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Whatever happened to the company car?

Skoda-Enyaq-vRS-1-1
Skoda-Enyaq-vRS

During the late-1970s peak period for the company funded motorcar, even the government accepted (reluctantly) that around 55% of annual new vehicle registrations were what they liked to call ‘fleet’, with the balance regarded as ‘private’, although Iain Robertson revealed the actual ‘private’ figure to be as low as just 8%.

When you reflect on how busy our roads are today in stark contrast with the relative quiet of Margaret Thatcher’s first year as the nation’s Prime Minister, it does not take a Brain of Britain to appreciate the following decade’s worth of minimal credit restrictions, maximal tax benefits, the selling off of council houses and the ‘loadsamoney’ culture. The great lady may not have been widely liked and there were myriad problems caused by her administration but the success boost was tangible.

In those early days of large fleet sales, it was a market predominated by Ford and Vauxhall, with Rootes Group (Chrysler) providing a third option. The Cortina (later Sierra) and Cavalier models held the lion’s share on the basis of reliability, durability and increasing ranges of driver pleasing features. The largely French inspired Chrysler (Hillman Hunter, Simca Alpine and Horizon models) never quite made the grade but held station as the chuckaway option. While BLMC was a modest fallback zone for British-badged demands (Mini, Maxi, 1800), the march of the Japanese brands had not yet commenced.

BMW-2-Series-AT-1-1
BMW-2-Series-AT

Companies started to employ more field staff (reps and merchandisers) and each was mobilised. The psychological impact of having a brand new car parked outside the garage on Acacia Avenue was immense; the better the model trim grade, the less likely the user would admit to it being company funded. As that space had been occupied previously by a Ford Anglia, Wolseley Hornet, or a Hillman Imp, the desire to keep the new car (usually replaced every two to three years) was enormous. However, to remain competitive in the jobs market also meant that other levels of employment promised a company car, which would be advertised alongside the customary salary range. Engineers, bankers and marketing specialists could find themselves in a new BMW, or Audi, were they successful in their applications.

However, along with the company funded transport, for which a car wash allowance was often a legitimate expense, the job-with-car package started to be seen as little more than a means to control wage levels in a downward direction, while the inevitable ‘tax dodge’ added a less welcome whiff to the process. ‘Fiddling’ expenses occurred regularly, even becoming a sackable offence with some employers. Ironically, corporate sales attracted the attention of the Exchequer, which led to new taxation controls and the introduction of various schemes that included ‘salary sacrifice’, by which the company car user would be paid an annual fee, from which to acquire suitable transport. As a result, the company car sector, having enjoyed 25 years of unmitigated progress, found itself in a fragmented position by the turn of the New Millennium. The growth of the self-employed sector which enhanced the freedom of choice, also means that very few butchers, bakers and candlestick makers avoid claiming for their transport, when completing self-assessment tax documents.

The ‘Teutonic Threesome’, Audi, BMW and Merc, need to count themselves as fortunate, because without the freedom of choice provided in the corporate sector, they would have been unlikely to out-register Ford, Vauxhall and Peugeot in the manner they have done. Yet, as a result of future changes in personal transport, which includes electrification, which is being promoted and supported financially through the corporate scene by government, there is a gentle return to the former company car sector methodology. In some respects, it is understandable, as EVs and BEVs are largely characterless and becoming increasingly so, during an era of technological platform sharing. However, with unit pricing sitting at around 40% costlier than the outgoing fossil-fuelled transport and (currently) plummeting residual values not helping the situation for a government having to deal with the pandemic fallout and, now, the Russian invasion of Ukraine placing its various budgets under increasing strain, any support packages are little more than sops.

Ford-Cortina
Ford-Cortina

The fleet market will never return to its heyday of the 1970s/1980s, which means that the small percentage of motorcars that have been sold to private buyers, often carrying nowhere close to the discounts anticipated on each fleet sale, are no longer subsidising company car registrations, can only be regarded as a good thing. However, it also means that a constant stream of two to four year old used stocks, usually (but not always) carrying higher but typically well-serviced mileages has reduced in quantity. Flexible lease programmes normally of no longer than six months duration have already made an impact on the UK car parc, which has had an unfortunate spin off in hiking upwards used car prices on already steeply priced products. However, the motor industry, having been struck by haphazard supply chain problems (most of which stem from China) has also been attempting to ‘fix’ its own markets by withholding vehicle stocks and increasing order delivery times.

Conclusion:      While I am certain that there is a proper way to operate corporate sales, they have become so politicised over the past fifty years to such an extent that a feint whiff of grubbiness and mismanagement does ensue. It is no longer the premise of the larger players, although several of them have grown off the back of it. Electrification merely adds complexity.