This guide outlines the things you need to consider when choosing a company car, including leasing vs buying.
It is often thought that men are more likely to buy a car than women, but recent data reveals that women shouldn’t be underestimated when it comes to purchasing power. According to a Forbes report, women buy
62 percent of all new cars sold in the US and influence nearly 90 percent of all car purchases. And these purchases aren’t just for personal use, but for business use as well with a company car.
Factors in choosing a company car
Buying vs leasing
If you’re a business owner, a significant thing that you’ll have to consider with a company car is whether you’ll be
leasing or buying cars for your employees. This decision will ultimately depend on factors that include but are not limited to your company’s size, your ability to pay monthly or upfront costs, and your employees’ personal preferences.
Nevertheless, whatever route your company decides on providing a company car to your staff, you must also consider what type of car to purchase. Here are some of the other factors to consider when choosing a company car.
Size of the Vehicle
One of the first decisions you must make with a company car is determining the vehicle’s size. If your business requires employees to deliver goods or transport tools, you will need a large car such as a van or pickup truck. Likewise, it is essential to think about how many people will regularly travel in the car.
If you have employees living within the same area, your company will benefit from
creating a carpool program for them. However, if you are providing company cars for your mid and top-level management as a perk, it would be best to provide them with a car that
has a sporty look and feel, such as a coupe car, for that added motivation.
Maintenance and Repair Costs
When buying company cars, it is essential to consider the costs of maintaining and repairing the cars and not just their price tag. You may have gotten a reasonable price for the company car, but may end up having to pay exorbitant costs for parts and repairs.
It is also essential to check how many service centers within your area can take care of your company cars. It is best to talk to the owners of these shops and get a discount for making them your exclusive maintenance and repair partner for your company’s fleet of vehicles.
Branding
Another thing to consider is how your company car will affect your brand. If you plan to tag your vehicles with your company logo, it is crucial to ensure that the vehicle you choose will give your company the best representation.
For example, if part of your company branding is being environmentally-friendly, then avoid choosing cars that are gas-guzzlers and instead choose electric or hybrid cars such as a Toyota Prius. a Nissan Altima, or a Hyundai Sonata. Likewise, it is also essential to educate your staff on proper driving etiquette since the way they drive will affect how pedestrians and other commuters see your company.
Resale Value of the Vehicle
When purchasing company cars, think of them as a business asset and choose vehicles that have high resale value once you decide to sell them off. You may allow your employees to purchase the cars they use, provided they stay with your company for a specified amount of time. This will enable them to enjoy the cars for a more extended period.
Pros and cons of providing a company car
Pro: almost total control
By providing a company vehicle, you have more control over the situation than if the employee is driving his own car. If your company needs special vehicle models, it may be easier to provide them. Despite this, the vehicles are not yet autonomous and you still encounter risks with the driver’s drive.
Pro: advantage for employees
Although there are tax implications, a fleet car can be a good benefit for employees. For some, this may eliminate the need to buy their own vehicle. You can also eliminate them and can make it easier to get to work, as well as allow them to use the car for personal purposes.
Pro: possibility of branding
Providing a company car allows you to expand your brand to more places. You can envelop your vehicles with your company’s logo and ads. In addition, this will give you more control over your corporate image. If you are trying to convey a sophisticated image and your employees are going to find customers using old cars and falling apart, this can negatively impact your image.
The opposite is also true, if you are trying to convey a practical brand that suits everyone, it will not work if your employees arrive to visit customers in luxury cars.
Cons: High initial investment
The purchase and maintenance of own vehicles are expensive. This requires a large initial investment of at least a few thousand reais per vehicle. You can deduct many of these costs from taxes, or in volume purchase, but you still need a high investment to get started. This can be very risky and challenging, especially for small entrepreneurs.
Cons: High maintenance values
Vehicles will need to be kept for their entire service life, and this can vary greatly according to use. This includes expenses with repairs, insurance, routine maintenance, among other unforeseen costs that may happen. All these costs need to be planned so that your cash flow is not taken by surprise.
Cons: More and more reports
You and your employees will need to record various information about vehicle expenses and maintenance. In addition to the dates of maintenance, oil change and vehicle expenses, your employee will need to create daily fuel expense reports, this will allow you to reimburse the fuel that was spent in the service of the company, and not the amount of personal expenses.
Cons: Be aware of risks
Keep an eye on the responsibilities involved in providing your company car to an employee. This is especially more worrying if they have full-time access to the car. At the very least, this will require more complete insurance for your vehicle in order to minimize the headache if the vehicle is involved in an accident.
Summary
Choosing a company car can be challenging if you do not know what to look for. It is essential to select cars that suit your company and employees’ needs. Likewise, it is crucial to look for vehicles that will be cost-effective for your company in the long run.
