, such as clothing and merchandise retail stores, are turning to reimbursement plans because they are simpler to administer and respond rapidly to changing workforces.  With flat car allowances or cents-per-mile plans, businesses end up overpaying drivers, which directly impacts the bottom line.

High-Tech Industry

Some high-tech companies are opting for a custom-tailored vehicle reimbursement programs rather than using less efficient fleet management solutions. Reimbursement works in these industries because:

  1. Huge changes in workforce.  Field teams may double, for example, if there is an important product promotion, and be scaled back in a few months’ time.
  2. Sophisticated work force that prefers to select their own vehicle.  With a reimbursement plan, employees are able to choose the vehicle they want and the one that makes the most sense for their lifestyle.
  3. Profit and Loss statements are cleaner as a result of a reimbursement plan.  Costs of corporate fleets, including administrative and capital costs, are diminished or eliminated.  There are no monthly lease costs or purchase prices.
  4. Contract labor makes up a significant portion of the high-tech workforce.  Labor trends indicate that the market is heading toward short-term employees, who typically are not assigned company vehicles.

CarData uses sophisticated technology that streamlines reimbursement with straightforward mileage entry, rapid response, and advanced security.  Businesses are able to analyze how much time their employees spend driving from client to client, duration of each meeting, and the number of times the employee meets with a client.  This technology allows businesses to make informed decisions about territories, personnel, and procedures based on tangible behavior and results.

In times of ambiguous economic climates, businesses need to efficiently monitor costs.  Employee mobility is crucial to business growth, enhanced client relationships, and increased profitability.  Many businesses have discovered that by, moving away from fleet management programs, to vehicle reimbursement plans, they have increased revenue and lowered costs.

For further information on how a vehicle reimbursement plan can benefit your business, contact CarData today.