• 01926 353 300

Author Archives: Chris Proud

Company Car Fleets – Single or Multi Supply? You Decide.

Company Car Fleets – Single or Multi Supply? You Decide.

When considering a company car fleet supply process, fleet stakeholders are often in conflict over the type of process with which to engage.

Some departments are often in favour of a single supply agreement so they can build relationships with one supplier, whilst other departments encourage a dual or multi-supply so they can “horse-trade” the leasing cost and “bank” a saving.

Choosing between single supply or dual/multi-supply is central to a company’s fleet model, and making the correct choice at the beginning of a supply term is essential; as the wrong choice could have a significant impact on the overall fleet cost.

But what are the relative merits of the two supply choices and which will be better for your business? Read on or download our simple infographic outlining the differences.

SINGLE SUPPLY – PRO’S

  1. Contact Leverage

The leverage generated by putting all the business with one supplier can provide the following benefits:

  • It develops a strong negotiating position which can help eliminate contract re-writes;
  • It can help remove any profiteering by the lessor on end-of-contract charges for damages, and restricts the charges to the actual costs to the lessor and no more;
  • It can help protect against high 2nd tier supplier costs with large lessor rebates;
  • The client will be able to negotiate greater transparency.
  1. Budget Accuracy

As legacy suppliers disappear, only one PO will be required per supplier. This will inevitably produce more accurate budgeting.

  1. Relationship Management

Relationships only need to be maintained with one supplier, resulting in slicker processes that reduce the administrative burden of managing multiple suppliers.

  1. Realistic Pricing

Although still needing to be competitive, the headline lease pricing of a single supplier will tend to be more realistic and more reflective of total cost than that of a dual or multi-supply arrangement.

SINGLE SUPPLY – CON’S

  1. Complex Savings Calculations

True savings gained form commercially advantageous terms are more complex to determine than those from directly competing lessors.

Very often, the final savings cannot be determined until individual contacts have matured.

  1. Detailed Contract Component Knowledge

A detailed knowledge of the contract components is required to understand the competitiveness of the supplier. This detailed knowledge is also important when managing the pricing structure and avoiding cost creep.

  1. Governance Need

Resource needs to be applied to governance processes within the client, as the single lessor cannot be expected to “sign off” their own invoices.

DUAL/MULTI SUPPLY – PRO’S

  1. Savings Transparency

Competitive bidding for each individual car can demonstrate accountable savings.

Although it should be noted that these are theoretical savings and may not reflect the whole life cost of the vehicle.

  1. Reduced Governance Burden

Some of the administrative burden of running multi-supply can be allocated to fee-charging external multi-bidder intermediaries. These are also ideally placed to conduct local governance tasks.

DUAL/MULTI SUPPLY CON’S

  1. Cost/Resource Burden

The client may need to pay fees to an intermediary company to transact the multi-bidding or resource it internally.

  1. Risk of Contract Deviation

The competitive nature of the rental is only maintained so long as the contract runs to the original deal. As contract parameters can change, the headline price can be theoretical, which means the contract may not produce the cheapest option.

  1. Supplier Selection

Suppliers must be churned regularly to exploit the opportunities of multi-bid, otherwise savings may only be theoretical as the suppliers may be the most expensive on the market.

For a simple infographic of supply options click here. This article is one in a mini-series featuring the complexities and challenges of managing fleet supply contracts. Visit www.fleetworx.com for other resources such as our ebook explaining how to Avoid Fleet Commercial Contract Trapdoors

Share this Article

Lifting the Lid on Business Mobility – Car Sharing

Lifting the Lid on Business Mobility – Car Sharing

As companies are being forced to reconsider the financial and carbon cost of employee movement, a wide range of service providers are disrupting the market and providing mobility solutions that are shifting the focus from long-term leasing and ownership, to usage and mobility.

One of those services is the development of car sharing.

Many companies have taken the concept of the company carpool, enhanced it with technology, and transformed it into a car-sharing scheme. It is the development of the technology that makes the creation of a sharing scheme much more attractive and effective than even 10 years ago, with advancements such as real-time app-based booking and keyless vehicle access.

