Pros and Cons of Company Cars

Pros and Cons of Company Cars

Trying to determine whether company cars make sense for your business? There’s something to be said for owning your own vehicles, in terms of control and oversight, but control and oversight can just as easily become a weight you won’t want to carry—too many expenses and too much liability, these are words to consider when considering company cars, just as much as control and efficiency. You need to weight these factors properly, and come to a reasonable conclusion for your business. This guide to the pros and cons can help you determine if company cars are the right solution.

Pros of Company Cars

1. Total control. Maintaining your own company cars means that your company has total control over every aspect of the cars; you get to decide upon which models will be driven, the equipment they’re outfitted with, maintenance schedules, and everything else related to the upkeep and operation of the cars. Should you need custom adjustments to your vehicles, there’s nothing in your way. Need more vehicles? You can buy more. Need fewer? You can sell a few off. As long as you’re willing to invest the effort in doing it right, you can make total control over your fleet work for you in a number of ways.

2. Accurate information. When you own your own company vehicles, you don’t have to wonder about specifications, how they are being cared for, how much they’re driven, or whether reimbursements and refunds are fair and effective. The simple ability to keep tabs on company cars can lend itself to a lot of benefits in terms of efficiency.

3. Employee morale. There’s a mode of thought that company cars boost employee morale; depending on the nature of your company and how important transportation is to the job, a company car might be seen as a bonus granted, an employee benefit to be appreciated and envied, or it might be viewed as a hassle, a part of the job to be dealt with as any other part of the job. Figuring out which category your company cars would fall into is important for determining their effect on morale.

Cons of Company Cars

4. Administration. For every expenditure to maintain your fleet, there’s an associated pile of paperwork to overlook—and someone getting paid to keep up with that paperwork. Some businesses find that administrative overhead single-handedly undermines any benefits they might get from managing their own fleet of company cars.

5. Liability. When you make use of a vehicle reimbursement program, you are only liable for business driving undertaken on your behalf. When you maintain your own cars, those cars are your problem under a far wider range of circumstances—during business time and during personal time, that means more liability, and accordingly more liability insurance. Even if you have the best employees in the world behind the wheel, you are insuring them on evenings and weekends, without knowing who really is driving the company car.

6. Cost savings. When you have a fleet of company vehicles, you are paying for their use 7/24, all days of the week and all hours of the day, whether personal time or business time, that is 100%. When you make use of a vehicle reimbursement program, you are only paying for business driving undertaken on your behalf, that is 5 days of the week or 71%. That leaves at least 2 days of personal time and expenses or 29% that is cost savings. With a vehicle reimbursement program, your reimbursements are paying for business time and business mileage, and personal driving is left where it should be with the employee and their family.

Final Thoughts

While company car fleets may be tempting, there’s several reasons most companies seem to be moving in the direction of vehicle reimbursement programs. Take a look at the CarData Learning Center for more information to help you decide whether you really need to own your own cars, vans, or trucks.