Staff Cars Choosing and Buying Them
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Different Methods of Providing Itinerant Employees with Means fir Personal Travel and Paying for Mileage
LAST week some aspects of car fleet operation were discussed, including both company and privately owned vehicles, with maintenance being carried out either in the company's own premises or by agents.
Dependent upon the user's requirements, there are two other _methods of providing staff cars which are used extensively, but may not be familiar to all readers. The first is an endeavour to obtain the advantages of the car being both company and privately owned. In this case the employer advances capital to the employee to purchase a car, and an agreement is made for the hire purchase of the vehicle by the employee.
Companies operating this scheme then pay their staff for the use of the car on business purposes by a variety of methods. The whole of the operating costs—standing charges and running costs—may be calculated and a charge per mile levied accordingly.
Alternatively, immediate running expenses only—petrol, oil and servicing—may be met on a Mileage basis, other expenses being paid for at a flat rate. The object of this scheme is twofold. It ensures the extra care which an owner-driver inevitably gives to his own ca s whilst obviating the difficulties when staff whose duties necessitate a car have insufficient capital of their own for direct purchase.
When the hire purchase is completed and the employee becomes the owner of the car, subsequent arrangement between employer and employee varies.
If the completion of the hire-purchase .agreement coincides with the time at which the company normally renew their vehicles, the employee then has several choices, assuming he is still not in a position to advance capital. He could sell the vehicle and use the proceeds substantially to reduce his hire-purchase commitments on the new replacement vehicle or for any other purpose.
Alternatively, if the vehicle was in above-average condition for its age, the company may agree to his continuing to use it. for business purposes. In that event the employee would then be in a much more favourable position. Not only have his hire-purchase payments ceased, but payment by the company for the use of his car will be at the full rate, including both standing charges and running costs.
Tangible Reward Whichever of these alternatives is taken, the conscientious driver has the knowledge that his efforts will bring him tangible reward, either by way of higher.resale value or extra—and instalment-free—life. This in turn is of benefit to the company, as car fleet costs are kept at a modest level, if not reduced.
Whether the car provided for business purposes is owned by the employer or employee, or is hire-purchased by the employee from the company, the several factors determining the correct choice of vehicle remain the same. As distinct from the use of a car for private or pleasure purposes, a car for business uses is only a means to an end, for which maximum reliability and availability are essential.
Of recent years, improvements in design have resulted in cars of 1k-litres to 2i-litres capacity, formerly looked upon as being expensive to operate, becoming so much more economical as to warrant serious consideration along with smaller cars, particularly now that former " babies " of 750 c.c. or so have, perhaps not unnaturally, grown to almost 1,000 cc.
Many operators of commercial vehicles consider a slightly oversized engine as an economy rather than an expense. Because reliability and availability are essential ingredients of a car to be used for business purposes, a similar policy may well pay dividends.
The distinction between reliability and availability should also be clearly understood. The modern car properly maintained is undoubtedly reliable. But the amount of maintenanCe required varies according to mileage and usage. Up to a certain mileage, dependent upon operating conditions, little beyond the routine servicing in accordance with the several voucher schemes may be required. Thereafter, increasing maintenance will be needed and however efficient the service, reduced availability must occur. In selecting the right car for the job, therefore, it is advisable to ask other operators the mileages that they are obtaining before major repairs are necessary.
Whether servicing is done in one's own garage or not, the proximity of the manufacturer's agent and the extent of his stores have often determined the ultimate choice. Obviously, this is still more the case when servicing is contracted out.
Declining Value
Coupled with the importance of prior knowledge of the critical Mileage beyond which availability is much reduced, is the determination of policy as to the period of renewals. This, in turn, may be influenced to some extent by the rate at which the used-car value of the particular model under consideration declines relative to mileage and age.
Compared with selection, the disposal of staff cars, when the time for renewal comes round, would appear comparatively simple. But at the best it can be a time-wasting occupation for staff who are primarily otherwise employed, particularly when a fleet of staff cars is concerned. As a result, more important work may be left undone, as interviewing, inspecting and negotiating with only one of several possible buyers can be a protracted business, often to no purpose. Alternatively, if there are no immediate buyers, the car may stand idle, with the danger of inevitable " cannibalization " setting in if identical types are in operation alongside.
To avoid these contingencies, many companies and national bodies operating fleets employ a used-vehicle sales organization to dispose of their vehicles. They thereby relieve themselves of all responsibility of the disposal of their vehicles and the selling commission varies according to the number of vehicles sold in any year for concerns already allocated a code number by the society of Motor Manufacturers and Traders for fleet discount on the purchase of new vehicles.
Still another method of providing cars for business purposes is by hiring by contract. By this means the user is relieved of all worries in connection with purchase, maintenance or disposal. It would be particularly suited to companies who can use. to better advantage the capital outlay necessary to provide a fleet of staff cars, or do not find it convenient to proVide the organization to operate them. .
Such a contract would normally be for a year, for which a fixed sum would be Paid, permitting a specified mileage. Above that mileage an additional charge per mile is raised. For practical purposes the charge does not include the cost of petrol, which the user would obviously find more convenient to purchase himself. Otherwise, all expenses are borne by the hiring company. S.B.