Choosing & Using Company Cars

Last Updated
August 22, 2009

Introduction – Choosing Company Cars

No matter what sort of business you run, it is almost certain that you use cars in one form or another. Whether in the transportation of products, driving to meetings, visiting customers, or just travelling to the workplace: cars are crucial to the movement of most businesses.

A company car is bought or leased by a business, and is then used by an employee for personal as well as business use. Many businesses use company cars for their managers and employees, but how do you go about choosing them; and more importantly, what are the benefits and costs?

Why Use Company Cars?

(i) Employee Benefit

A company car is most often used as a benefit for employees, depending on their position and job requirements. (i.e. an employee that travels as part of their job has more of a need for a company car.) Providing an employee with a vehicle means that they no longer need to purchase (or upgrade) one themselves, and helps to ensure that they are able to get to work reliably.

Receiving such benefits also helps an employee to feel substantially valued by the business, which can help to motivate them to perform at their best. Not only that, but the cost of providing a company car can be considerably less than an equivalent value cash (or similar) benefit; and will often have a higher perceived value to an employee. (e.g. Although a car may cost your business say £250 a month, because the total value of the car is many thousands of pounds, the benefit appears much larger than its actual cost.)

(ii) Image of Employees

When dealing with customers and potential customers, first impressions count for a great deal, as does the image of the employees. An employee arriving at a sales meeting in a rusty or extravagantly modified car will not present a professional or business like image.

Providing a choice of sensible company cars means that you are able to ensure that the first image seen by your customers is a good one.

(iii) Cost

Company cars are an effective way to save money if your business currently rents vehicles to allow employees to travel to meetings and events. For the cost of a few rentals a month, you could provide your employees with a car, saving money, as well as improving your image and your employees’ feelings of being valued.

The cost of a car can range from £100 to well over £1000 a month, depending on the c ar, as well as the length of leasing or finance agreement. Purchasing a new car outright will cost anywhere from £5000 to £30,000 depending on the quality and specification; although you may get some discount for multiple purchases or contracts.

Article Index

  1. Introduction – Choosing & Using Company Cars
  2. Purchase or Lease a Company Car - Car Leasing
  3. Choosing a Company Car - Part 3
  4. Choosing a Company Car - Summary
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