Government tax changes are set to create a decline in traditional company cars and leasing. 

Chancellor George Osborne’s Budget squeeze on BIK, coupled with the twin trends of an increase in alternative funding options and mobility packages, is threatening the company car and the leasing industry. 

“What we’re seeing now is people considering other options rather than traditional company cars,” said Mike Moore, director at Deloitte Car Consulting.

“You should look at all the options available and don’t go for a one-size-fits-all solution for your workforce.”

Moore cited cash allowance and company car ownership schemes as increasingly popular alternatives to leasing in the wake of the Government’s BIK increase on low-CO2 vehicles. 

Mobility schemes, where employees are offered a combination of rental and other travel allowances, are also set to take a bite out of traditional company cars, particularly with younger workers in urban areas. 

Speaking to BusinessCar, Infiniti’s European fleet boss Carlos Bocanegra, said: “We are detecting a new generation of people who tend not to value the company car but want to [be on the] move.

“When you are in a big city you try and attract good young people – and they don’t want a company car because they live in a city and take public transport, but they want a car at weekends.”

Bocanegra said some businesses are coming to the same conclusion as their drivers: “I’m visiting corporate customers and they are telling me the same thing: we don’t have enough parking, congestion charges, traffic jams etc, so we take the train.

“Companies are paying a huge amount for their vehicles, so why not think differently for young, talented execs that want a desirable car at weekends?”

Rental firms in particular would stand to gain from the schemes. Head of business rental at Enterprise, Adrian Bewley, said his firm was already providing such services: “If you relate that to the travel policy and not necessarily to an individual, we’re kind of already doing that.

“I don’t think it’ll ever get to a ‘this person will do this’; I think it will be a case of ‘the overall guidance of this particular company’s decision making is X, Y and Z’. I think it’s the way forward because you need an integrated travel solution that is enforceable.”

He cited the firm’s inroads with rental and pool car services in the public sector, but added that the company car as a perk was still in demand: “I think the difference is that a lease vehicle is a perk and part of a salary package, where a discretionary car hire for two days a month would be seen as a necessity.

“I don’t see that changing just yet – it may well do in future.”

Neil Cunningham, general manager UK and European strategic projects at Hertz, welcomed the move but said it would be difficult to implement: “It plays to what we do. It’s absolutely our thing. What I’m not sure about is whether this comes to you in the form of an app with partners sitting behind it or it comes from one provider with everything behind it.

“If you look at some of the bus and rail companies – things like The Trainline – and if you compare them to, say, something like Expedia, it’s packaging, and packaging is really hard to do.

“A lot of that comes back to the ability to book what you want, so inevitably if you’re going to put something in front of the consumer it’s got to be user-friendly.

“So how do you simplify the front end app, mobile website or whatever it might be, so all this can be booked on the front end but the rather complicated transition into the booking services at the back end?

“I don’t know whether the leasing companies are best placed to do this. That’s an interesting question in itself – who is best placed to provide these one-stop mobility solutions? There’s no one out there that’s great at the moment.” 

This follows the launch of Leaseplan’s Mobility Mixx service in the Netherlands last year, which offers employees a monthly travel budget that covers trains, vehicle rental and even bicycles, all paid for by a pre-assigned card.

Speaking to BusinessCar in August 2013, Leaseplan’s strategy director Ian Marson said: “We would love to do it in the UK.”