If you’re a business owner, you know there are a ton of moving parts to manage. One of the most important features of running a business is managing your company’s assets. After all, your assets bring value to your business, so keeping a watchful eye on your inventory, cash, and other valuable items is important.
A significant asset many businesses have are company cars. Not every business needs one, nor can every company afford one, which makes them a novelty item for business owners to have. But, is a fleet of vehicles really worth the extra cost? This is an age-old question that business owners like you have been asking for years. Sure, company cars have many benefits, but there are some drawbacks worth considering as well.
If you’re stuck wondering whether you should invest in one car, or a fleet of company cars, we’re here to help. Below, we’ll go over the pros and cons of company cars and whether they’re worth the investment.
Pros of Purchasing Company Cars
Advertising on Wheels: Marketing is an integral part of growing and maintaining your business. A great way to spread brand awareness around town is by placing an advertisement for your company on your fleet of company cars. There are plenty of places where you can get professional vinyl wraps for your fleet that will draw attention to your brand’s message.
Employee Retention: Poor employee retention can cost businesses a lot of money from lost productivity and time spent recruiting new employees. In this day and age, employees are all about their benefits, such as medical coverage, paid time off, and free snacks in the lounge.
An extremely alluring benefit that can increase employee retention is gifting loyal workers with a company vehicle. Purchasing a new Volkswagen for sale, or even a Chevy Impala, may sound expensive upfront. However, it is much cheaper to offer this benefit instead of looking for new employees every few months.
Great First Impressions: First impressions matter, especially when you’re trying to land a sale or strike a deal. For sales representatives always on the go, a newer business car will show potential clients that you mean business. If your sales rep shows up in an old beater, a company you’re trying to work with may think lesser of your company’s values and work quality. To keep up with the times, leasing is a great option. You’ll be able to get a new car every few years without being tied down to a specific model.
Cons of Purchasing Company Cars
Cost: We’ll say it here first— cars are an expensive asset. Shelling out $20,000 for just one company car can put a major dent in your company’s finances, let alone a fleet of ten company cars. If you’re looking to lease, an added $300 a month per vehicle can also drain your bank account fairly quickly if you don’t have substantial cash flow. Before deciding whether company cars are worth the investment, speak with an accountant to see if purchasing a company car works for your budget.
Liability: Not only are you responsible for your company’s cars, but you’re also responsible for the drivers inside them. Accidents can cost a company a lot of money in repairs and insurance. If an accident does happen, lawsuits can cost even more money. To ensure your cars and drivers are safe on the road, require them to take a driving safety course or invest in a fleet management system for extra protection.
Additional Costs: As you can tell, most cons with a company car center around money. Cars are an expensive asset and along with maintaining and running them are additional expenses to maintain the car that your business may not be ready for. From gas to oil changes and new tires to brake pad replacements, the additional costs to company cars can undoubtedly add up.
Now that you know the pros and cons of purchasing a company car, it’s time to decide. The benefits of buying a company car include increased revenue from employee retention, advertising, and improving sale probability through a good first impression. However, the upfront cost of purchasing a car, along with liability and additional costs, may cost your business a lot of money. The bottom line is this: determine your financial standing to see whether a company car is worth the investment.