The aim of corporate car sharing is to ensure that employees who need to be mobile within the scope of their activities for the company have a vehicle available at all times. The employer purchases one or more cars that are permanently owned by the company. In contrast to a company car, the “car sharing” vehicles are made available to multiple employees. If an employee needs a vehicle, he or she is provided with it from the corporate car sharing pool for a fixed or flexible period of time. If a company is interested, the vehicles can also be used privately by employees. It is important to adapt the insurance coverage to the scope of the vehicle’s usage.
For city dwellers, car sharing is a familiar concept with an increasingly growing market. One of the newer car sharing models offers customers the opportunity to use a shared vehicle through the app of a car sharing provider, like Getaround or Hiyacar. The growth of car sharing options is reducing the number of cars on the road, as less people find the need to own their own car.
Car sharing is not only more environmentally friendly, it is also cheaper than driving your own car. The practice therefore is not only practical, but also cost-effective. These benefits are also applicable to a company’s fleet and a great advantage companies should consider according to MoBeWe’s CEO.
Creating A Corporate Carsharing Contract
There are no legal requirements regarding the content for a corporate car sharing contract. This means that your business can determine how the vehicle is used internally. You can insist on exclusively commercial use or allow private journeys, spontaneously assign a vehicle each shift or decide that two or three employees share one vehicle.
However your business decides to structure your car sharing system it is important that all details are recorded in a contract. This will be a helpful reference if ever there is a dispute. If employees are given vehicles as part of a corporate car sharing model, all the important details should already be outlined in the employment contract.
The agreements should include important points regarding the type of use, whether the employee may take the vehicle home after the end of working hours or whether it must be parked on the company premises. It is important that all details are agreed upon and recorded in writing.
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Corporate Car Sharing for Private Use
A frequent point of dispute regarding the use of company vehicles within the framework of corporate car sharing are private journeys. This can arise when an employee is given a vehicle for several days and takes it home in the evening. In general, the shortest route home from the last place of work should be chosen. Employees often take a detour, for example to pick up children from school or to do some shopping, or to attend a private appointment, such as with a doctor or a public authority. If an accident occurs or if the car is equipped with a tachograph, these slight detours can become problematic.
In order to prevent this annoyance, any private use should be arranged in advance and approved in writing. It is important to arrange this kind of use in the insurance contract. Otherwise, it is possible that an accident related to a private journey will not be covered by the insurance.
Fitting Car Sharing Into Your Business
What distinguishes corporate car sharing to other models is that the company provides the vehicles for its employees. Car sharing can be divided into two variants: station-based car sharing and the free-floating variant. The station-based option specifies where the user can pick up and return the vehicle. By comparison, the free-floating option allows the driver to pick up the vehicle at any location and drop it off at another. The station-based option is most suitable for corporate car sharing.
What are the advantages?
From an economic point of view corporate car sharing is cheaper for the company than only allocating vehicles to a single person. Furthermore, car sharing better utilises the available fleet. Employees can request the use of free vehicles and prevent them from standing unused in the parking lot.
An ecological advantage can also be drawn from corporate car sharing. Shared vehicles should serve as a supplement to public transport and reduce the number of cars driven by individuals only by promoting carpooling.
Insurance, and Other Things to Consider
When taking out insurance for a vehicle, it must be made clear that it is a passenger car used within the scope of corporate car sharing. It is recommended that the number of kilometres should not be limited in an attempt to reduce the cost of the insurance. Limiting the number of kilometres driven is not helpful for a corporate car sharing model. Often it is not possible to estimate in advance how often the vehicle will be needed and what the mileage will be over the year. If the specified mileage is exceeded, this can lead to an increase in the premium.
Another thing to consider with corporate car sharing is that the drivers of the vehicle change, and can have different ages. In principle, it is possible to exclude young drivers under the age of 25 from driving the vehicle in order to reduce the insurance premium. The same applies if the number of alternating drivers driving the vehicle is reduced. However, both options have the consequence that not every employee is allowed to drive the vehicle.
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Always Moving Forward
Incorporating a corporate car sharing scheme into your business is a great way to mobilise your employees and your services. There is no one size fits all when it comes to how you use your company fleet. Understanding the difference between company cars and pool cars, what a grey fleet is, and the rules and regulations around vehicle tracking can all play a role in how your corporate fleet operates.
Is It Still Worth Buying a Corporate Car, Even If It Is Not For Sharing?
Prior to the COVID-19 pandemic, corporate cars were hardly popular among employees. However, the new normal occasioned by the pandemic has made company cars somewhat a necessity. Now, the future of corporate vehicles is brighter than ever, with many employees showing readiness to consider them.
Why Should You Buy A Corporate Car?
As a business owner, getting a corporate vehicle for employees has many benefits. Even as remote work becomes popular, people will still need to visit head office on occasions — and they’ll need vehicles for transportation. Having a company car means they can do so quickly and efficiently.
In 2020, the biggest case for corporate vehicles is that they’ll protect the health of your employees. Right now, everyone’s avoiding crowded spaces — and that means using public transport less frequently.
Employees with company cars can thus travel safely with their vehicles and avoid health issues. This will only make your company attractive to work for and shows you have compassion for your employees.
Tax Incentives and Corporate Cars
Different studies show an increase in the number of businesses and employees willing to adopt corporate cars. Benefits associated with such vehicles are among the reasons fuelling the patronage of company vehicles.
Here are some tax incentives available for businesses and employees that embrace company cars:
Lower Benefit-in-Kind Charges
By law, employees are required to pay benefit-in-kind taxes on company cars. However, the government recently announced a drop in BIK charges for electric cars. That’s part of an effort by the government to increase adoption of electric vehicles, especially across fleets.
Adopting electric vehicles benefits your employees because they’ll pay lower taxes — but it also benefits you, the employer. You’ll pay less for fuel and will contribute your quota to combating environmental pollution.
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Lower NIC Charges
The government requires companies to pay a National Insurance Contribution (NIC) tax on company cars. As a business owner, you can save on NIC payments by giving your employees the vehicles under a ‘salary sacrifice scheme’.
A salary sacrifice scheme is one in which an employee agrees to lesser pay in return for a non-cash benefit such as a company car. It often involves changing the employee’s terms of employment — ensure the employee understands what’s involved before you continue.
Read more: How To Create a Good Company Car Policy
Overall, corporate cars hold many advantages — both for employees and employers. Reach out to a Vimcar representative to know how fleet management software can promote responsible use of corporate vehicles and more efficient fleet management.