According to Fleet Europe, the car-sharing market is expected to grow at an annual rate of 26%, with 18m users by 2020. The market is driven by the rental companies who have gone through a period of product development and acquisition to offer the majority of the corporate car sharing schemes currently available. DriveNow recently divested by Sixt, and Ubeeqo by Eurpocar, appear to be leading the market with penetration across Europe.

Car sharing is quite a step-change for companies and employees alike, and the introduction of schemes will always require careful planning and consultation. The main practical requirements are managing the optimum number of vehicles so that availability is never compromised. It is stated that 1 car share vehicle can replace up to 8 standard company cars, however, a study of travel habits and a detailed understanding of travel planning is needed before the correct ratio of vehicles to employees is introduced.

As company cars are still a powerful and emotional draw for employees, some providers mitigate this by offering an integrated car share and mobility credit allowance. This means a user can relinquish their company car and downgrade to a smaller car within a car share scheme. They have credit up to the value of their allowance that they use on the car share use, however, they can also use that for evening and weekend hire.

The “sharing” of the vehicle can be handled in many ways:

  • Station based – where the cars are centrally located and must be hired and returned to the same station.
  • Free-floating – where the cars are parked within zones and are located and unlocked via a booking app, after the journey they can also be dropped anywhere within a fairly widespread zone.
  • Intra-corporate – where businesses located within industrial /business areas collaborate and share vehicles between their employees.

There are two business models for developing a car-sharing scheme:

  1. Use technology to convert part of an existing fleet. Companies such as Ubeeqo offer technology to assist in this.
  2. Enlist the services of specialist provider such as DriveNow or Car2Go and make use of their vehicle fleet and booking app.

Car sharing is one of a number of mobility solutions that are being implemented by businesses across UK and Europe. To understand more about business mobility and what it could mean for your employee movements Fleetworx have created the ultimate guide to business mobility.

Fleetworx provide client-side support in the design and delivery of cost-saving and carbon-saving company car policies and mobility solutions. To find out how Fleetworx could help you review the mobility options in your business contact Graham Rees or Tom Osborne on +44(0)1926 353 300 or visit www.fleetworx.com

Share this Article

Business Mobility: Everything you wanted to know about mobility (but didn’t know who to ask)

Business Mobility:  Everything you wanted to know about mobility (but didn’t know who to ask)

“Business Mobility” and indeed “Mobility” is a hot topic. Whole swaths of the fleet industry are refining their propositions around the term.  Leasing company’s such as Alphabet have repositioned themselves as “business mobility partners”, whilst the CEO of SIXT suggests customers are not concerned about their method of transport as long as they get quickly and conveniently to their destination.

But what actually is Mobility? And what does it mean for your business?

Traditionally, company car fleets have been the answer to a company’s employee mobility requirement. But as the approach to mobility is drawn into sharper focus, the company car is rapidly becoming only one part of a broader mobility mix.

Several key macro factors are influencing the mobility landscape across Europe and the market is responding with a raft of mobility start-ups and new product development from mature suppliers. The very real threat of vehicular access bans within inner cities is forcing companies to reconsider how their people move around their territories. This, coupled with the changing attitude of the millennials (under 35) toward mobility, has resulted in mobility products based around reducing the size and number of cars and switching people into car sharing schemes, public transport and cycling.

Mass digitisation of society has also influenced the way in which people travel, and the introduction of Mobility as a Service (MaaS) has allowed travellers to consider transport as something they purchase when it is needed, rather than having permanent car ownership. Indeed, a recent study by ALD found that 50% of Europeans consider car ownership as non-essential.

In addition to the changing attitudes of society at large, several market forces are also influencing the way in which companies are dealing with mobility. The reduction of cost is an ever-present challenge and understanding the efficiencies of how a company moves its people is essential to this task. Reviewing total cost of mobility, rather than managing the car fleet in isolation and reviewing total cost of ownership, is an increasingly popular practice among many European companies.

The review of the mobility category as a whole, rather than in silos of car fleet, business travel and expenses, also helps a business calculate its total CO2 emissions attributable to transport, as well as understand the efficiency of travel and employee productivity.

Recruiting the brightest new talent remains very difficult and as the younger generation move into more senior positions, new mobility solutions can exploit their changing attitude and be used as an attractive recruitment tool.

Although there is a noticeable market shift toward mobility, many organisations still do not understand what it means and how it can help their business. To assist companies with this change Fleetworx have created a straightforward guide to the services that make up business mobility, what it means for your business and how to introduce it.

