Are Company Cars getting more Popular in the UK?

Company cars remain a popular way of enticing new recruits into the company fold, and of retaining the services of valued members of the team. There are a number of advantages inherent in the practice. It tends to be more cost effective, overall, for a single buyer to obtain cars in bulk. What’s more, many workers would love to enjoy the privelege of not having to worry about things like services and upgrades.

So, how has this picture change in recent times, and how is it likely to change in the future? Let’s take a look.

Electric and Hybrid cars

One significant ongoing trend for the motoring industry is the move toward battery-powered vehicles, at the expense of the traditional internal combustion engine. According to figures from the Society for Motor Manufacturers and Traders, the battery electric vehicle and hybrid electric vehicle categories enjoy the fastest growth, with diesel in decline and petrol stagnating.

This is reflected in company car registrations, with the number of fully-electric company cars growing by around 1,300% over twelve months. This is largely thanks to cuts in the rate of benefit-in-kind taxes for zero-emissions vehicles. In short, it’s gotten much cheaper for company fleets to make the switch to electric, and so that’s exactly what they’re doing. 

The rising cost of running a fleet

The average whole-life cost of a company car has increased by around 18% over the year. Analysing how much a given vehicle is going to cost over its entire lifespan, however, is very difficult – and it’s made more so by the uncertainty surrounding the electrification process. 

For electric cars, the figure is around 14%, against 19% for petrol and diesel models. This is largely because these kinds of vehicles are slightly more competitive during a time of rising energy costs. It should be noted that there are significant variances from manufacturer to manufacturer, with some list prices increasing by just 1.6%, and others by 10.3%. While we’ve gotten past the petrol-pump peak of July 2022, the fact remains that filling up a traditional gas guzzler remains significantly more expensive than it was a year ago.

The cost of things like replacement batteries should also be considered, but only in light of the fact that electric cars in general include fewer moving parts, and are therefore easier to repair. If you have multiple electric vehicles as part of your fleet, mobile battery fitting could be an option as you would be able to replace most of them at once, which could save a considerable amount of time.

Diesel in decline

The phasing out of diesel is particularly noteworthy in the world of the company car. 80% of these vehicles were diesel as recently as 2017. Given the prominence of the electric vehicle, it’s likely that many fleet operators will look to pivot directly to BEVs, rather than using petrol vehicles as an intermediary.

What happens in 2023?

We should expect a continuation of the rise of electric vehicles, which are increasingly being seen not as a novel new gimmick but a serious rival to the internal-combustion-engine powerhouses with which we’ve gotten so familiar. In short, it’s reasonable to expect more electric cars, and more electric chargers, to turn up on business premises around the country.