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A Guide to Vehicle Purchase and Fleet Management

A Guide to Vehicle Purchase and Fleet Management

Posted On 16 Mar, 2018

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As a fleet manager, you would realise that the purchase of vehicles is one of the most crucial and delicate activities for fleet management. Why? Because one realises it’s expensive not only in terms of the purchase prices of the vehicles but also for their management and maintenance.

But have you ever wondered why it is important for a company to have a fleet of cars? That’s because these business organisations need to make an array of cars available to their employees and collaborators to allow them to do their jobs more efficiently, thus optimising time for activities related to reimbursement and expense reporting.

Before anything else, let’s try to understand the different acquisition methods of the company fleet car. More often than not, vehicles are bought (both new and used), leased or hired.

When the company has a good budget, then it is possible for them to explore the idea of buying used cars in the UK or even new ones. This purchase would imply the payment of the entire VAT and we must also consider that the new vehicles practically suffer an immediate devaluation once they are purchased. In addition to all this, fleet management and administrative practises are entirely the company’s responsibility. Although, of course, if you are buying new vehicles, then the first few months would be smooth and no such special measures will be needed.

Even in the case of a lease purchase, the maintenance and administrative procedures are taken care of by the company, but the main advantage of a lease purchase is that the monthly payments to the owner can be reduced. As long as the company doesn’t make the redemption of the cars, they will remain the property of the grantor and what’s paid essentially consists in its use for a determined period of time. At the end of this period, the company may choose to terminate this contract or purchase the vehicles.

The third option is for car rentals. In the case of a company, it usually means long-term car rentals. This is particularly advantageous for one reason - you can outsource all the maintenance or administrative burden to the rental companies.

Which is why, the choice of how to manage company car fleet depends entirely on the company. The employees who need to be able to use the company cars have to comply with the company’s car policy, which have some very specific rules, such as the car can be used only by the employee and nobody else. In certain cases, employees, who use the company car on lease, are expected to pay a monthly fee as well.

It should also be noted that in the event of an accident, the company has the insurance covering the car, but the company will not be responsible for any fines taken by the driver and expects the driver to pay for them. Or the company could pay for the fine and eventually deduct that amount from the employee’s salary.

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