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Shaun Sadlier's blog: Why fewer company cars might mean more fleet

Date: 28 February 2019

For as long as I've been in the fleet industry, which is a time measured in decades, people have been predicting a massive decline in company cars. However, they have proven remarkably resilient for a good reason - they provide highly flexible, cost-effective, safe and efficient business transport that is a popular employee benefit.

We are currently at a point in time when company car numbers are falling slightly. The reasons for this are many but are not really related to their effectiveness as a business tool. Instead, the key negative factors are external pressures such as WLTP and its currently unknown effect on personal taxation.

However, while we wait for these issues to be resolved, something interesting is underway. While there might be fewer company cars on the roads, there may well be more fleet.

Let me explain this statement. In many of the major fleets where we see company car numbers falling a little, employers are introducing a wider range of options, from personal contract hire affinity schemes to salary sacrifice to our Release used car leasing product. Their total fleet is actually growing.

To understand this, it is important to recognise why employees might be moving out of company cars. The biggest factor is simply uncertainty. They don't know how much tax their vehicle is likely to cost them over its lifetime, which is something that the Government has habitually provided, and so are looking at other options. These people still like the idea of a company car but don't feel that they can commit, which is why some have opted for the cash option and use an affinity PCH scheme, effectively the nearest alternative.

So, while we may be momentarily seeing a shrinkage of the company car parc thanks to a range of issues being in flux, there is every chance that the fleet sector overall is actually growing. This is a narrative that is likely to be lost on those who are, once again, predicting disaster for the company car, but an important one for our industry and the businesses we serve.

Shaun Sadlier is head of consultancy at Arval

 



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