As more companies continue to navigate their company policies in face of new work-from-home arrangements, employees too are re-evaluating their priorities. This has made the process of both recruiting and retaining talent all the more complicated with employers now challenged to meet these changing demands such as increased work-life balance and employment perks through the form of salary package benefits. Companies need to look beyond traditional car leasing models such as car allowances and benefits-in-kind through company cars in order to satisfy these new requirements from employees. A new flexible and affordable solution, through the form of car subscription, provides just this.
The disadvantages of current car leasing models
The new norm of work benefits
The Great Resignation has produced a ‘candidate job market’ where reward packages are highly valued. No longer content with private medical care and a few extra days of holiday per year, employees are now seeking companies that offer more and more enticing benefits. The current landscape of the British workforce whereby employees are prioritising flexible work-life balances and are open to switching roles more frequently even before their probation period, has undoubtedly made managing company cars and car allowances a vexing task. With the current vehicle supply shortages in the market, ordering a company car in the current climate for an employee who has yet reached their probation period is a challenge; and as such has seen human resource management begin to pivot towards flexible alternatives to suit this changing landscape.
New work-from-home arrangements
Such changes in the workforce are also hallmarked by the emergence of the ‘work from home’ culture which has seen employees significantly reduce their vehicle usage. Many businesses constrained by long leases are finding it very difficult to pivot or quickly downsize, leading to problems with their cash flow balance. This lack of flexibility means they are now carrying an unnecessary and possibly costly overhead which no longer matches their needs. Long four year leases, commonly associated with high mileage contracts, has meant that company cars are often under-utilised while also providing an unnecessary drain on resources.
The rising cost of living
Another factor that is detracting value from company car schemes is the rising cost of new cars. New car supply, new technology such as hybrid and electric cars, and new cost of living considerations such as rising interest rates, insurance costs, and fuel prices have made ‘cash for cars’ suddenly less attractive. More human resource managers and employers alike will be faced with employees asking for greater car allowances to help mitigate the rising cost of living. It is also possible that employers may be unlikely to reinstate company car programmes and have to commit to more cars in the fleet, especially with current market shortages and inflated pricing.
The benefits of car subscription for employers
Car subscription, distinctly characterised by its all-inclusive offerings and flexibility of short term contracts that are devoid of cancellation fees, fill the void currently experienced by many employers and human resource professionals. The benefits of car subscription for employers include:
- Providing very short contracts which are often no longer than a month, allow the ultimate in agility so employers can either downsize or upsize their fleet as business needs change to suit their cash flow balances
- New starters can instantly be provided with a car with the safe knowledge that the business could change the vehicle, or cancel the contract, with as little as one month’s notice in many instances
- High mileage users who are now working from home can instead have short-term contracts agreed to meet their changing mileage needs
- Departing employees who would otherwise be a challenge under car allowances can now return their vehicle almost instantly under a car subscription arrangement. This translates to a great advantage compared to paying the remaining term of a long-term lease, or shoehorning another employee into a car they don’t want.
- As lifestyle changes such as parenthood, environmental concerns, or even cost of living influence employees to prioritise a lifestyle-first approach, employees do not want to be fixed into the same vehicle for the long term. With no swapping fees, car subscription provides the ability to flex in an instant.
- EV curious employees who like the idea of an EV and the various tax savings they bring can trial a car with ease for a couple of months via car subscription. The experience will help them understand if the experience and suitability of an electric car is for them, and with the flexibility of car subscription, can even experience multiple electric models in a period shorter than traditional car allowances.
- Employees waiting for their new car can be served with car subscriptions that can plug that gap and provide solutions which long-term lease contracts cannot match.
Car subscription has proven itself to be a valuable and viable tool which can bring many solutions to human resources management, especially with the current economic circumstances. Employers who want to attract and retain must respond to the new demands from employees; and seek to provide a solution that delivers on agility, flexibility, and the ability to manoeuvre should such challenges arise. Loopit is the technology powering fleet and rental car companies to run their own car subscription service with our turnkey software. Our all-in-one platform makes launching and managing a car subscription service a streamlined and cohesive task. Get started today: https://www.loopit.co/get-started
