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A Standard Car Policy

Please see below an abbreviated example Company Car Policy. The full edition can be obtained from us in a word format, so that it can be personalised and edited to suit your Company or business. This service is free of charge, on request by email or phone.

Or if you would prefer practical help with the development of your own company car policy simply contact us to arrange an appointment with no obligation.

Company Car Policy

Assumptions:

You have already looked at the existing costs and decided that to keep within budget, the most suitable method of funding is Full Maintenance Contract Hire.

There are 15 Drivers

There are 5 Levels

These are divided either by

1. Salary
2. Position in the company i.e. Grade
3. Essential or Non Essential (Perk) Users

Group/Level A = 3 Directors

Group/Level B = 3 Senior Management

Group/Level C = 3 Sales Staff

Group/Level D = 3 Maintenance Engineers

Group/Level E = 3 Perk Cars

Benchmark cars are:

A: BMW 530D Sport Auto

B: BMW 320D SE

C: Ford Mondeo 2.0TDCi Zetec

D: Ford Focus 2.0TDCi Estate

E: Mini 1.6 Cooper

Method of Funding: Contract Hire for all cars

Parameters: 3 Years, 25000 miles per annum, full maintenance, 3 rentals in advance followed by 33.

Construct Table:

*This benchmark rental is based on an allowance of 25000 miles per annum to give a rental for the benchmark vehicle in each group. This allowance is based upon the average annual mileage of all the drivers in each group or level.

The actual contract rental for each driver is based upon his/her individual intended mileage. This allows all of the drivers in each group to have the same level of vehicle despite the mileage they have to drive.

e.g.

Director 1 in Group A drives a BMW 530D Sport Auto at 30,000 miles per annum which costs £725 per month

Director 2 in Group A drives a BMW 530D Sport Auto at 25,000 miles per annum which costs £700 per month

Director 3 in Group A drives a BMW 530D Sport Auto at 20,000 miles per annum which costs £675 per month

Average rental in Group A stays at £700 per month and keeps within the budget set.

From the table we can work out the total budgeted contract hire costs for the fleet per month. As in this case, the costs also include all repairs and maintenance, we need only to factor in expected fuel and insurance costs to give us a good idea of the total fleet costs for each month.

Instead of a rental, we could use car list price as a benchmark. However, the main drawbacks of this method are the availability of large discounts, special support, special offers etc, etc. The price paid bears little relation to the published list price. Also, with funding methods relying on a residual value at the end of the agreement, there can be large discrepancies between list price and rental depending on the manufacturer.

**Car List: This is subjective to say the least. At one extreme there are businesses which specify exactly the make, model and specification of each car without any variance whatsoever. At the other end there is the free for all, user chooser option where the driver can pick almost any vehicle as long as it is within budget.

In our example, we have taken a middle road, favoured by the many. Most drivers can choose from a list of selected manufacturers only, within the constraints of non allowable cars and allowable extras.

Allowable Extras: Metallic paint, Sat Nav, Bluetooth.

Controlling extras removes the absurd situation seen on some occasions, where because of a price reduction by way of special offers, the driver adds as many extras as he can to reach the maximum budget rental for his group. (We have seen as many as twenty five extras!)

Non Allowable Cars: e.g. Petrol cars, convertibles, 4x4s, MPVs in groups B,C and D. Groups A and E at the discretion of the Company.

Never underestimate the importance of this category. Get it wrong and a 30 years old single man is driving around in a 7 seat people carrier for the next two years as a result of someone leaving the company or someone being promoted and handing their car over to him. It is never good for staff morale.

In our example, to keep down costs, the company insists on the new generation of frugal common rail diesel engines in the cars in groups B,C and D. The drivers in these groups, as essential users, will be doing the higher mileages.

Suppliers: In this instance we have decided to use Webcars to be our supplier, providing us with 3 competitive quotes from 3 leading funders.

Implementing a Strategy for Administering Risk

To complete our car policy, we now need a strategy for risk management. Use this handy checklist:

Recruitment

If an individual is joining the company and driving is part of the job specification or a perk company car is in the package, then it is crucial to check the following:

• He/she has a current driving licence.
• Driving history - date of test, any previous convictions, accident history, types of vehicles driven and under what circumstances.
• Ask a general question of the prospective employee requesting that any information be provided that may influence the individual's ability to drive on company business.
• Consider objective assessment, driving tests, medical and eyesight tests.

Terms and Conditions of the Contract of Employment - points emphasising driving on company business

• Obtain a declaration from the driver of his/her intent to maintain any vehicle provided, in a safe, roadworthy condition.
• State groups and types of vehicles that can be driven, ensuring the conditions provide a clause that allows the employer to refuse permission if the proposed vehicles do not meet criteria acceptable to the company.
• Stipulate all legal requirements - driving licence, insurance, mechanical condition, MOTs, anyone else who may drive etc.
• Cross-reference the terms and conditions and ensure they are consistent with the company handbook which will contain the company policy. Refer the driver to the fact that the company policy will be reviewed on a regular basis and that the terms and conditions refer to the current published car policy.

Continued . . .

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All of the documents can be obtained from us in a word format, so that they can be personalised and edited to suit your company or business. This service is free of charge, on request or phone 01908 262662.