Is it Worth Buying a Company Car for Your Business?

Is it Worth Buying a Company Car for Your Business?
  • Opening Intro -

    At a certain point in the growth of your business, you'll want to consider whether company cars are a worthwhile investment.

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Most businesses require some travel, and many require representatives traveling much of the week. Before making any decisions, you should think about how the pros and cons apply to your particular business.

Pros:

  • Consistent company image:

    Say you’re a company like North Face or Patagonia operating out of Denver, and you’ve got to put employees on the road for sales. You’ll want them to be consistently communicating your brand by driving around in a more outdoorsy car, like a Subaru or Honda CRV.

    Say your upscale marketing firm is located in Texas, and your employees frequently have to drive around between Dallas, San Antonio, and Austin. You might consider stopping into an Audi dealership in the greater Dallas area and pricing some potential company cars. A strong company image communicates a commitment to consistency that potential partners will immediately favor.

  • Opportunity brand awareness:

    In addition to keeping your general image consistent, there is also the opportunity for branding. Of course, if you’re a high-end law firm, you probably don’t want to stick a gaudy logo on the side of the company Mercedes.

    But for more down-to-earth companies, a fun, sensible car like a Prius or a Fiat with a large image and logo on the door and hood can be a great way to raise awareness of your company.

  • Potentially good for employees:

    Requiring your employees to put miles on their personal cars might dissuade some otherwise eager talent from joining your business. Additionally, for some employees, transportation to and from work can be a struggle.

    Offering a company car can be a solution in both cases that benefits your employees, especially if they are allowed to use their car outside of work hours for personal transportation that might also otherwise be difficult.

Cons:

  • Large upfront expense:

    The first thing to consider when looking at your budget is whether you have the funds to purchase a new vehicle. This only multiplies with the number of cars you might need, so keep that in mind as you shop for a car or cars that fit your company’s image – if you’re operating a small flower delivery service, it probably isn’t necessary or desirable to buy a fleet of F-150s to transport your arrangements.

  • Continual expense:

    As you probably already know, the price of a car does not end with the tag you see at the dealership. Your company will be the owner of the car or cars, and so will be responsible for their upkeep, maintenance, and repairs.

    There are also some tax implications to be aware of, which can have some upsides and downsides – for instance, personal use of a company car is taxable, which may not be something your employees are terribly happy about. Make sure you read up on those rules before committing.

  • Records keeping:

    This especially applies if you intend on purchasing a fleet of company cars. You will have to keep track of the frequency with which they are used, for what purpose, and for how long. And in addition to the expense of maintenance, regular management of the fleet of vehicles will require a good deal of work.

    Bear in mind that this kind of bookkeeping may even require hiring an entire new position to manage if your fleet is large enough. At the very least, it adds work to your company’s schedule.

other valuable tips:

Ultimately, you will have to weigh these costs and benefits and quantify them within the scope of your company’s budget and expenses. If your company is on solid footing and looking for a chance to grow both geographically and in terms of public awareness, branded company cars certainly start to look like a good idea.

If your company is smaller, tracking and compensating business mileage on employees’ personal cars might be a good alternative, as you will be spending less in overhead on the cars themselves as well as their maintenance.

Image Credit: Pixabay

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