To get your free copy of this Ebook click here or call Graham Rees or Tom Osborne on 01926 353 300 to discuss how mobility may work in your business.

Share this Article

How to Prepare Your Car Fleet for External Factors such as WLTP

How to Prepare Your Car Fleet for External Factors such as WLTP

WLTP is firmly on the horizon and looming large. As of 1st September 2018, all new car registrations will need to issue CO2 emission based on WLTP (Worldwide Harmonised Light Vehicle Test Procedure) rather than the previously applied NEDCA.

A few months ago we talked here about the impact WLTP will have on company car fleets, suggesting the following three challenges:

CO2 Impact

The movement of official CO2 emissions data for a car fleet will impact a company’s carefully constructed fleet CO2 emissions target

Capital allowance claims

It will impact capital allowance claims as cars will move above the new threshold for claiming the standard rate of 18% which, as of the introduction, will be 110 g/km.

BiK Impact

In many cases, NEDC2 will effectively move the BiK of a car two brackets higher.

Unless a company has very tight control on their car fleet structure and understands the impact of these changes to a granular level, it is likely that they attempting to manage these impacts by currently observing two possible directives on company car orders:

  1. as only a selected few manufacturers have released their completed WLTP emissions figures, issue a restricted company car order list, covering only those that are WLTP compliant; severely limiting employee choice.
  2. allow older models of cars which haven’t been tested for WLTP, whilst anticipating the possibility of a negative impact on BiK tax and employers NI contributions when the actual WLTP figures are released. This could result in a hike in personal taxation and/or a request to cancel the order.

Whilst the above two solutions allow a business to navigate the uncertainty of WLTP, they are not ideal and could cause confusion, employee resentment and cost issues.

To be better placed to deal with the impact of WLTP many businesses employ the services of a Fleet category partner. A fleet category partner operates as client-side support, managing the supply chain and ensuring a helicopter-view of the whole fleet dynamic and the supply chain.

Having a completely transparent overview of the car fleet, with a firm grip on costs, compliance and replacement cycles, means the business can understand the sensitivities of the fleet to external factors such as WLTP, resulting in quick and informed decisions.

So rather than taking a compromised approach to managing WLTP, like the scenarios above, having a detailed understanding of the fleet means strategic decisions can be made that will result in the best possible outcome.

A number of our clients who are dealing with WLTP are using their transparent view of its impact to manage their order procedures accordingly, putting directives in place that enhance the medium and long-term benefit to the employee and the business.

Ultimately, having a fleet category partner allows a faster, better informed and more controlled policy procedure that can react accordingly to extraneous factors such a compliance, taxation and cost increases.

Share this Article

Imminent IFRS16 Accounting Standards Will Impact Car Fleets: Make Them Work to Your Advantage

Imminent IFRS16 Accounting Standards Will Impact Car Fleets: Make Them Work to Your Advantage

The new IFRS16 accounting standard is effective from 1Jan 2019 and will affect publicly listed companies that operate a leased company car fleet. It is broad reaching legislation that fundamentally changes the way organisations report their leases, forcing them to be recognised under an on balance sheet accounting model.

Currently such leases are classified as Operating leases and are kept off balance sheet. These Operating leases’ will now only apply to leases which are 12 months or less or where there is a ‘low value’, which is generally accepted as less than $5k.

Consequently, companies who use a lease funding model to procure their car fleet are now obliged to report this information in a different, more sophisticated manner. Currently the leasing contracts can be reported on the P&L account, meaning there is no need to have such a detailed insight into the data held within each contract.

And here is the rub.

By moving the reporting to the balance sheet, companies must now have a far more robust leasing information system.

Many of our clients are working with their accountancy partners to establish a robust means of recording data on all leases throughout their business.

Our clients have the substantial challenge of understanding what specific values they need to capture in the first instance and thereafter what may change, all proving fundamental to the design and build of their ‘lease information systems’.

Discipline issues

What has taken many by surprise, is the huge variation of lease structures and reporting practices around EMEA, limiting the granularity of reporting in some cases to the lowest common denominator. It is not unusual in some less developed markets just to receive a single monthly rental figure which includes all services whereas, in others, finance and services are itemised to a granular level.

