The UK has always had a strong company car culture, by which I mean a culture of companies providing employees who need them with cars that they also use as personal cars. This culture has dominated the UK car mid-market for decades. It used to be Fords and Vauxhalls (GM), and these days it is more likely BMWs and Audis, but the culture remains. British car reviews are full of observations about company car tax rates and so forth. Company car sales are so important that manufacturers tailor their designs to them, while trying to avoid the dreaded tag “repmobile” (meaning a car that is predominantly sold as a company car).
My question is, do other countries have the same thing, and to what extent?
Not here in Canada. Executives will typically be awarded a car allowance as part of their compensation package. This typically applies to directors and above and allows them to lease a decent car.
I guess it’s all about preserving the company image; you wouldn’t want the Director of Finance, for example, to show up at a client meeting in a beat up clunker.
What level of employee gets a company car in the UK?
In the US, no. However, cars that are commonly found in rental fleets have a poor reputation among auto journalists and enthusiasts. Supposedly, car rental companies in the US have an affinity for cars that are rather boring or generic; Mitsubishi Galant, Chevrolet Malibu, and Chevrolet Impala are among the most common. Not too long ago, it would have been the Dodge Stratus, Chrysler Sebring, and anything from Kia. Buyers often avoid models that are popular among fleets because they don’t hold their value well, with rental companies prone to dumping tens of thousands of the same model on the used car market at a time.
Some car manufacturers are trying to overcome this by restricting fleet sales, or having fleet-only models, such as the Chevrolet Captiva.
Reps (sales representatives) in medium or large companies would often get such a car, hence “repmobile”. I don’t know, it seems like a real badge of honour in the UK, what type of car you qualify for. It would go something like:
Junior rep - something like a Focus or Astra; experienced rep - Mondeo or basic BMW; good rep - “compact executive”, like a 3 series or Mercedes C; sales manager: 5 series or similar.
It’s a huge thing here in Israel - based on a (Hebrew-only) article from 4 years ago I found, 13% of all cars on the road here are company cars, with roughly two-thirds of these leased from rental companies. From what I understand, there are certain tax loopholes that make driving a company car very worthwhile.
From what I can tell, the Mazda 3 seems to be the most popular model issued.
I may have given the impression in my post just above that it only applies to sales people. But it’s more of a general middle management phenomenon. I think it is maybe a hangover from the days when company cars were a tax-avoiding perk. Which they have now clamped down on, but the tradition remains.
Like elmwood wrote, I don’t think it’s a big thing in American corporate culture. A high-paid executive would display his status by buying his own luxury car not driving a car owned by his company.
But it works the other way in government service. There it’s a sign of status to be assigned a vehicle. It’s not the cost of the vehicle that’s important; it’s the sign that your job is so important you need to always be available.
I’ve known people here in Canada with company cars, but it is certainly not the norm.
I’m sure it must have something to do with liability, because in a lot of cases it makes little sense to NOT buy a company car. My employer would surely save money by just buying me a company car rather than paying me per KM; the amount I claim for KM covers the cost of my vehicle quite easily.
In the US, a company car elicits more of a rental car idea - the company has a fleet of base level sedans that can be used for company business, or it means a special purpose vehicle (like a plumber’s van cable company lift truck). These don’t generally replace a personal car.
As to why, I think there’s a number of reasons.
individualism - "I want to choose my own car”
a car culture with brand and vehicle loyalty
pay preferred over a car - a company provided car is part of overall compensation; I believe a majority would prefer a larger paycheck over a company provided car.
In Holland it seems very similar to the UK. Every car commercial will mention something about ‘bijtelling’, which is a tax thing (or something like that) related to using a company car for personal use. So the low ‘bijtelling’ seems to be one of the most important selling points for cars.
Yeah, there is a “benefit in kind” tax in the UK, dependent on the list price and modified by the CO2 emissions, designed to reflect how much you would need to earn to be able to run such a car. It is no longer a tax-free perk.
As for “choose my own car”, often there is a list you can choose from. Or sometimes you can opt out and take the money.
In the U.S. many who own their own small business buy or lease their vehicles through the business for tax purposes. Some need a nice business related vehicle to transport clients.
When I was young my uncle owned a coffee distribution company and always had a company owned Mercedes SL. His wife was in real estate and always had a big company owned Lincoln for moving prospects between homes.
In the corporate world you may get a company vehicle if you’re up the food chain a bit, but it’s becoming rare. Most use a pool of fleet vehicles so the don’t have to pay mileage to the employee.
These are mostly dumpy Impalas and mini vans.
at my previous employer, if you were a sales rep who traveled frequently to customers, or were in the “management” salary band, you got a company vehicle.
At my current employer (an automaker,) company vehicles seem to be reserved for the top brass. middle-management can lease our brand’s vehicles at a discounted rate.
No in general, but I think it’s a quite common benefit for senior executives. They get lease cars that they trade in every couple of years. My dad had company lease cars, BMWs and Infinitis, when he was the president of a privately held company.
And not surprisingly, it’s common in the auto industry, assuming that culture is still intact since I worked there in the early 1980s. If you were a first-line manager you got a lease car including maintenance as a benefit. At some higher level that became two lease cars.
Just to be slightly different; in the oil industry in the US it’s very common for engineers and above to have a company car. I’m starting a job tomorrow and for the first time since college I’ve had to buy my own car. Typically I’ve been given a basic Chevy pickup the nicest was a silverado z71 package. My last job my company car was a brand new Jeep Rubicon. I e also gotten free gas with those cars a well. Typically it’s done for the engineers due to their frequency going out to the rigs and then since the engineers get them everyone above does too.
In Spain it depends on the job. It can come in two ways:
as a “perk” of a high-level job,
or because it’s a job where you’re expected to spend a lot of time on the road, therefore the company provides the car - same as they’d provide a van or truck if those were more appropriate for the reason you’re traveling.
The first kind includes execs and some sales people; the second kind is a lot wider (and frankly, although the sales folk make it sound like their company cars are “perks”, they’re more of the second kind). My brother had a company car of the second kind for many years: his job consisted of going to construction sites, measuring a space his company had to set up, then once the job was finished re-measuring (the final invoice was based on this final measurement). His company cars have ranged from an unmarked Nissan Micra to a van with the company’s logo on the doors.
One other factor is that in the US you can claim a pretty hefty write-off on your personal income taxes for a business vehicle, which you’d be missing out on if you had a company car.
I also think the nature of business travel is a little different in the US. For the most part, you’re not going to be travelling to domestic destinations by air. So a company car lets you drive up in mid-level quasai-luxurious splendor instead of having to travel on the UK’s historically awful rail network. In the US, virtually all domestic business travel is going to be by air, so having a company car at home is generally not going to be all that useful.
The write-off only offsets part of the cost of operating that vehicle for business if you truly are using it for business. As an employee business expense, there are also restrictions on the value of that write-off.
Of course, you can pretty much do anything you can get away with. If you use the car only partly for business but write the whole thing off you can make out quite well as long as you don’t get caught.
True, but if you actually are doing a lot of genuine business driving, it’s similar to what RickJay describes where you can usually beat the allowance and pocket the difference. Whereas if you have a company-provided car, they get that write-off and they get to pocket whatever the difference is between 55 cents a mile and whatever it costs to run whatever miserable econobox they’ll put you in.
I had a job for a while where I did a lot of travelling out to job sites, and we had the option of a company truck that we could take home or a mileage allowance. I don’t think I ever saw anyone take the company truck since pretty much any way you sliced it, the mileage allowance was the better deal. Particularly because you were supposed to track your personal usage of the company truck and claim it as income.