Deloitte report considers the future of the company car market,and the implications for car manufacturers, leasing and fleet management companies,  businesses and their employees

Companies must balance cost and business efficiency with corporate responsibility and employee aspirations as the debate over the merits of the company car as a key remuneration benefit intensifies. In a report launched today, Goodbye Company Car?, Deloitte, the business advisory firm, argues that far from abandoning the company car (with the current trend moving towards cash-based alternatives), businesses need to use a combination of funding solutions to ensure cost efficiency for both themselves and their employees.

The report argues that while the latest HM Revenue & Customs’ figures highlight a decline in the number of company cars since the 2002 reforms in company car tax (see notes to editors), this trend could be reversed as the impact of health and safety legislation relating to at-work driving begins to take effect.

Alison Chapman, head of automotive tax at Deloitte, said:

“In the future, the company car will not be confined to the scrapyard. The Government has made it clear that it wants the company car to remain a key part of the corporate landscape as it steers businesses and drivers towards choosing the most environmentally-friendly vehicles available.”

The report outlines the fiscal and legal measures already introduced and those in the pipeline from both the UK Government and the European Commission that will impact on the £20 billion UK fleet industry.

“The future of the company car will be determined by a wide range of factors, including congestion charging, fuel prices (particularly a widening of the difference in petrol and diesel pump prices favouring the former), vehicle funding and vehicle taxation, as well as safety and environmental measures and a greater focus on work/life balances by employees."

“Flexibility in the provision of corporate transport solutions has become crucial to both companies and their employees, but both parties have frequently failed to analyse in detail the full implications of opting out or staying loyal to the company car."

“This is because the issue is far from a straightforward ‘in’ or ‘out’ decision. Too many companies have tried to treat the choice as an either or option, and as a consequence have paid the price in terms of rocketing costs, administration overload and disgruntled employees.”

David Rawlings, senior manager for automotive tax, at Deloitte, added:

“Successful management of vehicle funding to the satisfaction of both employers and employees – who have different and often conflicting requirements – is undoubtedly more of an art than a science.”

The report includes analysis by Deloitte tax experts on key issues that impinge on the decision-making of Boards of Directors when discussing company cars. In addition, the report contains exclusive comment from a range of automotive and fleet industry professionals and independent commentators as well as the views of organisations such as the CBI, Department for Transport, the Conservative Party and the Liberal Democrats.

Chapman said:

“This publication is intended to assist the company car decision-making process of the Boards of Directors in every company in Britain by outlining the key issues for consideration and how they will impact on their organisation and its employees.”

- ENDS –

Notes to editors

Copies of the report are available at £225 from www.cartax.co.uk

Goodbye company car? includes exclusive contributions from the following:

• Dr Stephen Ladyman, Minister of State for Transport;
• Roger Putnam, Chairman of Ford of Britain;
• Christopher Macgowan, Chief executive, Society of Motor Manufacturers and Traders;
• Ray Holloway, Director of the Petrol Retailer's Association;
  George Grant, Managing director, Bank of Scotland Corporate Vehicle Finance;
• Nigel Stead, Managing director, Lloyds TSB autolease;
• John Lewis, Director general, British Vehicle Rental and Leasing Association;
• Martin Hall, Director general, Finance & Leasing Association
  Richard Brunstrom, North Wales Chief Constable and former head of roads policing for the Association of Chief Police Officers;
• Malcolm Murray-Clark, Director of congestion charging, Transport for London;
• Steven Norris, Former Conservative MP and transport spokesman and the Party’s two-time Mayor of London candidate;
• Professor Peter N C Cooke, The Centre for Automotive Industries Management, Nottingham Business School at the Nottingham Trent University;
• John Griffiths, Motoring editor, Financial Times.
  

In 1999-2000 there were 1.61 million people paying benefit-in-kind tax on their company cars, according to HMRC. However, by 2003-04, the latest year for which data is available, the number has dropped to 1.3 million.

About Deloitte

In this press release references to Deloitte are references to Deloitte & Touche LLP.

Deloitte & Touche LLP is a member firm of Deloitte Touche Tohmatsu, a leading professional services organisation, delivering world class audit, tax, consulting and corporate finance services, with around 120,000 people in over 140 countries. Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.