Jump into the pool

Date: 02 March 2017   |   Author: Jack Carfrae

We're told that pool cars are among the best alternatives to grey fleet. They're usually newer than your average private car, with lower emissions, and they're automatically free of the duty of care, business insurance and general suitability shackles that plague employees' personal vehicles.

Clearly, they're not designed for high-mileage drivers, but for those who occasionally pop between sites, or who make relatively short business trips, they can make a heap of sense - providing they're on-hand when needed and used frequently enough to earn their keep.

And that's catch number one: the admin. In order for a pool car fleet to work, someone, or something, has to gauge the demand and dish out the vehicles, not only in practical terms, but also for compliance.

"In order for it to be considered a pool car, it's got to be available to and actually used by more than one employee; the other rule is that it's got to be booked by appointment, so nobody has priority over it," explains Mike Moore, director of car consulting, at accountancy giant Deloitte. 

"The whole point behind pool cars is that you're using them for business only. The rules allow incidental private use, so if someone has, say, a particularly long journey the next day with an early start, then they're allowed to take it home the evening before; that would be seen by HMRC as incidental. If somebody took it home and then they had an 11am appointment five miles away, that wouldn't be very incidental."

Moore says there also needs to be somewhere to park the vehicles, either on or near the business premises, in order to meet the rules: "They can't normally be kept at employees' homes overnight. The rule of thumb that the Revenue apply is 60%; if they're looking at a tax year and 60% of the time the car is outside an employee's home, they will challenge whether it's a pool car and also then look at which employees are keeping them outside their homes to see if they fail the merely incidental test as well." 

Assuming you meet the criteria, there's still the question of hands-on pool car admin. If the numbers and the resource are right, then it can absolutely be done, which is what happens at Muñoz Group. The firm specialises in importing food and operates eight pool cars from its site in Cambridgeshire.

"They are predominantly vehicles which have been people's normal company car for three years or so, and I cherry-pick the ones that have plenty of life left in them," says fleet and expenses manager Steve Ashton. "This wouldn't work with lease cars, but we choose whether or not to keep the vehicles we outright purchase, and they've almost done all of their depreciating, so they're very cheap. The majority tend to be Fiestas, Clios, Polos - that sort of thing. Okay, they're three years old, but they're a lot cleaner than a nine-year-old, grey fleet, petrol Mondeo."

Ashton, a member of the Association of Car Fleet Operators, says the vehicles are predominantly used for competitive shopping or quality control trips to local supermarkets, attending training courses and to collect packaging from various suppliers. The cars are administered via a spreadsheet on a shared drive, and employees simply put their name down for a particular day and time.

"The keys are picked up from and returned to my desk. I do documented health and safety checks every single month and they're completely road legal, where managing grey fleet is impossible. That's how it works, and it works quite well."

The vehicles earn their keep, too, as Ashton explains: "In 92 days - that's October, November and December - our pool cars were used 443 times, and on a quarterly basis, I look back to see which departments have used these vehicles, and we then invoice these departments a percentage of the pool car cost, depending on how much they've used them." 

Leasing firm Alphabet claims to have nigh-on eradicated the administrative burden with its Alpha City pool car scheme. Launched in 2012, it comprises an online booking form and keyless vehicles with geo-zone settings that only allow them to start and finish the journey at the same location - or A to A, as the company describes it. At the start of each journey, the vehicle's infotainment system or an additional touchscreen asks the user about the car's condition, level of fuel etc., and the vehicle is able to recognise whether or not the fuel card is still in the cabin before the end of the session.

"There isn't a fleet manager managing keys which, traditionally when you're running a pool fleet, is a complete nightmare," says head of mobility services Nick Butler. He adds that the firm has a series of contracts "in the pipeline" that will see the service change from what is currently 80% public sector clients to a roughly even split with private businesses.

