Company cars overtaken by cash

Cash is in the driving seat for an increasing number of UK employers’ company car policies.

A new report from consultants Watson Wyatt has found that 28 per cent of employers provide a cash allowance instead of a car; double that of four years ago and now more the than proportion who offer company cars without a cash alternative.

Watson Wyatt found that a further 46 per cent of employers offer the choice between car and cash.

This brings the proportion of employers providing either cash instead of or as an alternative to a company car to 74 per cent.

This is in sharp contrast to much of the rest of Europe, where the direct provision of a company car is still largely the norm.

Over 70 per cent of employers in Belgium, Greece, Italy, Portugal and most central and eastern European countries provide company cars only, without a cash alternative.

The data comes from Watson Wyatt’s 2008 Company Car/Cash Allowance Report, a survey of company car policies which includes extensive information and data on company car policy across 38 countries, including, for the first time, UAE, Egypt, Saudi Arabia and Israel.

“Defining the best possible car strategy is an important challenge for many employers and our survey shows that the business of providing either cars or cash allowances as an alternative is attracting more and more attention across Europe, Middle East & Africa,” said Anne Severeyns, a senior consultant at Watson Wyatt.

“For example, compared with four years ago, the proportion of employers offering cash or a cash alternative has gone up by 40 per cent in the Netherlands and in Ireland, 32 per cent in Germany and 24 per cent in Sweden. However, this is partly driven by companies creating pan-European company car strategies; while employees in these countries may be offered a cash alternative, the majority will still go for the car because of tax efficiency.”

Company car policies – selected European countries                

                Employers offer      Employers offer      Employers reimburse
                company car only  cash or cash option     expenses/other
                         %                          %                           %
Portugal            78                          20                          2
Italy                  77                          20                          3
Belgium             74                          23                          3
Spain                 68                          23                         9
France               66                          30                         4
Netherlands       66                          31                         3
Germany           61                          35                         4
Switzerland       41                          51                         8
Sweden            39                          57                         4
Ireland              23                          71                         6
UK                   23                         74                          3 

Watson Wyatt’s 2008 Company Car/Cash Allowance Report is available in single country and pan-European formats from Watson Wyatt Data Services.

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