Myths About Driving For Work: Personal Car vs Company Car

There are a lot of vehicle program options out there. Which one, or ones, your organization choses will determine how driving employees are supported to do their work. With all the vehicle program options out there, how can you figure out what’s going to work best for your company? Personal car vs company car: which is the most supportive to driving employee efforts? What will the impact your team on the road with the most benefit and least drawback? There are a lot of myths and misconceptions we hear from our customers and other businesses with vehicle programs. We’ve dug into these and pulled out the top three myths to expose why you can’t take them at face value.

1. My sales team is going to look for another job if I don’t offer a company vehicle. How can I attract talent from the competition?

The truth is, your sales team does not know what that vehicle costs. When a rep learns that the car they’re driving is a $1,000 expense each month that could be provided to them for personal use of their own vehicle? More times than not they’re choosing their own vehicle.

Reps enjoy the freedom of choice because everyone has a different set of goals. Often, drivers are interested in saving their money and setting up for a comfortable retirement. This option allows them to drive a more cost friendly vehicle that might only run them $500 per month. That’s an additional $500 they now get to pocket. Others enjoy driving nicer vehicles, like a BMW. This option allows them to drive that vehicle and make it much more affordable. It provides greater flexibility for the driver, and, in most cases, a more competitive vehicle reimbursement for potential new hires.

2. Young employees want a company car.

As it turns out, this has proven to be the opposite. People of all ages want more control over their finances, especially when they’re driving a lot for work. A company vehicle gives then no flexibility in that. They are just given a vehicle without much say in the matter.

Giving an employee a car allowance or reimbursing for mileage allows them to use the vehicle they choose for work and personal use. This means a lower overall cost for driving employees to own a vehicle and flexibility to drive the vehicle they actually want to drive.

Let’s look at an example: If a rep receives $700 tax-free to own my vehicle for work, that covers almost all of the expenses for owning the vehicle. Then that rep only has to pay for fuel and other miscellaneous expenses when driving it for personal use. For any rep, that’s a huge benefit!

3. Company cars are cheaper than giving my employees the IRS cents per mile rate.

Organizations are convinced that their company-provided car program is cheaper than a reimbursement model. One of the major culprits here is their fleet management company completing this task for them. When looking into the numbers, it’s no surprise. They know the annual fleet expense, they have the mileage information, and that’s all they need, right? Wrong.

Folks that drive company cars are usually high mileage drivers. That means higher than average wear and tear on their vehicle. When comparing mileage reimbursement to fleet, organizations know that reimbursing using the IRS mileage rate will be more expensive than their fleet program. That’s easy to agree with them. They’re right.

But their evaluation of fleet vs. reimbursement generally comes before they’re familiar with a Fixed and Variable Rate program, or any alternative to the IRS business mileage standard. Once they can explore an option that reimburses a fair amount and truly separates reimbursement from compensation, it clicks. A happy medium between the two exists.

Myths About Driving For Work

There are a lot of myths out there about driving for work: which vehicle program is best, which is the most expensive, which has the most liability. We’ve been working diligently to put those myths to rest in much of our content, from this blog to the videos, guides and other assets on our resources hub. Have a question you want answered? Feel free to explore all the resources we have to share, or reach out to us directly! We’re happy to help dispel and myths or solve your vehicle program problems.

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