The company car has had a chequered history. I remember an outcry when higher-paid employees, defined as earning £8,000 a year or more, were to be taxed for the benefit. How times have changed.
Remember the historic reasons for having a company car? ‘Cost-effective’, ‘released personal capital’, ‘status symbol’, ‘sign of corporate esteem’ and ‘a better car than you would buy yourself’.
Later chancellors saw the company car as a cash cow and a relatively easy tax to collect, so the pressures built, and environmental issues have subsequently entered the equation.
Statistics may indicate that the number of company cars has slipped, but this is partly due to the dire economic climate and partly due to changes in business practice. Communications have also evolved, as have the increasing cost of car provision and management, and the growth of alternative forms of business mobility.
So much for the business justification for the company car.
In terms of an employee benefit, the financial incentives have largely evaporated and are unlikely to return. Other benefits are taking precedence and salary sacrifice arrangements are an emerging science.
While the company car is still ‘nice to have’, it comes at significant financial cost. Certainly, the company car will always have a place, but as a working tool rather than as an employee benefit.
There appear to be many schemes to minimise the cost of a company car, but I feel that in future, any employee benefit from the provision of a company car will be other than financial.
Peter Cooke is professor of automotive management at the University of Buckingham