Company cars used to be a pretty big perk in the 90’s and early 2000’s but today, it doesn’t seem to be as much of a focus. This is partially due to improvements in technology, courier services, and remote work but part of it is also the expense and liability of owning company cars. For some industries they are essential, while in others, they are more of a risk than an asset.
If you’re trying to decide whether to use company cars for your business, there are several factors you should consider first.
Why Some Businesses Still Use Company Cars
Company cars have been one of the go-to job perks for years because having them saves employees from having to put the miles on their own car, making the daily commute less of a burden. Offering company cars for high-profile positions is one way to attract top-notch talent.
There are also certain reasons why your business might actually need to have company cars. For example, if you own a delivery business or service-based business that makes frequent visits to customers’ homes. While you could rely on a third-party service to make deliveries for you, you can’t very well send someone else out to provide maintenance at a customer’s home on your behalf. In this case, it makes the most sense to have company cars or even a fleet.
Local businesses also often invest in a company car or two when they want to market their business. Car wraps like those by Wrap Works have long been an effective marketing method that can help you spread the word about your company to your target market without having to do any additional work.
Finding the Right Company Car for Your Business
Investing in company cars, especially higher end models, is a substantial business expense. However, when it comes to selecting your company cars, you have options. Selecting your company car should primarily focus on their purpose. For example, if you need a car specifically for making deliveries or carrying equipment, you’re likely going to need a van or truck-style vehicle. But, if you’re purchasing cars that your execs will be driving to and from meeting, you’ll likely want to go with something professional and high-class.
Take your time when shopping for company cars so that you can get a good deal without sacrificing quality. You’d be surprised at what you can find, from certified pre-owned Mercedes to gently used fleet vehicles through Enterprise and more.
How Do You Know If It’s the Right Time to Buy Company Cars?
As mentioned earlier, company cars are a big investment. In addition to the sticker price of the cars, you must also consider monthly payments, insurance policies, maintenance costs, and interest on financing. In addition to looking for the best car deals, you also want to shop when it comes to auto loans, maintenance providers, and insurance with sites like Esurance.
While you can write-off part of the expense on your taxes, you’ll have to take on the cost burden for the time being. Before you decide to purchase your company cars, you should consider whether you have the financial bandwidth to support the expense. To determine whether it’s the right time for you to invest in company cars, you should ask yourself a few important questions:
- Does the business currently have the available cash flow to support this cost?
- Are company cars a necessity or a luxury for the business?
- What are the pros and cons of bringing on company cars right now?
- Can you trust your employees to care for the company car and drive responsibly (safety should always be a priority)?
If you are going to start providing company cars, make sure you put a policy in place regarding the conditions of use and any expectations for employee conduct while driving the vehicles. For example, you may want to have a document created by your business lawyer and have employees sign it, especially if they’ll be interacting with customers.
If company cars are not in your budget right now, you may be able to offer mileage reimbursement as an alternative. It can be a middle-of-the-road solution until your business is in a better position to make such an investment. Keep in mind that you are the only one who can decide which move is best for your business, but hopefully, this guide was a good starting point in the decision-making process.