Company Car vs. Car Allowance: Which Is Best for Your Fleet?

February 25, 2021

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Written by David Thornton
February 25, 2021 / 3 minute read
Blog Topic: Manage My Fleet

Deciding on the best way to acquire vehicles for your fleet? You might be wondering whether to provide drivers with a company car or car allowance.

Here at Foss National, we often advocate that drivers use a company car. Since this decision greatly impacts your fleet operations, we’ll explain why in this blog. We’ll look at five key advantages of leasing vehicles for drivers, and how this financing method can really benefit your business.

Download our guide for what factors to weigh when considering providing drivers  with a company car> >

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Top 5 Benefits of Leasing Drivers a Company Car

Benefit #1: Recruit More Drivers

Providing company-owned vehicles gives your organization a huge hiring advantage.  

Potential employees see a company car as a valuable benefit, like healthcare coverage or profit-sharing. A company vehicle can be the competitive advantage you need to attract the right talent before your competitors do.

Download our guide for more in-depth info on the benefits of providing employees with a company car > >

On the other hand, if you require drivers to use their own vehicle at work, you might be excluding potential great hires if they:

  • Don’t currently own a vehicle
  • Have a vehicle that isn’t right for the job
  • Don’t want to use their personal vehicle for work

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Benefit #2: Control Your Company Image

The condition and type of vehicle used for business reflects back on your entire organization. When you lease company-owned vehicles to drivers, you’ll have better control over your company’s image. Whether the vehicle is branded with your company name or not, you get to control the types of vehicles that arrive at your clients’ doorstep.

While many companies have fleet policies for personally owned vehicles (i.e.: the car must be less than five years old, there should be no exposed rust, etc.) this is sometimes difficult to manage and awkward to enforce.

Benefit #3: Keep Drivers Safe and Reduce Liability

A company-wide focus on driver safety has a big impact on employee retention and job satisfaction. Keep your employees safer on the road with vehicles you provide.

A company car will have all the latest safety features, while an employee’s vehicle may not always meet these standards.

And in most cases, company-provided vehicles are better maintained than employee-owned ones. Plus, a company vehicle will have a proper insurance policy to ensure your drivers aren’t exposed to unnecessary risks.

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Benefit #4: Save Money on Fuel Costs

When companies provide a vehicle to employees, the fuel and maintenance costs are managed through a dedicated fleet card. A fleet card has controls on it that alert you anytime a suspicious purchase is made, for example if an employee purchases more fuel than their vehicle’s gas tank can hold. 

An employee owned vehicle will have no such controls, and instead you would need to rely on employees to submit their business mileage for reimbursement. While most employees are honest and have no mal-intent, you may run the risk of an employee exaggerating their business mileage, costing the business extra money each month. 

Benefit #5: Provide vehicles best suited for the job

By providing a company car to your employees, you have the ability to choose the right fit-for-purpose vehicle for the job. 

Any required upfitting will be overseen by you, ensuring all cargo remains safe, and drivers have the exact set up they need to perform their work cleanly and efficiently. 

Any enhancements on an employee-owned vehicle may not receive the same rigorous oversight, so your driver may not have the right set-up or tools for the job, or the tools might not be stored in the proper manner. 

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Bonus: Drivers still receive taxable benefits for a company car during COVID-19

Due to the pandemic, many drivers ended up incurring more personal kilometres than business ones throughout 2020. Normally, this would prevent them from being eligible for the Automobile Standby Charge & Operating Expense Benefit.

But for the 2020/2021 taxation years, the federal government is allowing the use of a driver’s 2019 business/personal mileage ratios to determine if they are eligible for the benefit. Learn more on our COVID-19 resource page here. 

Conclusion

When it comes to acquiring fleet vehicles, a big decision is looking at the benefits of a company car vs. car allowance. In this blog, we’ve discussed five benefits of providing a company car, including recruiting more hires, better controlling your company reputation, better protecting drivers, and eliminating fraudulent mileage reporting.

Ready for the Next Step?

Download the white paper below. In it, you’ll find cost breakdowns for both leasing and reimbursement, plus bonus information on how leasing benefits both drivers and your company.

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Car Allowance vs. Company Car: A Guide on Fleet Leasing of Corporate Vehicles vs Reimbursing Staff for Personal Vehicles

This guide will show you what factors to weigh to make the right decision for your organization. Valuable fleet leasing vs. purchasing cost comparison chart included.

Download Guide

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