Is a car club a better solution for company cars?

The days of the company car wars seem to be over. That once-eternal struggle, as company car users vied for car park one-upmanship (who had a GL or a GLX, who had a vinyl roof) seems to be fading into the background as work patterns change, as employee wishes change, and crucially as the physical workplace environment changes.

There is a growing trend among companies to switch from traditional vehicle fleet leasing and management solutions to a “car club” – a small pool of vehicles made available to company employees on an as-needed basis, which is managed by an outside supplier. It means concerns such as depreciation and vehicle maintenance can be shunted off to the vehicle supplier, and it also clears up any concerns over insurance when it comes to employees using their own cars on business duties. It also means that rather than having to manage and pay for a vehicle fleet, whose costs can fluctuate unpredictably, the whole issue can be dealt with in one fixed, pre-negotiated payment.

The cost side is one thing, but there are other factors driving the move towards car clubs. Enterprise Rent-A-Car has been operating such clubs for a while now, and its managing director in Ireland, George O’Connor, says: “It’s a very interesting space. We currently have a dedicated car club up and running in the Republic of Ireland, we’ve had it for about a year now, and it’s going like gangbusters for us, for a few different reasons. A big thing is the mixture of talent acquisition and property footprint, and what I mean by that is that companies are hiring, but they aren’t necessarily expanding their car-parking space, or indeed in some cases, in certain buildings, they may have no access to car parking at all.

There's a strong appetite from companies coming to us saying 'help me do the right thing when it comes to emissions'

“There’s another aspect driving this and that’s the environmental one,” adds O’Connor. “Both company car users and consumers in general are becoming much more environmentally conscious, and there’s a strong appetite from companies coming to us saying ‘help me do the right thing when it comes to emissions, help me do the right thing when it comes to congestion’. So, what we see now that is companies are providing the car-club model to solve employees’ driving needs Monday to Friday, and then those employees are coming to us as private hire customers at the weekend when they need a car for personal use, and we can give them a special rate on that.

Tax advantage

There’s also a potential tax advantage for employees. If you’re given a company car for constant use, then obviously you have to pay benefit-in-kind (BIK). With a car club, though, each journey can be logged and attributed to a specific business-related task, and companies and their accountants can then take a view that there’s no BIK payable on such usage. With the preferential rates on weekend car hire for personal use, there’s a potential huge benefit to the employee.

There are, obviously, other solutions such as signing up to use on-street micro-rental services such as GoCar or Toyota Yuko car club, but they’re a little more limited. You’re competing with other members of the same club for the same cars, effectively, and that inevitably means that at some point, there’s not going to be a car available when someone needs it.

That’s a fair criticism too of in-house car clubs. Unless you have a dedicated car for every employee (which kind of misses the point of using a car club), then at some point, someone’s going to go for a set of keys and find they’re not there. O’Connor stresses that Enterprise tries to work to make sure that doesn’t happen, or at least happens as little as possible. “The world of hire and mobility is all about usage. If you’re providing vehicles and they’re not being used, then it’s the wrong model. If you’re providing vehicles and they are being used, then that’s the right model.

“We’ll do an implementation period. Where, for example, we might provide two cars at the start, and then we’ll keep an eye on the way it’s working, really hold the client’s hand for the first little while, and see whether the cars are being used, how much they’re being used, and then between us and the client we can work out whether more cars are needed. It’s all done off a dashboard app – it’s a live, active system. And it can flex with the demand and the need that you have in your business,” says O’Connor.

Bookings for cars are made through an online system, which can be accessed from a desktop, laptop, or mobile device. Employees can then access the cars, usually with an RFID (radio-frequency identification) card, or in some cases by holding their credit card up to a sensor on the windscreen. The keys are usually kept in a lock-box inside the car, accessed with a PIN code.

All maintenance is taken care of, and employees are encouraged to do little things such as check the tread depth on tyres, so they can be replaced when necessary. Cars are usually cycled out of service every 12-18 months.

Invaluable

Don Foynes, chief financial officer of Shannon, Co Clare-based Modular Automation, says the scheme has proven invaluable in helping the company streamline operations. “A key benefit of Car Club for us is the flexibility on offer. What’s more, it ensures that our employees are driving the latest vehicles and benefitting from up-to-date safety features. This is key as we take our duty of care to employees very seriously. Car Club also promotes the image of Modular Automation as our employees are always in clean and presentable vehicles.

“On the basis of our experience of Car Club, we would recommend it to any organisation that needs to better manage their team members’ mobility needs in an open and transparent way. The extensive reporting capability from Enterprise gives our company key cost data by project and allows us plan our future requirements. We also coupled the Enterprise Car Club with Enterprise Rent-a-Car for all worldwide requirements. In the last year, we have hired vehicles in 29 cities worldwide. Enterprise Rent-a-Car now gives us total worldwide visibility for our mobility requirements. From the set-up right through to implementation, the whole process with the Enterprise team was seamless and we commend their can-do attitude and overall commitment to customer service, which seems to be embedded in everything they do,” says Foynes.

We are getting interest in electric cars, but hybrids are already very popular because they're seen as a simpler solution, with no issues over rang

It’s also a way for companies to put their first toe in the water of electric motoring, as the fleet system gives them an opportunity to try before buying. “We are getting interest in electric cars, but hybrids are already very popular because they’re seen as a simpler solution, with no issues over range,” says O’Connor. “We’ve a lot of tech behind this, not just the tech in the cars. We also have some software into which you put in your destination and it’ll tell you what’s the best way to get there. It won’t automatically point you at an Enterprise car hire or Car Club solution, it might say that there’s a Luas nearby and that’s the best way, or a bus route, or even that you might be best off walking.”?

Car clubs are, clearly, not a perfect fit for all. For companies that still need reps to be out on the road all the time, racking up big mileages, it’s probably not the right solution. For other companies, there’s still a desire to keep things in-house and under local control, rather than farming out responsibility to an outside supplier. For many companies, though, especially those with limited physical space for car parking, and with employees who increasingly don’t want the burden of a company car, a car club could well be worth joining.