"Grey fleet was far more out of control with local authorities than it was in the corporate sector. So many different local authorities had so many different policies, and there were some where it was almost an incentive to drive your own car because you could make cash out of it. Then there was the whole duty of care piece, which, it's fair to say, local authorities tend to jump on quicker. But we're definitely seeing a trend towards corporates becoming more engaged in it." 

Public sector rates can be encouragement enough to eke out mileage, and you don't have to look far to see the financial cut-off between the likes of a pool car and grey fleet.

"If an NHS employee uses their own car at work, they get paid 56 pence per mile for the first 3,500 miles, then it reduces to 20 pence per mile; the NHS also pays National Insurance Contributions on the allowance, which takes the cost to 57.5 pence per mile," says Colin Knowles, chairman at Knowles Associates, which specialises in public sector fleet management. "If that person is doing, say, 3,500 to 4,000 miles a year or more, then it could be viable to offer a business car [pool or otherwise] because it could be cheaper, and all the issues with the suitability of the vehicle, business insurance etc. disappear."

As sage an option as pool cars can seem for the public sector, the benefits over grey fleet can very quickly be undone by monstrous end-of-contract damage charges. 

"One of our clients has a fleet of 550 pool cars and it's been identified as a particular problem," adds ACFO member Knowles. "We've been tasked with significantly reducing that fleet, and over time, our objective is to stop pool cars altogether, simply because of the cost - and it is a big cost.

"This particular organisation has huge fees at the end of the contract, and it's very difficult to make individuals responsible for the damage. The damage is very often not noticed straight away, so it's difficult to apportion blame - and it's not necessarily one big dent - it's a combination of dents, scratches all over the car, so it's small amounts of damage but covering a larger surface area. Individually, if you put an insurance claim in, you're going to have an excess on every single scratch and dent. This particular organisation was putting all its vehicles through a body shop and then paying the cost, so it's certainly a big expense."

"I wouldn't disagree with pool cars' susceptibility to damage," adds Ashton. "Our cars spend a lot of time in and out of supermarket car parks and they can get damaged with little scuffs or trolley marks, that is undoubtedly true. I'm not amazingly precious about it, simply because they've already done the majority of their depreciating, but if something's actually dangerous then I'll deal with it. If it's just a door ding or a bumper scuff, I won't worry about it until I dispose of that vehicle, but clearly, if it's contract hire, you're talking about end-of-contract damage."

Ashton frequently advertises ex-pool cars internally: "Quite often, by the time we've finished with them, they're a six-year-old Corsa or something like that, which I would normally sell to a member of staff. I'll advertise it internally as '80,000-miles, £2,500 as it is' and 'if you want it painted, bumper repaired, the wheels done etc., it's £3,000'. Most people take them how they are."

According to Knowles, grey fleet isn't necessarily a bad thing in small doses, providing it's done properly, and it skirts the issue of damage charges with leased pool cars: "When a grey fleet scheme is managed well, it's not a bad way of providing transport. In a typical NHS community-based trust, you might have 2,000 employees who use their own car at work, so you wouldn't necessarily want to provide every one of those employees with a pool car or a business and private use car. A lot of the mileage might be incidental, and the majority of those people may not do much more than 1,000 miles a year, so for them to use their own cars at work and be reimbursed for it is actually a good strategy."

If pool cars have a future, it's with businesses that are sharpening their methods, by getting their money's worth and using them frequently: "I think businesses are getting smarter about not having excess pool cars lying around," says Butler. "They're being stricter in terms of what employees can have so they can easily reallocate those vehicles."

Using pool cars to generate cash is another way in which fleets are honing their operations, as Daniel St Claire, Alphabet's car-sharing and e-mobility manager, explains: "You can shut down Alpha City business-use rentals from 6pm on a Friday until 8am on a Monday morning, and open them for private use. Employees can use a Mini or a BMW 3 Series for the weekend, and in the booking portal, we can charge credit cards directly, and that income comes straight back into the company."

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