Did you know that four in five employees would choose benefits over a pay raise? This means that they prefer having work perks over a higher salary. Unfortunately, as many as two in five employees don’t receive any work benefit at all.
Of those who receive benefits, though, access to a company car is one of the “grandest” perks. A 2018 survey found that 21% of participants had access to a company-provided vehicle. They further reported that they could use the car either for work or for personal purposes.
However, company-provided cars aren’t always “smart” benefits. They may also be impractical in some cases, especially for smaller businesses.
On that note, we’ll give you a brief but concise guide on the pros and cons of company vehicles. Read on so that you can decide if it’s a good idea to give your hardworking staff a free ride.
Pro: A Potential Work Perk
The average US household owns 1.9 vehicles. Almost nine in 10 people aged 15 or older are also drivers.
All these figures imply how important having a car is to folks in the US.
However, not everyone finds it easy to purchase a car using their own money. Therefore, a company car can help ease this financial burden that many workers face.
Pro: Provides a Way for Company Branding
Allowing your employees to drive a company car allows you to expand your branding reach. For example, you can use decals or even vehicle wraps on these corporate vehicles. Potential customers can then see these ads wherever your employees take the vehicle.
Con: A Potential Liability
About six million car accidents occur in the US each year. These incidents result in approximately three million injuries.
If you have an employee who gets into a crash while operating a company car, you, as the owner, will likely be liable. This could happen to you even if your employee was driving it for personal reasons.
So, before you give an employee access to a company vehicle, you need to establish what it is for and when they can use it. You have to draw up a company vehicle use agreement, otherwise, you’re at risk of liabilities. You might end up being responsible under the law if a worker gets into an accident while driving a company car.
Con: High Initial and Ongoing Costs
As of July 2020, the average transaction price (ATP) of new compact cars reached $21,575. That’s a 3% increase from the ATP from July 2019. However, the mean ATP for all new light vehicles was a staggering $38,378.
So, as you can see, company-procured vehicles are an expensive investment. Don’t forget that the figures above are only for the ATP, which doesn’t include insurance. It also doesn’t account for the ongoing maintenance and operating costs.
Company Car: Yay or Nay?
A company car can be a key part of your business, especially if it involves regular trips and travels. However, you need to consider the costs, not to mention the liability you face as the issuer.
If you want to “gift” your workers with a practical work perk, mileage reimbursements may be better. It’s technically free gas for your people, so they will still likely be happy to receive them.
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