What are your most important factors when choosing a new car? For many private car owners, factors such as fuel economy, the cost of car leasing and contract hire deals and design are at the top of their priority list – but is it the same for company car drivers?
New research has investigated what the most important criteria are when company car drivers choose a new car. Keep reading to find out more…
Benefit in Kind tax more important than fuel economy
New research from one of the UK’s largest vehicle leasing and fleet management providers, has found a significant change in the last 12 months on the most influential factors when choosing a company car. ALD Automotive has found that in the last year Benefit In Kind (BIK) tax is now more influential than the specification of the car or its fuel economy.
In 2012, ALD’s survey of 1,000 fleet drivers found that car specification was the most important factor in choosing their next vehicle, with a quarter of drivers saying this was most important to them. Fuel economy was second with 22 per cent of drivers citing this as a priority with Benefit in Kind taxation in third place with just 14 per cent of drivers highlighting this as critical.
However, 2013 has seen a significant change in driver attitudes. Benefit in Kind tax is now being classed as the most influential factor (39 per cent), followed by car specification (no change at 25 per cent) and fuel economy (17 per cent).
Commenting on the significant rise in the influence of taxation, Helen Fisk, AutoSolutions Manager at ALD Automotive, highlighted the changes to Benefit in Kind tax announced in March 2013’s Budget as a turning point.
All low emission cars are now no longer exempt from company car tax and the maximum threshold has increased from 35 per cent to 37 per cent. Also, the diesel supplement is to be removed from 2016 and, significantly, most drivers will see increased uplifts in BIK rates over the coming tax years.
Fisk explained: “Following the Budget we’ve seen Benefit in Kind propelled to the top of the list of drivers’ priorities as they look more carefully at their opportunities to minimise their exposure. It’s clear that drivers are planning for future rises by selecting vehicles with low enough emissions to last a typical three-year agreement period. Even as the economy improves, maximising take home pay remains a priority for many company car drivers.”
Focus on costs echoes private car buyers’ desire for cheap car leasing deals
This factor appears to resonate with private car drivers who, in similar surveys, have highlighted the cost of driving as their most important buying criteria ahead of the car’s specifications or design.
The prices of car leasing/contract hire deals and a car’s fuel economy have been most important to private car buyers – although economy is less of an issue for company car drivers in 2013.
“Interestingly, it seems fuel economy is becoming less of an issue for drivers. This could be because drivers have become immune to higher fuel prices and are, therefore, switching to fuel efficient models with a lower Benefit in Kind rate,” added Ms Fisk.
“Company car drivers are typically the first-in-line to take action and react to changes in legislation, as well as adopting new models and technology from manufacturers, especially when it saves them and their company money.
“The results from our survey help us to carefully monitor changing driver demands and seeing how the influence of Benefit in Kind has more than doubled in the last year only supports our advice to fleets that they must use a total cost of ownership programme to balance cost, flexibility and choice to identify the optimum fleet policy.”