The keys to choosing a company car that you should also consider

Car sales to the corporate channel continue their unstoppable rise. And the criteria companies use when choosing their cars can also be a great help for private buyers. We review them in this article.

During 2017, car sales to private individuals in the Spanish market reached a 52.5 percent share, growing 4.2% compared with 2016. The corporate channel also kept its unstoppable rise, growing 13.3 percent, to reach almost 30 percent. If the trend continues, 2018 could be the first year in which sales to the corporate channel surpass those to private individuals.

But, what do companies look at when choosing a car? Logically, given the type of use companies make of their vehicle fleets, there are some aspects that take priority over those that usually appear among the top purchase motivations for private users. Here, for example, design and any other motivation with an emotional component take a back seat, and everything related to costs, maintenance or reliability takes centre stage.

These are some of the criteria companies consider when choosing their cars, which you should know if you are a private buyer and are thinking of changing yours soon, if you want to save money and time.

The total cost of ownership of the vehicle

Fleet managers refer to the total cost of ownership of the vehicle as TCO. It is one of the most important factors for companies, because the cost of ownership can vary greatly depending on the type of vehicle chosen, especially in the case of fleets of a certain size.

Bear in mind that this does not include only the purchase price, but also everything related to its ownership and use: from the fuel cost to insurance, maintenance or even depreciation of the vehicle.

Until recently, most company fleets opted for diesel-engined cars, which had lower depreciation and, above all, the advantage of a more favourable cost per kilometre in terms of fuel consumption. But recently this has changed.

Many factors play a role here, among which we can mention the technological advances made by petrol engines, the growing range of hybrid versions and the uncertainty hanging over diesel.

It must be noted that although fuel prices still show differences between petrol and diesel, the latest generation of small-capacity petrol engines allow consumption figures similar to those of diesel engines of equivalent power. And in the case of hybrid cars, maintenance savings must be added to the consumption advantage. Studies confirm that the saving of a hybrid car can amount to around 17 percent over 90,000 km, as it has fewer mechanical parts subject to wear.

Toyota, one of the brands with the most hybrid-electric cars on the road, and with one of the broadest ranges of hybrid-electric cars on the market, explains here how much it costs to maintain a hybrid car.

Image and quality

A fleet manager seeks a car that is reliable and well built so that it does not break down. For this reason, companies usually take into account all the reliability indices published by the most prestigious and established studies.

These include the American JD Power, or the studies published in Germany based on large-scale surveys of owners. In Spain, the study usually carried out by the OCU, analysing the breakdowns recorded by vehicles over the last twelve months, is also important. These data compilations can also help a user choose their car, although it must be borne in mind that reliability has a strong component linked to how the driver looks after and maintains the vehicle.

Other reports based on the perception the public has of each brand or each vehicle, such as those produced by Forbes or Interbrand, are also of special interest to companies, perhaps less so to private individuals.

Utilisation rate

For a company, every unscheduled day that one of its cars spends in a workshop is money lost. A report by Lease Plan reveals that the average annual time spent in the workshop for a vehicle’s maintenance work is 1.95 days. Cars that reduce that figure are a clear indicator of the vehicle’s reliability and of good after-sales service. These are the five brands that perform best in Spain, according to that same study:

In addition, for companies, and increasingly for private individuals too, another factor has come into play in this respect for just over a year: traffic restrictions during pollution episodes. In Spain, 65% of companies are concentrated in just four provinces: Madrid, Barcelona, Valencia and Alicante. Not being able to drive in these urban areas would be a handicap.

Cars with DGT 0 and ECO environmental labels have the advantage here. Electric, hybrid, plug-in hybrid and LPG and CNG-powered cars have the advantage. Companies can continue using their cars when traffic restrictions apply, and it is also a matter of image, as these are cars that are more respectful of the environment.

After-sales service

For a fleet manager, it is essential that their cars are kept in good order in the shortest possible time. And one of the factors when deciding on one brand or another is whether the manufacturer’s after-sales service responds.

As well as offering replacement cars, some brands have a workshop service that prioritises these customers, with immediate vehicle reception (even for Express servicing).

For a private user, securing the best after-sales service can be just as important as it is for a company. Here, both the number of technical assistance points of the chosen brand and the services offered are important, which can range from a replacement car, ease of booking an appointment or scheduled maintenance plans.

Financing

When buying their cars, companies can choose from different types of financing. In this case, paying cash for the vehicle is uncommon, except in exceptional cases and in small companies. It is normal for SMEs to resort to financing that suits their needs in order to own the vehicle and pay for it comfortably.

The same applies to private individuals, and it is increasingly common to take advantage of the financing schemes offered by brands. There are now even interesting options such as Toyota Pay Per Drive, which allow private customers to access a car according to their needs, by paying a monthly fee over a period of 2 to 4 years, with the option of exchanging the vehicle for a new one at the end of the contract.

Renting and leasing

For large companies with considerably sized fleets, it is practically the only option to consider. Although ownership of the vehicle belongs to the renting company, they will also take care of vehicle maintenance and other costs such as insurance, freeing the client company from those concerns.

Not to mention the tax advantages it offers or the option of flexible renting, which adapts in terms of term or mileage.

Another option that is gaining increasing prominence among SMEs is leasing. In this case, the main difference from renting is that there is a purchase option at the end of the rental period. It also has tax advantages, although the costs of vehicle maintenance are borne by the company that contracts it.

Brand loyalty

A company is usually a loyal, long-term customer. Studies estimate that private individuals change their vehicle every 8 years, but companies renew their fleets every 4 or 5 years, due to their intensive use.

In a company car, mileage is usually between 10,000 and 15,000 km per year higher than that of the average private user. This means that companies renew their cars almost twice as often as private individuals. And they tend to do so with a very high loyalty index towards the brand. According to some studies, even above 90 percent. The main reasons are usually, on the one hand, the same one a private buyer would have: why change if this brand suits me well? But the second, which often becomes the first, is the advantages the company can gain by rewarding the brand for its loyalty in the form of discounts, purchase benefits (purchase price or financing) and even maintenance.

Here, a private individual can also benefit, as many brands positively value a buyer who is already a customer. Even when handing over a vehicle, additional discounts or an above-market valuation of the used vehicle being replaced can be obtained, which can be significant.