Also, what is evident, is that most businesses up to this point, have lacked discipline and structure when it comes to recording their vehicle lease contract arrangements with their suppliers.

At best, these are dispersed across the region and, at worst, contract documentation cannot be located at all.

And the retrieval of this data from across the EMEA region is perhaps the most challenging aspect of all. Communicating with sometimes more than 80 suppliers from 30 plus countries, and attempting to extract the required data in a standardised format, is no mean feat.

The idiosyncracies of vehicle leasing also add complexity to the recording and reporting process. Unlike equipment or building leases, where the rental and term remains static, vehicle rentals and end dates can change due to mileage variations. So, not only do the supply chain need to be engaged once to collect the initial data, they also need to be kept engaged so changes in rental or terms can be accurately reported.

Collecting lease data accurately and timely will be critical to the successful adoption of IFRS16 reporting. The challenge however, as we have found, is that a complex supply structure creates a complex array of data formats. And where corporates often have centralised structures with scant resource, it is very difficult to maintain dozens of supplier relationships at the right level to retrieve and manipulate the information to the right standard.

This ability to accurately collate and manage lease data is where Fleetworx clients have a substantial head start on their peers. As part of our “Fleet Category” management services, Fleetworx holds relationships with all the fleet supply chain on ours clients’ behalf. Which means we remove the pain of collecting critical contractual data and monitoring any contractual changes due to mileage variations or otherwise. Crucially, this data is also validated, cleansed if necessary and stored in Fleetworx Centrax database.

The value for our clients comes from the single report we produce which consolidates their lease data from across the EMEA region: helping them manage their “lease information systems” more closely, more accurately and less painfully.

We consider the introduction of IFRS16 an ideal opportunity for fleet owners to align their reporting systems, develop closer relationships with the fleet supply chain and gain a more thorough understanding of the fleet category cost. By its nature this then provides an excellent opportunity to deliver best practice and savings.

With support from a professional category management partner like Fleetworx, the task of developing a birds-eye view of the fleet category can be hugely simplified, whilst the rewards can be significant.

Share this Article

Exposing Hidden Car Fleet Contract Costs

Exposing Hidden Car Fleet Contract Costs

When costing a fleet supply agreement, and choosing the right funding model and appropriate supplier, it is important to understand that the price quoted against a vehicle list is merely a price at a snapshot in time, and on a very specific configuration.

It is a price that is being provided for the purpose of comparison, either between other suppliers in a multi-bid scenario or against other suppliers in a single bid scenario. It is extremely unlikely that it will reflect the actual cost of operating the fleet over the term because of two main reasons:

Price creep
As the fleet expands and the legacy supplier is removed, the new leasing price of each type of vehicle will change over time: likely to result in an increase in the headline price that the contract was signed against.

Additional supplier margins
Although the provider may have offered significant signing-on incentives to win the business, they will always be factored into the overall contract pricing, very often with sophisticated systems to recover this investment.

And it is these margins that the supplier can apply to consumables and services that need to be understood, so they can be managed.

It is a common misconception that the only revenue elements that can be negotiated are the management fee and the margin on the financing interest.

Most fleet stakeholders assume that focusing on these means they are in control of the contract costs, however, that is, unfortunately not the case. There are in fact six cost categories within a typical leasing contract that are used to generate revenue for the lessor.

To understand these six commercial trapdoors Download the fleetworx e-book “Fleet Contracts: Avoiding Commercial Trapdoors – A Practical Guide for Procurement Departments” .

 

Share this Article

How Structured Company Car Schemes Can Improve Employee Wellbeing

How Structured Company Car Schemes Can Improve Employee Wellbeing

The recent REBA crafted report on wellbeing clearly demonstrates the growing strategic importance of wellbeing strategies and services. There is strong evidence of the high profile that wellbeing now enjoys at board level, and the subsequent clear recognition of the link between employee wellbeing and recruitment and retention, employee engagement and productivity.

It is the firm belief of many REBA members, and report contributors, that a strategic and properly measured wellbeing programme can make a powerful impact. REBA expect the growth of such programmes to soar in the short to medium term, with 45% of companies researched already having a defined wellbeing strategy, and 49% of those without planning to introduce one this year.

