The rise in employees opting to take cash rather than company cars has led to a growing reliance on higher-CO2 grey fleet cars, conflicting with the Government’s emissions targets. Martyn Collins asks the major funders about how their own cash or car schemes are tackling eco and risk issues and also asks the fleet experts for advice on managing cash takers…

Alphabet’s AlphaCity scheme provides an alternative to both traditional pool cars as well as daily rental, taxis and grey fleet usage

ALD Automotive

ALDSelect is ALD Automotive’s new fully digital employee car scheme for corporate customers, designed as a complementary, low-admin proposition alongside traditional company car schemes.

The new scheme is designed to run alongside traditional company car schemes, enabling HR and reward/benefits professionals to provide a car scheme to all their employees including grey fleet drivers and even those with no existing car allowance.

In essence it supports organisations’ staff recruitment and retention efforts by giving them access to new, safer and greener cars at competitive prices.  More impressive is that the whole process, from searching to managing, can all be done online – at the office or at home using a PC or smartphone.  ALDSelect starts with an online search and quote; which are provided in real time, personalised to each driver and saved for comparison. Employees can also apply for credit via the website, select maintenance if they require it, and once they have chosen, they are given a quick credit decision.  Once ordered, employees can then track the progress of their order via their dashboard, e-sign their documents, pay and set up a direct debit, all online.

It operates in a completely different way to salary sacrifice; ALDSelect uses manufacturer discounts and competitive finance to give employees a highly valued perk, but with no financial commitment or administrative requirements by the employer. This agreement is only between the employee and ALD Automotive; a key benefit for employers. It also vitally reduces the environmental impact of the grey fleet by putting drivers in newer, safer and more efficient vehicles.

Ian Turner, ALD Automotive’s sales director, explained: “We are very excited to be able to offer a fully digital all employee car benefit scheme in ALDSelect. We know that employees will love having direct access to savings and competitive finance on new cars, and employers can benefit from offering all their employees a car scheme.”

Europcar Mobility Group UK

The rise in drivers opting for cash allowances, Europcar Mobility Group believes, is as a result of heavier Benefit-in-Kind taxes leading to a growing reliance on grey fleet, which is in direct conflict with the Government’s emissions targets.

Peter Crabtree, corporate sales director, comments: “Europcar Mobility Group UK recently commissioned research of fleet decision-makers, which found 29% said up to a quarter of staff have opted for cash allowance, while 26-50% have gone this route, for nearly a quarter of companies. Ultimately, this leads to increased use of grey fleet and nearly half of companies said that almost a third (30%) of employees use their own car for business journeys.”

With the average age of a grey fleet vehicle standing at 8.2 years as per BVRLA research, such vehicles not only present risks by lacking modern safety equipment – and possibly business-use insurance and MOT certification – but they’re also potentially far higher polluting. According to figures, an estimated 12bn miles are travelled in grey fleet vehicles each year, emitting 3.5m tonnes of CO2. And then there’s mileage reimbursement costs too.

“One way to overcome this is to integrate a range of mobility solutions that offer viable alternatives to cash for cars, for both employees and businesses into a one-stop business travel platform,” says Crabtree. “If journey optimisation is an integrated component of a multi-modal mobility service, businesses and their travellers can choose the best travel option for every journey.”

Employers can also help staff manage their own cash allowance budget by recommending solutions that don’t necessarily tie them into a long-term contract, such as PCP. Europcar’s Long Term Flex is one such example and is claimed to be ideal for the cash allowance audience. Unlike traditional solutions, Europcar’s Long Term Flex offers 6-18 month contracts, has no large upfront payment and no exit penalty after six months.

“Cash for cars isn’t going to go away, so it’s vital for business productivity and profitability – and the wider environment – that fleet, business travel and mobility managers adopt new processes and policies to keep a control on grey fleet usage.”

Alphabet

Another solution to the cash or car conundrum is Alphabet’s AlphaCity scheme. First launched in 2012, the forward-thinking scheme was intended to provide a more practical and cost-effective alternative to both traditional pool cars as well as daily rental, taxis and grey fleet usage by enabling employers to set up their own, fully managed Car Sharing scheme. This can be accessed and booked by employees directly, via a user-friendly web portal and the costs automatically attributed to the relevant cost centre.

