Employee-owned vehicles

A company-leased or owned fleet will consistently reflect a particular company’s image and standards

June 18, 2013
by Kara Kuryllowicz

From the May 2013 Print Edition of Fleet Management

Individuals and corporations typically ask themselves very similar questions when considering vehicle purchases.

Reliability? Operating costs? Fuel consumption? Cargo space? Warranty? Extended warranty? Safety features? Does it meet my performance requirements? Resale value? What is the lifecycle cost? What does this vehicle say about its driver/owner?

Yet, as much as they may agree on the questions, their answers, which may differ substantially, based on their unique perspectives, can have a significant impact on the realities of driver-owned, company-subsidized vehicles.

A company-leased or owned fleet will consistently reflect a particular company’s image and standards, while allowing the firm to control everything from vehicle selection to operating costs and scheduled maintenance. As appealing as that may be, a company’s ability to manage a driver’s history and behaviour isn’t such a sure thing, which helps explain the continuing presence of driver-owned vehicles.

“There are performance-oriented, productive employees who also happen to be [the kind of] drivers no one wants on their fleet program,” says Steve Somers, vice-president of sales and client services, Central Region at TLS Fleet Management. “A firm may benefit from not having a high-incidence individual with a track record that includes accidents or multiple tickets for speeding and other infractions, on their corporate policy.”

Of course, no firm wants its employee calling on a valued client in a well-used vehicle, and conversely not every firm will be comfortable with the not-so-subtle significance of a high-end sports car or a luxury SUV.

“When compensating drivers for using their own vehicles on the job, it’s easy to assume it’s all about cost management, but it’s as much about consistent branding and standardization,” says Somers.

A driver-owned fleet that includes a Mazda 626, a BMW sports car, a Cadillac Escalade and a beater sends mixed messages internally and externally. Yet there are other equally valid concerns, such as safety and reliability, sufficient cargo space and the ability to comfortably accommodate more than one passenger.

“A driver-owned vehicle’s vintage, mileage and maintenance record may not matter to the employer until the employee is late for an important appointment or misses a full-day of meetings because the vehicle is in the shop,” says Somers.

Companies reimburse employees for using their own vehicles in a variety of ways. As Wayne Rose, vice-president of operations at Jim Pattison Lease, sees it, they may offer one or more of the following: flat fee or monthly allowance; cents per kilometre; dollar amount plus fuel; or dollar amount plus operating expenses. In today’s business environment, and in view of some firms’ lines of business, sustainability is important and some companies may also offer additional incentives on more environmentally friendly, fuel-efficient vehicles.

Corporations may set guidelines and offer compensation only when driver-owned vehicles meet specific criteria pertaining to brand, vintage, mileage and other criteria. No matter how much fleet managers might prefer contributing to the operation and upkeep of driver-owned vehicles that are three years old or less, it is becoming increasingly difficult, simply because they are in the minority.

According to Dennis DesRosiers of DesRosiers Automotive Consultants, in 2012, there were about 4.7 million, personal-use light vehicles four years old or younger on the roads. Over the past decade or so, Canadians have been keeping their vehicles longer, and in 2012, the average age of a light vehicle was 9.22 years.

How can a company tell its employees what and when to buy, let alone how to drive and maintain it? While one might expect pushback, drivers are more accepting once they understand the business case.

“You simply present a company policy that addresses the type of vehicle required to carry out a particular business requirement and the maintenance programs that will support it,” says Rose.