Stressful working environments (73% of respondents said a high-pressure work environment is the biggest threat to staff wellbeing) and personal money concerns are widely acknowledged as key wellbeing challenges. As such, companies are keen to explore mental health and financial wellbeing campaigns that can alleviate these pressures and contribute positively to their wellbeing efforts.

Employee mobility and the provision of mobility solutions is one such area that can have a big impact on workplace stress and financial anxiety. Company cars remain a popular benefit perk for many employees, however the industry is seeing a small but growing shift toward cash alternatives, relieving the employer of much responsibility and shifting it to the employee. And in the confusing and predatory world of car retailing, this is not a recipe conducive to employee wellbeing.

Most fleet owners manage their car selection design quite tightly so they can exert some control over their fleet and the type of vehicles driven by their employees. A well organised and correctly specified car fleet provides a more controlled environment for both the employer and the employee; assisting safety, comfort, and productivity.

Company Car Support Network

As the fleet supply chain exists to manage the vehicle, and support the driver, it also removes the personal burden of responsibility for the upkeep of the vehicle, allowing the employee to be free from the distractions and compromises of personal car ownership. However, once this support network is removed and the requirement to source, maintain and eventually dispose of a personal car, albeit with employer financial support, becomes the responsibility of the employee, then the convenience of a company car compared with a cash allowance is drawn into sharp contrast.

Wellbeing implications

If a company decides that a cash allowance is how they wish to mobilise their workforce then there will be a number of implications that could impact employee wellbeing:

Unfamiliar responsibilities
Switching people into a cash allowance scheme will expose them to a number of situations with which they may not have been familiar for many years, such as financing, insurance, maintenance, all of which can cause anxiety, become huge distractions and create financial challenges

Financing arrangement
A personal vehicle needs to be sourced and, unless the employee has the luxury of being able to afford to buy a car outright, it is likely it will need to be financed. (this also raises the issue of exerting some control over the quality and age of the vehicle being used) Car purchases could be private or most likely Personal Contract Plan (PCP) or Personal Contract Hire (PCH) schemes, for which there is usually a deposit required. A cash allowance will provide a monthly fixed sum which can be used to cover the financing payments,  but it will not cover the deposit; something that will need to be covered by the employee.

Minimum term commitment
If the car is to be financed there will be a minimum term to which the employee will need to commit. If their employment circumstances change then they will be committed to the term or likely face early termination penalties.

Insurance
Insurance will need to be arranged by the employee and as most employees may be coming off the back of a company car (it is often difficult to prove no-claims from a company policy) they may struggle to negotiate cost-effective and appropriate levels of cover. And in the event of a claim the typical excesses of £300-£500 need to be paid by the employee.

Maintenance
Company car drivers have the luxury of a centrally applied maintenance arrangement. MOT’s are covered, servicing is just an email away, tyres replaced at the drop of a hat. Dealing with these without the support network of the employer can lead to many hours of sourcing, negotiating and appointment making, as well as creating a serious concern over its financing.

Roadside assistance
Company-wide roadside cover is universally applied to a company car fleet, whilst cash allowance drivers fend for themselves. It is not a particular onerous task to appointment a roadside recovery partner, but it still requires effort and expense.

In-Life and End-of-Contract Damage
If indeed the employee arranges their vehicle on a PCP or PCH, unforeseen operating costs such as damaged tyres and wheels, minor scratches and non-routine maintenance costs are typically not covered under either the maintenance or insurance programmes. Employees will be liable to a recharge if their vehicle is returned with what is classed as unfair wear and tear, a set of tyres for a typical fleet car can cost between £800-£1000.

Excess Mileage
When the employee negotiates their vehicle financing they can be easily lured into an attractive deal with relatively low contract mileage, often overlooking the punitive penalties that are imposed if they exceed the contracted amount on vehicle return.

And even the offer of a cash allowance can have consequences for company car drivers. If a company car driver has deliberately chosen a more energy efficient car with a lower BiK tax point, and their employer offers a cash alternative, then the employee will be charged at the higher of the cash or car benefit value. A consequence that the driver may not even be aware of, and ill-prepared for, until they get their tax bill.

The positive impact on employee wellbeing of a well-designed and carefully administered company car programme compared to a cash allowance scheme should not be underestimated. Personal car ownership brings with it a whole host of challenges that employees need to manage, adding anxieties and pressures that can be hugely distracting and stressful.

