In today’s saturated business market, every company is looking for a way to stand out and get one step ahead of everyone else. Company cars are one way a business may try to set themselves apart and improve several aspects of their business at once.
If you’re on the fence about purchasing a company car or another vehicle for business use, you’ll need to weigh the pros and cons of this decision.
The Pros of Having a Company Car
Having a company car has several advantages to the business, its owners, and its employees, including:
- Tax benefits: The tax deduction benefits of having a car for business use are typically one of the biggest draws. Any company that purchases a vehicle or multiple vehicles for business can make deductions for owning the vehicle as well as deductions for vehicle expenses and business-related driving. Companies can even deduct the interest costs on their car loans.
- Company culture: If you offer your employees company cars, you’ll be providing a significant perk that many people look for when choosing to work for a particular company. This means you’ll draw in more high-quality candidates and also boost your company culture. A 2016 study from an independent vehicle supply company in the UK revealed that 33% of job candidates say a company car is the best perk a company could offer. Along with attracting the best workers, a company car gives your best employees a reason to stay.
- Company image: When you supply your team with company vehicles, you have full control over the year, make, model, and color of the car. This allows a company to control the image. Without providing employees with company cars, you run the risk of them arriving at meetings and other critical business events in an old, beat-up car. Having company cars ensures your staff will always look professional.
- Better deals: There are, without a doubt, many more deals to be had in the world of business car shopping. When you’re buying several cars at once, you may be surprised at the brands you could afford thanks to multiple-vehicle purchase discounts.
The Cons of Having a Company Car
Of course, there are a few cons of having a company car or several company vehicles:
- Insuring the car: Even though insurance may be cheaper for businesses due to multiple-car discounts and other potential perks and deductions, your company will still have to foot the bill for your employees’ car insurance if they’re driving company vehicles. There’s also the issue of increased liability for your employees, especially if you have shared company vehicles that your employees only use on occasion.
- Managing employee usage: If employees are going to be using their company cars for personal use, as well, you’ll need to ensure they’re keeping proper track of their mileage. While company cars do come with certain fringe benefits — for example, stopping for a coffee on the way back to the office after a client meeting — you cannot deduct mileage for employees’ personal use, such as their commutes or picking up the kids from school.
- Making the investment: Buying one car is a significant capital investment — purchasing an entire fleet can be downright scary! Making the initial investment in your company vehicles can be difficult for some business owners.
Safety Tips for Your Company Car
One of the most significant risks of having a company car is the potential to jeopardize the safety of your employees. For this reason, it’s crucial to provide your staff with the tools and knowledge to operate the vehicle safely.
Here are two tips to help you and your employees operate your company car safely:
- Keep up with maintenance: Whether you give your employees company cars or have a few that everyone shares, you’ll have to ensure these vehicles are kept on a regular maintenance schedule. Oil changes, tire rotations, and inspections and emissions tests can be easy to forget about when you have several cars to tend to — even if they are deductible! Write out an annual maintenance plan for each vehicle and stick to it. You should also encourage your staff to speak up if they notice something wrong with one of the cars.
- Provide proper training and materials: Every vehicle has its quirks and features, and it can feel strange to get in the driver’s seat of a car you’ve never driven before. Provide your staff with proper training with the new company cars, especially if they’re very different from a traditional car. For example, if you decide to purchase a Tesla for employees to use for client meetings and other business-related errands, you’ll need to ensure they know precisely how to operate it before getting behind the wheel.
Should You Invest in Company Cars?
The decision to invest in vehicles for your employees will depend on several factors, including your finances, size, relationship with employees, and the maturity of your business. Before you finalize the purchase of any company vehicles, you must make sure your business is in the right place to be able to support this initiative.
You should also be certain your employees are prepared for the responsibility of driving a company vehicle and understand everything that comes along with it.