Cost of new vehicles

sevenhills

I know that some people replace their cars every couple of years, probably because of the status of a new car; but why do companies change their vehicles so often?
Surely the cheapest option would be to keep a works vehicle as long as posible?
I have always owned older cars, the cost of depreciation is massive on brand new vehicles, much more than the total costs of owning an older car.

BethanyD

It's all to do with the tax advantages of leasing new cars.


Individuals cannot benefit in the same way, so we tend to go for the cheaper option.


Eventually, when the bills outweigh the benefit, we sell and move on

flashg67

A few of my thoughts - Tax advantages & fixed costs (eg Leasing), need for reliability for 'working' vehicles, company image, attracting/keeping employees

HWG

I'm curious about this too. My old employer axed the free instant coffee in the break rooms, but the fleet of white BMWs was renewed every couple of years.

I struggle to believe a company would pay a higher cost for a unquantified benefits of reliability and "prestige".

Can someone explain how the tax works from the company's side?

Tom99

Could be with fleet discount for buying 100 or 1,000 cars that the loss when selling after a year was minimal and no servicing, repairs, tyres etc to worry about.

Herzlos

It's much easier to budget for cars with a fixed cost, so leasing type deals are great for businesses.
New cars likely also have better emissions and thus better BIK tax ratings, cost less in fuel, and usually have less down time (it's no big deal if my domestic car is in the garage for the day whilst I'm at work, but if I needed the car for work I'd be renting one for the day).



So basically the same reasons that people buy new cars anyway, but with more tax breaks.

motorguy

sevenhills wrote: »

I know that some people replace their cars every couple of years, probably because of the status of a new car; but why do companies change their vehicles so often?
Surely the cheapest option would be to keep a works vehicle as long as posible?
I have always owned older cars, the cost of depreciation is massive on brand new vehicles, much more than the total costs of owning an older car.

As has been said, they'll be getting v cheap leases for fully maintained, fully warranted new cars.

Used cars means buying them, maintaining them, keeping them on the road, etc. Probably wouldnt work out much cheaper unless you really went down the years and then you hit reliability.

Plus some companies have a "corporate image" so can order say, 100 new BMWs in white whereas older cars might end up being a mix

After recovering tax and VAT, a new BMW might cost them £150-200 a month.

AdrianC

HWG wrote: »

I'm curious about this too. My old employer axed the free instant coffee in the break rooms, but the fleet of white BMWs was renewed every couple of years.

I struggle to believe a company would pay a higher cost for a unquantified benefits of reliability and "prestige".

BMW and other "prestige" marques tend to be fairly low lease cost relative to the published list purchase price, simply because of better residuals.

Can someone explain how the tax works from the company's side?

For lease vs purchase? Have a look into the accounting differences between capex and opex. There's also advantages in keeping unpredictably depreciating assets off the balance sheet and having a predictable cost over time. Then there's outsourcing the acquisition and management of the vehicle to a specialist, who likely gets better buy prices.

owen_money

As above, plus its about staff retention and hiring in the first place.

---

HR 'Well done Mr Money, you've go the job, £60k pa plus 15% bonus, health insurance etc., oh and we've been reading MSE bangernomic's thread, so here's the keys to your 1996 Vectra, welcome aboard'


Trust me company cars are a very emotive subject

motorguy

owen_money wrote: »

As above, plus its about staff retention and hiring in the first place.

---

HR 'Well done Mr Money, you've go the job, £60k pa plus 15% bonus, health insurance etc., oh and we've been reading MSE bangernomic's thread, so here's your keys to your 1996 Vecta, welcome aboard'


Trust me company cars are a very emotive subject

+1

I remember some years ago a friend of mine got promoted to "management with a company car" grade and he got some old wreck of a pool car with 100K miles on it as a company car. A bit demotivating....