Can a Vehicle-Related Benefits Program Reduce Costs?

A current issue within not-for-profit and governmental entities is whether it makes financial sense to provide vehicles to employees or to reimburse them for use of their personal vehicles.  Vehicle costs are under increased examination because not-for-profit and governmental organizations are typically under pressure to reduce costs.

According to a 2015 survey, "Vehicle-Related Benefits Programs" by WorldatWork, 89% of organizations offer at least one vehicle-related benefit, including a car allowance, company car, fuel reimbursement or other vehicle benefits.  The top three vehicle-related benefit programs are:

• Fuel or mileage reimbursement (70%)

• Vehicle allowance (69%)

• Automobile provided, including lease vehicles that the organization owns (60%)

Below are several additional highlights from the 2015 survey:

• Similar to findings in earlier studies, 75% of organizations offer a car allowance to executives, while 66% provide executives with a personal vehicle.

• Fuel or mileage reimbursement is widely eligible for employees with a bona fide business need (69%).

• 64% of organizations report that vehicle benefit programs are believed to have a positive impact on employee satisfaction.

• Two-thirds of organizations promote their vehicle-related programs as a key employee benefit to attract new employees.

Management may feel that shifting to an employee reimbursement program may be the best way to accomplish cost reductions.  However, a detailed financial analysis should be completed first to determine if this is a smart plan of action.  In addition, management must also consider qualitative issues, such as employee satisfaction and productivity, as well as public image when making these decisions.  If your organization is considering a vehicle-related benefits program Schneider Downs can assist in analyzing your vehicle costs and what vehicle-related benefits would work best for your organization.

For more information, please contact Schnedier Downs or visit the Our Thoughts On... blog.