Fleetworx can design and implement a range of company mobility solutions that will deliver long-term savings and provide a structured framework of employee mobility that can deal with the ever-changing demands of modern business.

To understand more visit www.fleetworx.com.

Share this Article

The Great Cash or Car Conundrum

The Great Cash or Car Conundrum

Although the offer of a cash allowance as an alternative to company cars may be considered a fairly ubiquitous option for company car users, it is, in fact, not as widespread as expected.

A recent major report on Global Company Car Policies suggests that only 34% of companies across Europe allow all their employees the choice of cash allowance rather than car; whilst 66% of companies restrict the choice to certain employees or don’t provide the choice at all. Nowhere is the situation more polarised than the UK, with only 17% of companies allowing all employees the option of cash allowance.

This suggests quite clearly that car ownership, rather then the provision of an allowance, remains the preferred choice across Europe.

So why is it the company car is still the preferred route?

  • Employee wellbeing
    • Most fleet owners manage their car selection design quite tightly so they can exert some control over their fleet and the type of vehicles driven by their employees. A well organised and correctly specified car fleet provides a more controlled environment for the employee; assisting safety, comfort and productivity. As the fleet supply chain exists to manage the vehicle, and support the driver, it also removes the personal burden of responsibility for the upkeep of the vehicle, allowing the employee to be free from the distractions and compromises of personal car ownership.
  • Image
    • Driving the right type of vehicle adds to the strategic value of the brand building efforts of the business. The vehicle needs to reflect the brand image and personality that the business is projecting. Sports cars may be desirable to the employee but if they contradict the understated, professional and level brand image that is being communicated then the customer may be left confused about the brand and its real values.
  • Recruitment and retention tool
    • A well-defined company car policy can be a major attraction to new recruits and can be used by the employer to create a point of difference between themselves and their competitive set. If a company decides to offer car allowances then that amount is fixed by policy and has a defined value in the mind of the employee. However a company offering cars can use this to their advantage and employ smart policies such as these to provide higher value vehicles, and hence an increased package, at no extra cost to the business.
  • Tax Position
    • Once a cash alternative is made available to employees it triggers the new tax regulation that means the employee will be taxed on the higher of the BiK or the cash allowance. As well as higher tax liability for the employee, it also removes the incentive to choose low emitting vehicles, as the tax benefit will be eroded.  The employer will also be subjected to higher NI contributions on those vehicles that were previously enjoying low BiK values.
  • Cost Management
    • Employers operating a cash allowance scheme need to be aware of the underlying temptation for car users to choose alternative transport options in order to reduce the mileage accrual on their private vehicle. The use of alternative transport naturally increases mobility costs, and can impact of the total mobility spend of the company.

Although advocates of cash allowances may consider it the easy option for providing cars, it is, in fact, a tactic that could erode the many benefits provided by a well-managed company car fleet.

Share this Article

New Real-World CO2 Emissions Testing Set To Affect Company Car Taxation

New Real-World CO2 Emissions Testing Set To Affect Company Car Taxation

Have you heard about the new emissions testing regulations that will ultimately affect car tax?

No? Can’t say I blame you.

Without much of a fanfare, the launch date for the new testing regulations has been and gone. As of 1st September, the new vehicle type approval emissions tests have switched from the 80’s throwback NEDC (New European Driving Cycle) to the ultra-modern WLTP (Worldwide Harmonised Light Vehicle Test Procedure).

And frankly, it is probably about time.

Although the test remains lab-based, they will better replicate the actual real-world driving conditions and provide a more accurate indication of fuel consumption and emissions.

With more powerful vehicles, the introduction of speed cameras and road furniture, the year on year increases in traffic numbers and the inevitable stop/start motorway routines that this has instilled, the dynamics of driving are now very different to 35 years ago. And until now this has not been accurately reflected in CO2 values.

Enter stage left … the WLTP.

To create more realistic driving conditions the new test will have, among others:

  • higher average & maximum speeds
  • longer test distances
  • more dynamic & representative accelerations and decelerations
  • greater range of driving situations

Although the tests are now more reflective of what happens on our roads, there will, in fact, be an impact on the recorded CO2 emissions. Quite expectedly, the CO2 emissions will be higher than under the NEDC, with some reports suggesting an increase of over 10%. This will have a threefold impact on car fleet management.

