by Paul Marchment, SME development manager, Arval UK.
Trawl through motoring headlines and you could well be forgiven for thinking the motoring world is perhaps a little… shall we say confused? 
On the one hand, car ownership is strong. According to the Society of Motor Manufacturers and Traders (SMMT), April has been a record month for UK new car registrations, with more than half a million new cars ready to go on the road.
About this time last year, US research company J D Power reported that the millennial generation – those born after 1980 and largely believed to be less interested in motoring – are now buying cars. Last year, millennials represented around 27% of new US car sales.
Alongside this, the new ‘sharing’ economy is challenging car ownership as people find new ways of accessing vehicles on demand.
Meanwhile the latest Budget is devoting £15m to developing a ‘connected corridor’ between London and Dover to pioneer driverless motoring – a technology that many predict will impact the future of car ownership.
All this can be confusing for businesses engaged in financial planning as a new tax year emerges. Is this a good time to invest in company vehicles – or not?
While these questions are complex and vary from business to business, there are five key factors that can help in the decision-making process around company vehicles.
- Getting from A to B is still essential
Despite the growth in homeworking, a company car is still perceived as an enormous benefit by the majority of employees. People in the South West make more business trips than those anywhere else in the country and the overall business mileage is also around 25% higher than the national average.
- Low emissions matter
The recent Budget outlined measures which favoured the most environmentally friendly vehicles based on emissions. SMMT data shows that cars registered this year will have 20% lower emissions lower emissions than the average car on the road. So it may be useful to find a funding mechanism, such as leasing, that allows you to replace the vehicle regularly to benefit from the reduced running costs that the fast pace of vehicle technology is delivering.
- In-car technology counts
A study by AutoTrader.com found that millennials look closely at the tech inside a car before committing to buy. Today they want mobile integration, Bluetooth, sat-nav and MP3 connectivity. Tomorrow? Who knows – so, again, keeping your replacement options open can ensure your company drivers have access to the latest technology.
- Agile businesses need less admin
Businesses are trying to do more for less. This means decreasing the administrative burden of buying, selling, insuring, maintaining, repairing and monitoring vehicles can have a huge impact in terms of office efficiency. Leasing can help to reduce the admin overhead for businesses.
- Assets impact balance sheets
Whilst buying a vehicle outright may appeal to companies with cash reserves, a vehicle is generally a fast-depreciating asset which will show as a liability on the balance sheet. Leasing can keep the asset off the balance sheet and ensure cash reserves are used more directly in support of the core business activity.Paul Marchment has been in the leasing and automotive industry for 18 years and with Arval for 16. During this time, he has advised businesses in the areas of vehicle selection, CO2 reduction, duty of care, driver behaviour, new vehicle launches and – more recently – new technologies and safety. Paul is also the architect behind a number of Arval’s award-winning consultancy tools which he defined, developed and launched.
