A company car is a
vehicle
A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), ...
which companies or organisations
lease
A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...
or own and which employees use for their personal and business travel.
Take-home vehicle is a vehicle which can be taken home by company employees. Depending on the company, company cars may be available to all employees or just top level personnel.
In
corporate car sharing
Carsharing or car sharing (AU, NZ, CA, TH, & US) or car clubs (UK) is a model of car rental where people rent cars for short periods of time, often by the hour. It differs from traditional car rental in that the owners of the cars are often pri ...
, the company shares the vehicles and allows multiple employees (rather than just one) to make use of a company car, at times when they actually need it. The vehicles are made available from a
corporate car sharing pool, and shared for a fixed or flexible period of time. One shared car could replace up to 8 non-shared cars. However, car-sharing does involve additional processing and associated costs. Still, it reduces fleet-related costs over the long term and allow employees to save not only on costs but also on time.
Attractiveness
There are three main reasons which explain why the provision of a company car for private use as a benefit may be attractive for both the employee and the employer.
* The first reason is that companies can supply the fringe benefit at lower costs than the employee is able to achieve on their own – and consequently pass it on to the employee.
* Secondly, the tax system may encourage the provision of cars over monetary remuneration from the perspective of both the employer and employee. Ways on how this can be encouraged include
tax benefits (tax deductions and depreciation write-offs)
* Thirdly, firms may want the employee to drive in a car of certain minimum standard or have access to a suitable vehicle at all times.
* It may also benefit the employer if there is advertising/branding on the car's paintwork (or window stickers), since if the employee uses the car during the evening/weekend, it spreads advertising in public areas more than if the car was locked up in a garage during these times.
The use of company cars is widespread in some regions. For example, business registrations account for roughly 50% of all car sales in the EU, largely due to taxation rules which give companies a strong incentive to provide the benefit.
The practice has been criticised by many groups who argue that the benefit encourages people to drive more (thus increasing CO
2 emissions), reduces government tax revenues, distorts economic competition, and may work to neutralise other government programs and objectives.
Usage by police departments
Police departments are among frequent participants in take-home vehicle programs, allowing officers to take home the
police cars they use while on duty. It is considered to be a
fringe benefit
Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries. Inst ...
by the departments.
It has been viewed by some departments as a crime-fighting tool, given its cost.
Issues with take-home vehicles
Economic distortions
There is a straightforward distortion in consumer markets as consumers through tax incentives are being encouraged to consume more car services than they would have been otherwise.
There is also a substantial tax loss resulting from the subsidy.
Environmental damage
Studies have shown that the subsidy encourages consumers to buy more and bigger cars than they would choose otherwise.
In many areas, fuel costs are also covered by the benefit, so that the marginal cost of driving may approach zero. In these areas consumers are encouraged to drive more frequently and farther than they otherwise would, and avoid other forms of transportation. Emissions of CO
2 and other harmful gases are clearly higher as a result.
Costs to government
When issued by a government agency, concern has been brought up by citizens and advocates over taxpayer money used to fund take-home vehicles. This has led some cities to cutting or reducing the number of employees to whom vehicles are offered.
In
Sacramento, California
)
, image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg
, mapsize = 250x200px
, map_caption = Location within Sacramento ...
, the issuing of take-home vehicles has come under scrutiny as the city has faced a budget deficit.
In the city of
Baltimore
Baltimore ( , locally: or ) is the List of municipalities in Maryland, most populous city in the U.S. state of Maryland, fourth most populous city in the Mid-Atlantic (United States), Mid-Atlantic, and List of United States cities by popula ...
, the use of take-home vehicles by city employees has been questioned due to the distance that city employees drive them to their homes. It was determined in a report that two-thirds of city employees drive their vehicles outside city limits, some more than 100 mi (160 km) from the city, and the cost to taxpayers, which included fuel, was high.
Baltimore's former mayor
Sheila Dixon was also criticized for having three tax-funded take-home vehicles parked at her house. She defended herself by saying she might need the vehicles if there were an emergency.
In
Dallas
Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...
, the city was having trouble obtaining data in attempting to determine the cost of take-home vehicles to taxpayers.
The city of
Los Angeles
Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...
was criticized for issuing take-home vehicles to utility employees while raising rates to customers, though the city stated it would be a minuscule part of the budget.
The city of
Evansville, Indiana
Evansville is a city in, and the county seat of, Vanderburgh County, Indiana, United States. The population was 118,414 at the 2020 census, making it the state's third-most populous city after Indianapolis and Fort Wayne, the largest city in ...
reduced the number of take-home vehicles offered to city employees, but allowed public safety employees to keep theirs.
See also
*
Cycling
Cycling, also, when on a two-wheeled bicycle, called bicycling or biking, is the use of cycles for transport, recreation, exercise or sport. People engaged in cycling are referred to as "cyclists", "bicyclists", or "bikers". Apart from t ...
and
public transport
Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typi ...
: alternatives to privately owned motorized vehicles
*
Fleet vehicle
*
Remote work
*
Smart mobility
Smart mobility refers to many Mode of transport, modes of transport.
Some smart mobility services include:
* public transport (with real-time timetabling and route optimization, seamless travel and digital ticketing)
* Carsharing
* Mobility as a s ...
: component of the
European Green Deal
*
Traffic congestion
*
Criticism of vehicle-to-grid
References
{{employment
Vehicle
A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), ...
Vehicle law