The demand for car Contract Hire
Why is the demand for Contract Hire growing in relation to Personal Contract Hire and car Hire Purchase, when changes in legislation and rising fuel costs would appear to deter companies from providing company cars for their employees?
The clue may be in surveys carried out that reveal that company car drivers view their company car as more important than any other benefit that their employers can provide. The company car ranks even more importantly for women driver than it does for men. This came as quite a surprise to many, who previously thought that women attached more importance to issues such as their work environment, pension benefits and holidays.
It would appear therefore that companies need to consider carefully before changing their employees from company cars to providing them with a car allowance and encouraging them to arrange their own Personal Contract Hire. Judging by the figures companies have become more reluctant to cancel their company car scheme.
There was previously a trend for companies to take this route and it is easy to understand why this appeared attractive; firstly there was no more time spent on arranging company vehicles. However it very quickly became apparent that the time was still being spent but by the employee arranging the acquisition of their own vehicle, during office hours. The evidence is that those acquiring a vehicle on Personal Contract Hire take longer to make a decision and change their mind more often that a company arranging Contract Hire.
Then there was the attraction of not being stuck with a vehicle if an employee leaves or is made redundant. A considerable advantage indeed but of course what was seen an advantage to the company, was seen as a very worrying development to the employee; how is the car going to be paid for if one finds oneself out of work?
Another attraction was seen as less responsibility; following The Queen's Speech in 2005, the decision was made to take forward the proposal of Corporate Manslaughter; companies and its officers would become responsible for the safety of its company vehicles. Although companies soon came to realize that if an employee is using his or her own vehicle in connection with company business they are still responsible. It is however much more difficult to ensure that an employee's personal vehicle is properly maintained and roadworthy than a company's own vehicle.
The trend started to move back towards company vehicles and also to more flexibility as far as choice is concerned. Previously many companies restricted their employees to just one manufacturer. Taking the view that the company car is no more than a tool for the employee to carry out his or her work. In practice it is so much more; it is important to so many people, how clients, neighbours and even other road users view them.
Bearing this in mind and the fact that over 20% of employees will change their job if offered a better company car, this new flexibility when it comes to choice seems sensible. Within reason the employee's preference should be an important factor. If the employee wants the company to Contract Hire an Audi rather than say a Ford or a Vauxhall, this can be used to the company's advantage. If there is a difference in cost this could be pointed out to the employee but it would not be unreasonable to ask the employee what they are going to do in return. The promise of an improved company car can also work as a strong incentive when a company is looking to achieve higher sales.
The difference in cost between the car that the employee wants and the car the company was intending to provide is easily measured. The cost of an experienced and fully trained employee leaving because a competitor has offered a better company car is immeasurable.
Should you have any queries or questions regarding Fleet Management, Licence Checking, Contract Hire, Personal Contract Hire, Lease Purchase or vehicle Hire Purchase, please do not hesitate to contact us. Bowater Price plc 01494 536536.www.bowaterprice.com.
contract hire | personal contract hire | vehicle hire purchase
Bowater Price plc - Personal Contract Hire and Vehicle Hire Purchase