Firstly, the movement of official CO2 emissions data for a car fleet will impact the carefully constructed fleet CO2 emission targets.

Secondly, it will impact capital allowance claims as cars will move above the new threshold for claiming the standard rate of 18% which, as of 2018, will be 110 g/km.

Thirdly, it will effectively move the BiK of a car two brackets higher.

Although the EU has suggested the scheme should not be used as a tax grab for national governments, there needs to be an alignment of CO2 thresholds with the introduction of the WLTP. It has been announced that the regulations will not impact directly on car tax until at least April 2019. This is the date for which HMRC have suggested the exiting NEDC figures will continue to be used for taxation purposes. And they have also suggested the review of CO2 thresholds to be used beyond that date will be announced in the Nov 2017 budget.

And of course it is not just the potential increased personal taxation forced upon an employee who may be renewing a like-for-like vehicle but with a new WLTP grading, there is also the potential increased employers NI contributions. Using a Fleetworx client as an example, moving a fleet of 389 cars two BiK brackets will impose an additional £35,000 in employers NI contributions.

So, although the introduction of WLTP is universally welcome, it is basically a watching brief between now and the various staging dates to keep track of looming administrative and cost challenges.

Share this Article

Plug-in hybrids not being plugged in? Real world data supports need for plug-in hybrid fleet strategy.

Plug-in hybrids not being plugged in? Real world data supports need for plug-in hybrid fleet strategy.

We have written recently about the suitability for fleet of EV and plug-in hybrids, and how it is important to develop a deployment strategy considering the following issues:

  • company objectives
  • tax position
  • technology
  • driver behaviour
  • health and safety
  • range
  • image
  • future proofing

One of our main concerns was driver behaviour and how this impacts on real-world fuel consumption.

A plug-in hybrid can only deliver its dual fuel benefits if it is, well, plugged-in.

There are countless stories within the trade of charging cables for plug-ins never having been removed from their plastic wrap and it appears these stories are not just stories, but are being played out in real-life.

TMC have conducted a recent study into the fuel efficiencies of plug-in hybrids and discovered that they are in fact among the highest polluting vehicles in the fleet if not used correctly.

Using the data captured in their Mileage Capture & Audit system, they analysed seven PHEV models, finding the sample vehicles achieved an average of 45mpg, a huge 65% lower than their advertised average consumption of 130mpg.

The subsequent CO2 emissions averaged at 168 g/km, again, in sharp contrast to the advertised CO2 emissions of 55g/km.

And it is the advertised consumption and emissions rates that are leading to claims of “fake hybrids”, allowing such vehicles to sit within the low emission category, attract lower BiK rates and offer conscious-satisfying CO2 savings.

The ”fake” status means that the BiK advantage is of genuine appeal to company car driving employees, whilst the employer is stuck with the challenges of the real-world fuel consumption resulting in higher than expected fuel costs and whole life cost challenges.

Belgium is one European country that has decided to tackle this issue head-on and is removing the friendly tax status of plug-in hybrids. From 2020 the financial benefit will switch to the ratio of the battery capacity to the weight of the car, meaning those cars running on a small battery will become significantly less attractive. UK is also set to follow suit as in 2020 the BiK will be linked to the actual electric-only range.

Plug-in hybrid discipline

In the meantime, as plug-in hybrids remain a popular choice for employees (plug-in hybrids sales for Jan-June 2017 up 14% on same period 2016) it is in the interest of the employer to instill charging disciplines that encourage and increase plug-in usage:

Mileage allowance rates

  • consider utilising sliding mileage allowance rates based on journey length, giving lower mileage rates for shorter journey to encourage the battery to be sufficiently charged

Workplace charging

  • take advantage of voucher scheme offering up to £300 toward the installation of each workplace charging socket
  • place charging point stations in advantageous parking positions to encourage charging
  • reward work place charging by identifying charging vehicles and assigning “charging points”
  • arrange charging etiquette to avoid “charging point congestion”

Homeplace charging

  • support employees in applying for a grant of up to £500 toward the cost of installation of a home charge point
  • encourage the sign-up by explaining the process
  • support the sign up by having clear health and safety guidelines
  • reward the sign-up by offering relevant incentives
  • consider interest-free loans to help with home charge point installation costs
Share this Article