The company car as an incentive, the solution companies offer to the loss of purchasing power

More than half of Spanish companies use the company car as a reward in the face of salary restraint.

Inflation in our country rose by 1.6% in 2016, while salaries sit 18% below the European average. According to forecasts, sales of vehicles through renting could rise by 10% in 2017.

According to the Company Vehicle Observatory (CVO), the company car is set to become more widespread and turn into a employee benefit on a par with private health insurance. The moderate salary growth model that currently prevails in Spain appears to be helping bring back the company car as part of human resources policies, in an attempt by companies to offset the loss of purchasing power of their employees. So much so that 51% of companies contemplate it as a flexible compensation element, according to the Company Vehicle Observatory (CVO).

Spanish companies are following in the footsteps of their European counterparts and are seeking to use the company car to ease the impact that the rise in inflation had on workers’ pockets, which ended 2016 with growth of 1.6%.

In this regard, CVO data point to the motivational role that the company car currently plays in a context in which Spain ranks as one of the countries with the most modest salaries in the euro zone, roughly 18% lower than the European average.

Given this situation, the company car is undergoing a process of democratisation and is becoming on a par with other more common employee benefits such as private medical insurance or restaurant vouchers.

With this shift in trend, CVO data explain that companies have downgraded the category and engine size of incentive vehicles, replacing them with socially responsible models, not only to rationalise fleet costs but also to fit within low-emission ranges and project an image of a responsible company.

“The car has become a tool for companies to regain competitiveness and cover the salary gap. However, practicality is what is sought. The crisis first, which made the use of high-end vehicles frowned upon during periods of cutbacks, and corporate social responsibility policies afterwards, have ensured that the trend towards downgrading vehicle categories is here to stay,” says the director of the CVO, Manuel Orejas.

This trend and energy efficiency explain why the CVO forecasts for 2017 point to a growth of nearly 10% in car sales intended for renting. For their part, high-end models will only increase by 4%.

Source: Newspress