Should You Give an Employee a Company Vehicle? Pros & Cons for Businesses


For those businesses with a fleet of vehicles, before deciding on whether or not you should choose company vehicles for employees, you should look at all options available, not only with regard to vehicles but also the provider.

Maybe you already have a pool of employees using their own vehicles but can see that if the business is to continue to grow at the present rate, you may need to provide a professional look and feel to the company fleet. This is a big step to make for many businesses so it’s natural to feel apprehensive. At the same time, you need to choose the right car to meet business needs, whether it be reducing CO2 emissions or improving fuel efficiency and costs. Whatever the case, this is where Toyota Fleet Management (TFM) can help.

In this article, we are going to look at the pros and cons of providing company vehicles for employees, as well as the key things your business may want to consider when leasing a fleet of vehicles for your business.

Reasons to get a company vehicle

  • By providing staff with the most appropriate ‘tool of the trade’ vehicle, they can do their job effectively and efficiently.
  • You can also build on the professional image of the company, enhancing your brand identity and awareness by adding decals to your fleet vehicles.
  • Your employee retention rates could improve by supplying pristine vehicles as well as helping to attract the best staff. Employees in turn will feel valued knowing that they have use of a vehicle supplied by their employer.
  • Vehicle Selection – procedure and criteria
  • Fuel Economy – economical driving standards
  • Vehicle Care – preventative maintenance; fuel card use; breakdown, recovery and roadside assistance.
  • Vehicle Returns – end of lease process and process upon termination of employment.

When considering the reasons to provide company vehicles for employees, the way to move forward is to look at its benefits.

Tips for managing employee use of company vehicles

Once employees have been provided with company vehicles, the fleet should be properly managed. TFM can help both before and after vehicles are delivered. Not only can we manage the fleet on your behalf but choosing to enable ForceField Telematics, can also help improve driver safety and behaviour, which is of utmost importance. ForceField Telematics is provided in the form of mobile technology within the vehicle that tracks vehicle and driver behaviour, such as harsh braking. Operational efficiencies are maximised whilst safety concerns are flagged. This way you can monitor productivity due to vehicles and employees being off the road as well as helping to avoid fines and insurance costs. Vehicle utilisation can also be maximised, ensuring that surplus vehicles are reallocated and route planning made more efficient.

Lease or buy? Advantages and Disadvantages business owners should consider


Leasing

Advantages

Disadvantages

  • A deposit is not required
  • Fixed monthly payments simplifying cash flow management, freeing up capital for business investment and growth
  • Flexible end of lease options – replace, extend, or purchase
  • You may not be able to lease if you do more than 50,000 kilometres per year as most vehicle providers will see that as beyond the fair wear and tear limit they have allowed for.
  • You will be paying a set amount each month for a number of months, instead of one single up-front payment.

 

Buying

Advantages

Disadvantages

  • The list price of the vehicle may be less than when leasing.
  • You can sell at any time and are not tied into a set lease term. There will also be no mileage restrictions.
  • It is a commonly known that once the vehicle leaves the garage forecourt, depreciation kicks in.
  • You will need the full amount of money available upfront via either cash or finance, which will then be tied up into depreciating asset.

 

Guidelines for employees using company vehicles

  • Safe Driving – drink driving, drugs and driving; speeding; fatigue and mobile phone usage; driver training; fitness to drive.
  • Vehicle Selection – procedure and criteria
  • Vehicle Care – preventative maintenance; fuel card use; breakdown, recovery and roadside assistance.
  • No matter the size of your business, employees should not be provided with a company car unless you have a motor vehicle policy in place which is agreed to by the employee as part of the employment contract. For example, this policy may cover the following areas:

Why partner with Toyota Fleet Management?

By partnering with a provider such as Toyota Fleet Management (TFM), you are assured of a reliable service from a truly professional company. TFM’s core values include building a collaborative relationship with you and being fully transparent when it comes to costings. We are well aware of the impact that running a fleet can have upon the finances of a SME business. This is why taking advantage of our advisory services can help by providing you with a comprehensive range of options when it comes to decision making as well as maximise efficiency. As experts in the field of vehicle fleets, we will understand your business to add value. Not only do we provide extensive vehicle funding options but also fleet management services. When looking at prices, we work on a Whole of Life Comparison method; this means that we evaluate the costs of different types of cars over their effective lifespan, providing an accurate comparison.

By being fully informed about the reasons for choosing company vehicles for employees, the pros and cons of buying or leasing and by teaming up with a fleet management professional such as TFM, you can be confident with your decisions. Should you not want to fully fund the vehicle, then a Novated Lease salary sacrifice offering is another good solution to consider.

Ultimately, selecting the right fleet funding and fleet management option is crucial. Should you require further information on telematics or if you would like to know more about TFM’s fleet services, do get in touch with Toyota Fleet Management today. We can be contacted on: 1300 888 870. Or if you would like to learn more about Employee Use of Company Vehicle Policy, you can find out more here.

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Disclaimer 

The information provided by Toyota Fleet Management, a division of Toyota Finance Australia Limited ABN 48 002 435 181, AFSL and Australian Credit Licence 392536, is of a general nature and for your information only. Nothing in this article constitutes or should be considered to constitute legal, taxation or financial advice. Before making a decision about any product or service described, we recommend that you seek independent professional advice such as from your accountant, taxation or financial adviser or lawyer, who can advise you about your personal circumstances and what would be suitable for you.

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