WORRIED about the cost of company cars? Most firms are, and some have been actively exploring a whole series of alternatives to outright purchase in a bid to reduce the amount of capital tied up in assets which have an unsettling habit of depreciating rather more rapidly than anticipated.
According to Hertz Leasing the provision and management of company cars is more often than not the second highest cost to a company after staff salaries. But still cars remain a vital part of the remuneration package, particularly in the recruitment market where - all other things being equal - securing the best people can come down to the class and make of company car on offer.
Hertz has long recognised the problem and has identified some of the many ways in which fleet costs can be reduced, whether the vehicles concerned have been purchased outright or supplied on a contract hire basis.
Although not an off-the-shelf solution, the measures are designed to be practical and straightforward to implement, according to Len Clayton, managing director of Hertz Leasing.
''In small and medium-sized companies, dedicated fleet managers are rare,'' he points out. ''The role may be split between two or more employees. By sharing our business knowledge and expertise we can help reduce the administrative burden, thus enabling companies to focus on core business issues.''
Mr Clayton says companies can make a good start by considering their acquisition method. Following changes to VAT regulations more are moving away from outright purchase in favour of options provided by contract hire and leasing. However, companies should first of all carry out an internal audit and assess fleet costs, particularly with regard to how the whole life costs of the fleet are measured. This is important as without an effective measurement, it is not possible to determine what is best value.
Hidden costs should be avoided when opting for contract hire. It pays to run a careful check on a contract for any penalty clauses or other hidden charges. A seemingly low monthly rental can end up costing more in the long term when wear and tear and excess mileage charges come into effect.
User chooser policy in operation? The advice here is to put restrictions in place to discourage specialist or fashionable vehicles which are difficult to dispose of or which depreciate rapidly, leading to losses when it is time for them to leave the fleet.
Running a fleet of cars - even if it is a large one - needn't mean that a company has to tie up inordinate amounts of finance or to employ expensive in-house personnel to keep everything ticking over. There are always cheaper, more efficient ways of oiling the wheels.
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