Sam Sterry, SME Sales Director, Europcar Mobility Group UK looks at the challenges facing small businesses in keeping people on the move – safely and cost-effectively.
Small businesses have led the way in changing working practices in recent years, capitalising on their agility and flexibility to make things happen quickly. From the introduction of flexible working and working from home to reducing outgoings by moving to a co-working space. There’s also been a change in attitude to employee travel. Once upon a time having a company car was the be-all and end-all for many employees. Indeed what type of car was on offer could be the difference between someone accepting or refusing a job offer.
Today, with greater environmental consciousness, combined with government efforts to influence company vehicle choice through Benefit-in-Kind tax rates, the appeal of the company car has waned. But there is still a need for people to get from A to B for their work.
Recent research1 commissioned by Europcar Mobility Group UK revealed, unsurprisingly, mobility remains fundamental for many UK businesses, with 25% of firms saying they need some form of transport for a significant majority (75%) of their workforce to get their job done. And that has seen a growing dependence on employees using their own vehicles – known in the fleet world as ‘grey fleet’.
Over a quarter (28%) of companies with 10-25 staff said they rely on grey fleet vehicles, rising to 40% for firms with 26-50 employees. And nearly a third of companies with 10-25 employees said that up to a quarter of their staff chose cash-for-car, which inevitably means they will be using their own car for business journeys.
Whilst the Europcar Mobility Group UK research found that dependence on grey fleet remains, the use of shared services also seems likely to increase, as car share/car clubs are expected to account for 27% of employee mobility in the next few years. Rental is favoured by 28% of respondents with 23% expecting pool fleet to be part of the business travel landscape in 2022.
On the surface relying on a grey fleet sounds like a great idea. No need to worry about vehicle acquisition, allocation of the right car for the job grade or vehicle maintenance. But the reality is employers have a Duty of Care responsibility to their employees and relying on a ‘grey fleet’ doesn’t eliminate that. Indeed, it could actually mean a greater level of risk if it’s not managed effectively. There’s no easy way to collect data about driving behaviour, leaving employers unclear whether a vehicle has a valid MOT, tax, insurance or when it was last serviced. There’s also the burdensome administration and expenses associated with claiming fuel costs for business mileage.
For firms that don’t want to layout hard-earned funds on vehicle acquisition or commit themselves to long-term finance deals, what’s the answer?
Car rental and carpooling enables companies to reduce the size of their own fleet, tackles the challenge of grey fleet usage and eliminates costs associated with high mileage claims without compromising on the flexibility of staff transport options. There is the environmental credit too – businesses that want to play their part in the sustainability agenda could consider car sharing. It helps address issues with congestion and parking by reducing the physical number of vehicles on today’s roads. And electric vehicles as well as modern hybrid fuel options are becoming more widely available through car sharing schemes.
Rather than firms simply looking at car hire as a one-day, short-term option, they are incorporating it into over-arching mobility strategies that can be made available to all employees. And this is really accelerating the shift from ownership to ‘usership’. Firms are also seeing that car hire can replace the long-term commitment of a 3-4 year lease which often comes with early exit penalties and means being locked into the same vehicle for the whole time. Automotive technology is moving fast – so that could mean falling way behind the curve.
Instead long-term rental offers, for 3-months or more, can provide access to brand new vehicles. With no pressure of upfront costs and a choice of contract lengths, firms get all the benefits they need to offer staff access to the mobility they need while staying in control of their costs.
The big challenge for SMEs is to keep employees moving, but avoid unknowingly making mistakes that could be detrimental to their duty of care responsibilities and employee wellbeing. Embracing the new world of mobility options could be the answer.
1 Research conducted by Censuswide, May 2019 on 300 business owners