Britain leading way in alternatives to the company car

Jun 16 2006 by Nic Paton Print This Article

British companies are ahead of the rest of Europe in allowing employees to take cash as an alternative to a company car, a new study has found.

The research from consultancy Watson Wyatt has found there is a marked north-south divide in Europe when it comes to providing a cash alternative to company cars.

North European employers are far more likely to offer a cash alternative to a company car than those in southern and eastern Europe.

The survey found that 56.9 per cent of UK companies offered a car/cash alternative and a further 15.2 per cent offered a cash allowance only.

Only 23.8 per cent of employers provided company cars without the option of cash instead, while just four per cent reimbursed expenses related to the professional use of a private vehicle to the employee.

This contrasted with Belgium, Greece, Italy and Portugal where more than 80 per cent of employers had a policy of providing company cars only.

In Latvia, Slovenia, Bulgaria and Croatia, this increased to more than 90 per cent.

Providing a cash allowance without the option of a company car was very rare outside of the UK, Ireland and the Nordic countries.

Anne Severeyns, senior consultant at Watson Wyatt, said: "The divide between northern and southern Europe on cash alternatives to company car provision is widening.

"This is down to two main factors. The first is undoubtedly the local tax benefits of providing cash alternatives to company cars in the UK, Ireland and the Nordic area.

"The second is the continued and heightened status of the company car in southern and eastern Europe. The car is simply a more coveted and important lifestyle accessory in the south and east," she added.

The survey of more than 5,000 companies in 34 countries also found that Ireland had the most generous policy when it comes to free private use of company cars. The UK ranked sixth.

Germany, Finland, Norway and Sweden had the shortest replacement period for a company car with the Ukraine adopting the longest replacement period of an average 49 months.

"The environmental issue is rising up the corporate agenda," said Severeyns. "Companies are not only looking at the expense of purchasing the company car but also at the increased oil prices and carbon dioxide emissions.

"That said, not only are private use policies more generous than last year, nearly 75 per cent of companies intend to absorb the incremental costs if oil prices remain constant or increase in the next six month," she added.