Tax changes fail to put brake on company cars

THE businessman's favourite perk, the company car, is booming again, despite tax changes which have made it less attractive, writes Christian Wolmar.

A survey of 305 fleet managers and 320 company car drivers by Mori for Lex, the vehicle leasing company, reveals that the number of company cars has increased slightly over the past year from 2.65 million to 2.7 million. The age of company cars has also gone down, from 2.8 to 2.5 years, which, according to the researchers, reflects increased business confidence. Company cars encompass 13.9 per cent of Britain's 23.9 million cars, a higher percentage than for several years, but represent 52 per cent of new cars purchased in 1993, the same proportion as in 1992.

While a quarter of drivers will ask for a pay increase in order to pay for the extra costs of having a company car after next month's tax changes, nearly one-third are taking no action. Only 5 per cent are considering giving up their company cars. Drivers of company cars reckon, on average, it would take an increase of pounds 5,500 to compensate them for not having one.

The profile of a typical company car driver that emerges from the survey is that he is male (only 18 per cent are women), between 35 and 54, drives a medium- sized car which is under three years old. He is also not law- abiding. Company car drivers are much more likely to break traffic laws such as speeding and parking illegally.

Company car drivers who have bought their car themselves and then charge it to their firm as a business expense, rather than having the car bought by their employers, are the worst offenders. Ten per cent admit to having driven while over the alcohol limit in the past year, compared with 4 per cent of all drivers while 12 per cent have gone through a red light intentionally, twice the average for other drivers.

Women are almost universally perceived by fleet managers to be safer drivers than their male counterparts. Only 4 per cent said women were more likely to have accidents while 43 per cent thought men were and the rest thought there was no difference. Half of fleet managers thought women were better drivers and 27 per cent thought women looked after their cars better.

Lex Report on Motoring, the company view, 1994, Lex Vehicle Leasing, pounds 150.

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