Is Having a Company Car Worth the Trouble?

By Erin Steiner, special to EO

One of the biggest perks you can offer your employees is a company car. At the same time, with the economy being what it is and technology having advanced as far as it has, traveling for work is not the necessity it once was. Here are the biggest questions that you need to answer before you can decide whether or not offering vehicles to your employees is in the best interest of your business.

Do the Advantages Outweigh the Costs?
The biggest advantage to offering company cars is the uniform marketing opportunities the cars provide. Creating a uniform look for your company is part of your branding (plus, you can put your company logo on the car!). Another advantage is that you can control the overall initial impression your business gives when your employees leave your offices. For example, you might work in a “high-end” field, but it’s hard to convey your company’s financial success when your employees show up to meetings driving the same broken-down car they drove in college.

There are some financial benefits, as well: Company cars are usually tax-deductible, which is a financial advantage come tax time. At the same time, purchasing a company car (or a fleet of company cars) is incredibly expensive. Not only is there the initial cost of the cars to consider, but there is also the cost of maintenance and repairs to think about. What about insurance? That won’t be cheap. Can you truly afford that? Or would it be cheaper to offer mileage-reimbursement plans to your employees to cover their travel expenses?

Would Your Cars Travel Off-Site?
While some companies offer cars to their employees for full-time use, others simply keep a fleet of cars on hand for employees to use only for work-related activities. There are benefits to both options. Allowing employees to take the cars off-site and use them for personal purposes, as well as business purposes, gives you the opportunity for passive marketing (if your cars have company branding on them, that is).  On the other hand, keeping the cars on site and having employees “check them out” for business purposes allows you better control over the cars, and would give you the right to put in GPS tracking to ensure that employees aren’t abusing the privilege of having company cars handy.

How Would You Handle Employee Abuse?
Outside of employees using the cars to run personal errands, there is also the potential for other forms of abuse— treating the cars like second homes (some people let their cars get hideously messy), transporting kids who are prone to accidents and spills, etc. How would you handle and/or regulate what employees are allowed or not allowed to do in the company vehicles?

Do You Need to Have Company Cars?
Do your employees spend a lot of time out in the field? Do their jobs require them to do a lot of driving? Is this driving absolutely necessary, or can it be replaced with teleconferences? If you really do need to send employees out of the office regularly for off-site tasks, offering a company car to get there is a good idea (particularly if long distances need to be driven). These questions aren’t going to be easy to answer, but that’s okay. Purchasing company cars shouldn’t be an impulse-based decision.

Erin Steiner writes about personal finance and small business topics for companies like, and is what some might call “too” active on Twitter.

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