Personal Car or Company Car:
Common misconceptions around driving for work
With so many options out there for how you choose to organize a vehicle program and all of the feelings that come with it …
How can you figure out what’s going to work best for you? Choosing personal car or company car, which one works best for your company? What about for your team spending their life on the road?
We took a closer look at the myths and misconceptions that we hear from our customers and other businesses with vehicle programs. Here are the top three myths and more on why you can’t take them at face value.
1. My sales team is going to look for another job if I don’t offer a company vehicle. How can I attract talent from the competition?
“The truth is, your sales team does not know what that vehicle costs. When a rep learns that the car they’re driving is a $1,000 expense each month that could be provided to them for personal use of their own vehicle? More times than not they’re choosing their own vehicle.
Reps enjoy the freedom of choice because everyone has a different set of goals. I meet drivers that are interested in saving their money and setting up for a comfortable retirement. This option allows them to drive a more cost friendly vehicle that might only run them $500 per month. That’s an additional $500 they now get to pocket. Others enjoy driving nicer vehicles, like a BMW. This option allows them to drive that vehicle and make it much more affordable. It provides greater flexibility for the driver, and, in most cases, a more competitive vehicle reimbursement for potential new hires.”
Bob Kelm – Enterprise Sales Executive, Motus
2. Young employees want a company car.
“Being a sales rep in my 20’s, many people my age want more control over our finances, especially when we’re driving a lot for work. A company vehicle gives us no flexibility in that – we are just given a vehicle without much say in the matter.
Giving an employee a car allowance or reimbursing for mileage allows us to use our vehicle for work and personal use.
This means a lower overall cost for us to own a vehicle and flexibility to drive the vehicle we actually want to drive.
For example, if I receive $700 tax-free to own my vehicle for work, that covers almost all of my expenses for owning the vehicle – then I only have to pay for fuel and other miscellaneous expenses when driving it for personal use – that’s a huge benefit for me!”
Jason Meyers – Enterprise Sales Executive, Motus
3. Company cars are cheaper than giving my employees 57.5 cents per mile.
“Organizations are convinced that their company-provided car program is cheaper than a reimbursement model. When looking into the numbers, it’s no surprise that their fleet management company would be thrilled to complete this task for them. They know the annual fleet expense, they have the mileage information, and that’s all they need, right? Wrong.
Folks that drive company cars are usually high mileage drivers, and that means higher than average wear and tear on their vehicle.
When comparing mileage reimbursement to fleet, organizations know that reimbursing using the IRS Safe Harbor Rate of 58 cents per mile will be more expensive than their fleet program.
I always agree with them. Because they are right.
But their evaluation of fleet vs. reimbursement generally comes before they’re familiar with a Fixed and Variable Rate program, or any alternative to the IRS business mileage standard of 58 cents. Once they can explore an option that reimburses a fair amount and truly separates reimbursement from compensation, it clicks. A happy medium between the two exists.”
Andrew Stein – Enterprise Sales Executive, Motus
What’s something you wish we covered?
Send the team your questions on reimbursement, company-provided cars or car allowance programs at email@example.com. You may even make it into our next post!