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A company car is a
vehicle A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), wat ...
which companies or organisations lease or own and which employees use for their personal and business travel. Take-home vehicle is a vehicle which can be taken home by company employees. Depending on the company, company cars may be available to all employees or just top level personnel. In
corporate car sharing Carsharing or car sharing (AU, NZ, CA, TH, & US) or car clubs (UK) is a model of car rental where people rent cars for short periods of time, often by the hour. It differs from traditional car rental in that the owners of the cars are often pri ...
, the company shares the vehicles and allows multiple employees (rather than just one) to make use of a company car, at times when they actually need it. The vehicles are made available from a corporate car sharing pool, and shared for a fixed or flexible period of time. One shared car could replace up to 8 non-shared cars. However, car-sharing does involve additional processing and associated costs. Still, it reduces fleet-related costs over the long term and allow employees to save not only on costs but also on time.


Attractiveness

There are three main reasons which explain why the provision of a company car for private use as a benefit may be attractive for both the employee and the employer. * The first reason is that companies can supply the fringe benefit at lower costs than the employee is able to achieve on their own – and consequently pass it on to the employee. * Secondly, the tax system may encourage the provision of cars over monetary remuneration from the perspective of both the employer and employee. Ways on how this can be encouraged include
tax benefits Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income. Tax deductions are a form of tax incentives, along with exemptions and tax credits. T ...
(tax deductions and depreciation write-offs) * Thirdly, firms may want the employee to drive in a car of certain minimum standard or have access to a suitable vehicle at all times. * It may also benefit the employer if there is advertising/branding on the car's paintwork (or window stickers), since if the employee uses the car during the evening/weekend, it spreads advertising in public areas more than if the car was locked up in a garage during these times. The use of company cars is widespread in some regions. For example, business registrations account for roughly 50% of all car sales in the EU, largely due to taxation rules which give companies a strong incentive to provide the benefit. The practice has been criticised by many groups who argue that the benefit encourages people to drive more (thus increasing CO2 emissions), reduces government tax revenues, distorts economic competition, and may work to neutralise other government programs and objectives.


Usage by police departments

Police department The police are a constituted body of persons empowered by a state, with the aim to enforce the law, to ensure the safety, health and possessions of citizens, and to prevent crime and civil disorder. Their lawful powers include arrest and th ...
s are among frequent participants in take-home vehicle programs, allowing officers to take home the
police car A police car (also called a police cruiser, police interceptor, patrol car, area car, cop car, prowl car, squad car, radio car, or radio motor patrol) is a ground vehicle used by police and law enforcement for transportation during patrols a ...
s they use while on duty. It is considered to be a
fringe benefit Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries. Insta ...
by the departments. It has been viewed by some departments as a crime-fighting tool, given its cost.


Issues with take-home vehicles


Economic distortions

There is a straightforward distortion in consumer markets as consumers through tax incentives are being encouraged to consume more car services than they would have been otherwise. There is also a substantial tax loss resulting from the subsidy.


Environmental damage

Studies have shown that the subsidy encourages consumers to buy more and bigger cars than they would choose otherwise. In many areas, fuel costs are also covered by the benefit, so that the marginal cost of driving may approach zero. In these areas consumers are encouraged to drive more frequently and farther than they otherwise would, and avoid other forms of transportation. Emissions of CO2 and other harmful gases are clearly higher as a result.


Costs to government

When issued by a government agency, concern has been brought up by citizens and advocates over taxpayer money used to fund take-home vehicles. This has led some cities to cutting or reducing the number of employees to whom vehicles are offered. In Sacramento, California, the issuing of take-home vehicles has come under scrutiny as the city has faced a budget deficit. In the city of
Baltimore Baltimore ( , locally: or ) is the most populous city in the U.S. state of Maryland, fourth most populous city in the Mid-Atlantic, and the 30th most populous city in the United States with a population of 585,708 in 2020. Baltimore was ...
, the use of take-home vehicles by city employees has been questioned due to the distance that city employees drive them to their homes. It was determined in a report that two-thirds of city employees drive their vehicles outside city limits, some more than 100 mi (160 km) from the city, and the cost to taxpayers, which included fuel, was high. Baltimore's former mayor Sheila Dixon was also criticized for having three tax-funded take-home vehicles parked at her house. She defended herself by saying she might need the vehicles if there were an emergency. In Dallas, the city was having trouble obtaining data in attempting to determine the cost of take-home vehicles to taxpayers. The city of Los Angeles was criticized for issuing take-home vehicles to utility employees while raising rates to customers, though the city stated it would be a minuscule part of the budget. The city of
Evansville, Indiana Evansville is a city in, and the county seat of, Vanderburgh County, Indiana, United States. The population was 118,414 at the 2020 census, making it the state's third-most populous city after Indianapolis and Fort Wayne, the largest city in ...
reduced the number of take-home vehicles offered to city employees, but allowed public safety employees to keep theirs.


See also

*
Cycling Cycling, also, when on a two-wheeled bicycle, called bicycling or biking, is the use of cycles for transport, recreation, exercise or sport. People engaged in cycling are referred to as "cyclists", "bicyclists", or "bikers". Apart from two ...
and public transport: alternatives to privately owned motorized vehicles *
Fleet vehicle Fleet vehicles are groups of motor vehicles owned or leased by a business, government agency, or other organization rather than by an individual or family. Typical examples include vehicles operated by car rental companies, taxicab companies, ...
* Remote work *
Smart mobility Smart mobility refers to many modes of transport. Some smart mobility services include: * public transport (with real-time timetabling and route optimization, seamless travel and digital ticketing) * Carsharing * Mobility as a service (MaaS) * M ...
: component of the
European Green Deal The European Green Deal, approved 2020, is a set of policy initiatives by the European Commission with the overarching aim of making the European Union (EU) climate neutral in 2050. An impact assessed plan will also be presented to increase the ...
*
Traffic congestion Traffic congestion is a condition in transport that is characterized by slower speeds, longer trip times, and increased vehicular queueing. Traffic congestion on urban road networks has increased substantially since the 1950s. When traffic de ...
* Criticism of vehicle-to-grid


References

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Vehicle A vehicle (from la, vehiculum) is a machine that transports people or cargo. Vehicles include wagons, bicycles, motor vehicles (motorcycles, cars, trucks, buses, mobility scooters for disabled people), railed vehicles (trains, trams), wat ...
Vehicle law