Until last year, AlphaCity solely offered BMW Group vehicles but this was expanded into other carmakers and LCVs following a successful trial.

The scheme has also seen increased take-up in usage of electric and hybrid vehicles. Average CO2 output for the entire AlphaCity fleet now stands at just over 100g/km and with the increase in take-up of electric and hybrid vehicles the expectation is that this will decrease further.

Craig Grant, Alphabet’s head of mobility services, commented: “Shared mobility requires a mindset shift in the industry and with fleet decision makers; it’s not about the sheer number of vehicles you have on fleet, it’s about how you use them to deliver more mobility with less vehicles. The key questions for successful shared mobility are around how often your vehicle assets are being employed, the number of people who can access them and ultimately the number of employee journeys which they are providing solutions for.”

Hitachi Capital Vehicle Solutions

Hitachi Capital Vehicle Solutions’ managing director Jon Lawes believes that as an industry there is a large focus on the impact of alternatively fuelled vehicles (AFV), but grey fleets are often left out of the conversation.

“There are 14m grey fleet vehicles on the road, a figure that is only set to increase, so businesses need to seriously consider effective measures to manage their costs.”

As such, he suggests customers with employees taking cash allowances should educate staff on the benefits of AFVs or implement grey fleet policies that encourage staff to use more environmentally friendly transport options – and can also help maintain lower costs.

Lawes explains: “We regularly work with customers to help manage the impact of grey fleets and associated costs to their businesses, and find that considering car rentals, or an extension of the fleet beyond core company cars, can also be particularly wise choices.

The benefit of migration to AFVs, he adds, should not be underestimated. The firm’s own research found that if all of Britain’s vans and HGVs were to switch to electricity, businesses could save around £14bn a year in fuel costs alone.

“The first step to cost saving is a thorough evaluation of grey fleet and, from this, policies, controls and checks can be put in place to make sure there is a safe and compliant grey fleet in operation.”

Lawes also warns that incoming Clean Air Zones (CAZs), including London’s ULEZ, could cause real issues for grey fleet too.

“The BVLRA estimates that grey fleet vehicles are on average over eight years old and emit 152g/km CO2 emissions. [Diesel] engines that adhere to CAZ thresholds are at most just a couple of years old, so it’s likely that only a tiny proportion of these cars will qualify for CAZs. The vast majority will either need to be replaced, or the way that employees use their own cars will need to be revaluated.”

LeasePlan UK

To provide an alternative to unstructured cash allowances, LeasePlan has launched its ‘My Car Choices’ scheme; designed for corporate clients to use as part of their employee benefit and reward packages and similar in concept to ALD’s ALDSelect.

A members-only, employer-endorsed web platform, it has been developed to provide customers’ employees with access to preferential rates on a wide range of brand-new cars from LeasePlan.

Matthew Walters, head of consultancy and customer data services, explains: “This scheme offers the employee with a ‘cash taker’ mindset more choice, whilst giving the control back to the fleet manager, enabling them to ensure that a fleet policy is more detailed. As we move into a more emission-aware future, with the development of CAZs across our towns and cities, it’s important to ensure fleets are as up-to-date and therefore as environmentally friendly as possible.”

Employees benefit from this scheme as, according to the firm, it offers great prices on a number of finance options, with tailored deals that often have shortened lead times. Offering peace of mind, it also includes full UK and European breakdown assistance, as well as routine servicing and fair wear-and tear-repairs.

For employers, the scheme can bring numerous gains including enhancing employee retention and satisfaction without any implementation cost. LeasePlan also makes it simple to implement and manages the whole process, free of charge. The relationship is established directly with the employee, so the employer carries zero risk or liability.

And by ensuring drivers are at the wheel of new cars, businesses can mitigate both the risks and the higher emissions involved with a traditional grey fleet.

In Numbers:

• 8.2m more cars and 1.7m more commercials than 20 years ago
• Congestion costs the UK almost £8bn in 2018 – an average of £1,317 per driver
• UK Government has earmarked £90m to establish four ‘Future Mobility Zones’