RAC study shows company car here to stay

19 February 2004: At a time when new treatment of Benefit in Kind (BIK) has called its future into question, new research from the RAC has shown the strength of motorists' attachment to the company car.

The UK study finds that despite rising costs of company car ownership, motorists are staunchly resistant to using public transport alternatives - or even to downgrading to smaller, cheaper models.

Once they obtain the car they want, company car drivers tend to be very attached to their vehicles, the study found. Some 30% of male drivers declared there was nothing that could be done to part them from their car - apart from a job move, or a significant cash alternative. Perhaps surprisingly, this was even more so with female drivers (38%). 94% of drivers said it would be 'very difficult to adjust to life without the company car', while only 37% said they would use their car less if public transport was better.

The RAC research reveals company car drivers seriously underestimate the running cost of their car. Most guess it to be around €2,600, when the average cost for a regular motorist is in fact €7,400. "The fact that the company is footing the bill leads the employee to underestimate the substantial costs involved," suggests Robert Taylor of RAC Ireland. "It's a case of 'what I don't see can't hurt me'. Drivers in Ireland contemplating stepping out of a company car scheme need to bear these costs in mind."

The study shows motorists have no confidence in their ability to keep track of servicing and repair costs in particular. They typically underestimate these costs, most especially in the fleet sector, where the perceived cost is as little as 20% of the actual cost. The impact of depreciation was also downplayed severely.

Despite BIK in the UK now being based on CO2 emissions, comfort and space remain the predominant factors in the choice of company car. Four out of five of the 250 company car drivers interviewed said their car was essential for their work.

"The new treatment of BIK on the company car is penal to both employer and employee." continued Robert Taylor. "Not surprisingly, it has led to both sides sizing up their options. I don’t see a mass migration from company cars. When the sums are added up, the convenience and 'fixed-cost' nature of the benefit will see it continue into the future."

©2004 irishcar.com