Curtis Hutchinson: The Short Game
Not all employees entitled to company cars actually want them, which is why new mobility services offered by carmakers could offer a practical alternative.
Company car provision used to be straightforward. Companies provided vehicles to staff who ran them for three years and paid Benefit-in-Kind (BiK) tax for personal usage.
Times change. The high level of BIK taxation for non-essential users is often cited as a reason not to join the company scheme, with employees taking a cash allowance instead. After all why surrender a growing portion of your salary to HMRC for a perk which may not actually be desired?
This, of course, can give businesses administrative and duty of care headaches, on the occasions when those employees do need a car for work.
One solution could be a new wave of short-term mobility schemes being offered by carmakers, where traditional ownership is replaced by usership.
The latest scheme comes from Volkswagen Financial Services with its dealer-based Rent-a-Car offering which is being piloted by three Volkswagen (Poole, Exeter and Watford) and two Skoda showrooms (Northampton and Leeds). The service was launched in Germany and Spain and VWFS promises more UK sites to be added over the course of 2018.
Customers can book online and take delivery at a showroom or have their cars delivered and picked up for an additional charge. VW light commercials will also be available as part of the offering.
In time this could prove to be a useful alternative for SMEs in need of vehicles at short notice and on a short-term basis, with VWFS promising a service which removes the hassle associated with some daily rental transactions.
Mark Forton, director of mobility services at VWFS in the UK, said: “As we see customers moving from ownership to usership we are very excited to launch our first mobility offering to the UK market.
“The Rent-a-Car service will provide customers with simple, clear pricing of hire costs, a low excess as standard and paperless vehicle check-in and out. This includes six-point photography of the vehicle to alleviate potential concerns in relation to vehicle damage charges.”
Elsewhere in the VW Group, Audi has just started piloting an On Demand service in Manchester, Edinburgh and Glasgow, with plans to follow later this year in Newcastle, Birmingham and London, ahead of a possible national rollout. The service offers short-term loans, across the Audi line-up, from one hour to 28 days, with deliveries within a 30 minute radius of participating dealers. Prices range from £70 to £190 per day. Plans are underway to introduce Audi On Demand for business use in 2019.
Audi said On Demand will act as “an umbrella term for a new wave of mobility services to be launched in the UK”. Starting with a retail offering, the service will expand and develop to offer a series of mobility products based around customer flexibility and convenience.
Andrew Doyle, director of Audi UK, said: “Audi On Demand is the premium mobility service with a difference. It neatly packages convenience, flexibility and ease of use into every booking and enables our customers to tap into a bespoke experience that is fitting of the Audi brand and maintains the exceptionally high levels of service that we are committed to from start to finish.
“The traditional model of ownership is consistently evolving and this innovative concept firmly puts Audi UK ahead when it comes to meeting consumer demand and transforming into a digital premium car company.”
This summer Jaguar Land Rover launched Carpe, a car subscription service specifically aimed at high mileage drivers, which could appeal to company owners and senior directors. The subscription package runs for a year and there’s no mileage restriction. Customers sign up for a standard nil-deposit 12-month deal and can specify the car to their requirements. Servicing, maintenance, insurance, roadside assistance and delivery are all bundled into the no-haggle monthly cost.
It’s not cheap though. Subscription packages start from £910 per month for a standard specification Jaguar E-Pace, up to £2,200 per month for a top-end Range Rover Sport HSE. Jaguar Land Rover’s advertised rates exclude VAT suggesting that business owners are the key target.
The online scheme is run by Jaguar Land Rover tech subsidiary InMotion which is confident a new breed of well-heeled customers will sign on and renew their subscriptions on an annual basis.
Sebastian Peck, managing director of InMotion, said: “We know there is appetite for unlimited motoring packages and demand is growing rapidly for subscription services that better meet individual needs. For people who love driving premium vehicles, but are tired of inflexible contracts, a subscription to Carpe is the solution. We aim to give our customers as much flexibility, freedom and choice as we can.”
This is a toe in the water, with JLR saying it is gathering feedback from subscribers to expand its offering and provide even more tailored packages to customers. Expect more services like these from carmakers over the coming months as they look at ways of broadening their mobility services.