By Fernanda Tafoya
October 17, 2023
Managing fleet vehicles continues to pose challenges to companies. With the current state of the economy and lingering auto manufacturing issues, used cars continue to be valued at high prices. Company cars remain the most expensive option out there to keep your workforce on the road. Given all these factors, and more, companies may be looking to transition from fleet to FAVR.
It’s simple math. Want to scale up your fleet? You need to purchase more vehicles at record high prices. But running the other way and selling off your company cars also means obtaining a considerable ROI on your initial investments. This post will cover the top 5 reasons to transition out of fleet and into individualized mileage reimbursement.
Personal use of company vehicles increases risk and liability. Employees use company cars used 24/7 for different purposes (not necessarily generating revenue to the business). Additionally, nothing guarantees the employee is the only one behind the wheel. The latest Motus Safety report found US employers spent $5.5B in 2019 on insurance. If serious injury or worse occurs and a company provided vehicle is found at fault, no matter who’s driving, the business faces litigation.
If cost savings is your priority, there has never been a better time to switch from fleet to FAVR. Not only would you be making a profit with the current high demand for used cars, but you’d also eliminate the maintenance costs that come with a company-provided vehicle program. If an employee leaves or an unexpected situation requires your entire mobile workforce to stay off the road indefinitely, your business will continue to make lease payments for those vehicles.
By offering a personalized reimbursement based on how much employees drive and where they drive, the company can offload the costs of idle vehicle expenses, maintenance, insurance and liability.
Companies should focus their time and efforts on their core business, not on managing a fleet of vehicles. Unfortunately, many decision makers only consider alternatives like mileage tracking. These alternatives can be both time consuming and hard to execute accurately every single time. An individualized mileage reimbursement program like FAVR that calculates accurate rates no matter where your workforce is can be fully automated. This ensures your employees can dedicate their time to activities that generate revenue for your business, while fairly reimbursing them.
Mistakes with fleet vehicle mileage reporting can land companies in hot water with the IRS. This can be avoided with a personalized reimbursement rate program such as FAVR, is the only IRS-recommended methodology to reimburse mobile employees tax-free for the different costs associated with driving for business. This is possible thanks to our scalable platform that accounts in real-time for both fixed and variable expenses and updates the personalized reimbursement rates based on costs specific to where your workforce is located and how many miles they drive.
Transitioning immediately out of fleet? Even in a market where companies have budget concerns, that plan will move a lot of questions. Decision makers will have questions: What about the recruiting perk? How will employees react? Not sure you’re ready to go through with a new vehicle program? Consider making a smaller step.
By rolling out a fleet mileage tracking app, employees track their personal driving mileage. This makes fleet personal-use chargeback’s more accurate. There may be some money saving there, but, more importantly, the company now gains insight into how much employees are driving for business use versus personal use. If the personal use outweighs the business use, then your case for replacing fleet vehicles just got stronger.
Truth is, no one enjoys driving a vehicle they’re not comfortable with. Your employees are using their company car for both business and pleasure. Providing them the flexibility to select a model they actually like can make a complete difference in their productivity and engagement levels.
Used car prices keep rising, so why not make that work to your advantage?
There has never been a better time to achieve a considerable ROI on your company cars… Or a worse time to keep them. A partner like Motus can help make the transition from fleet to mileage reimbursement as seamless and painless as possible. With our platform, every mile is tracked, and every expense is accounted for, eliminating tax waste and keeping more money in your employees’ pockets.
As one customer said, “FAVR is the future. You’ll wonder why you didn’t change earlier.” But don’t take our word for it. Watch this virtual panel where three business leaders discuss their main tipping point to get out of fleet, what made their transition successful and the many benefits they have experienced since.
Switching vehicle programs is always a process. Transitions around business aspects that can have a serious impact on your business require time, education and thought. We get that. We also get we can only do so much to help prepare you for the process. That’s why we created this guide: Transitioning out of a Company-Provided Vehicle Program. This piece outlines the steps companies take when getting out of fleet. Check it out to learn more!
With Motus, accurately capturing business mileage has never been faster or easier.
Contact us today or take a virtual tour of the Motus Platform.
One Pager 
Report