Why Companies Give Employees Cars

In this economy, it wouldn’t be surprising to hear that a company is cutting back on perks such as company cars. With so many companies tightening their belts, one might not expect the CEO to head down to McAllen Ford and pick up a new Explorer for some of his employees. And yet, it’s those kind of perks that help motivate and drive (no pun intended) the success those employees generate, ultimately growing the company’s bottom line.

Benefits vs. Perks 

What is it about perks that make them so powerful, even in times like these? Well, you have to think of them as different thank benefits. Benefits are for all your employees while perks are for those who earn them. Benefits are plentiful and perks are rare. Benefits are part of the cost of doing business while perks are rewards bestowed upon employees who earn them.

Make Employees Feel Special 

A perk like a company car can help make an employee feel special and appreciated. It’s a way for a boss or company to tell an employee that they are special and taken care of. Effectively, while they are a reward for hard work they also help motivate those employees to work even harder, lest a park like that new Escape model from McAllen Ford be taken away from them.

Job-Specific Needs

There can also be job-related specific reasons for giving an employee a company car. If they are a salesperson or need to travel for work, the company car cuts down on rental and other costs. If it’s a nice car, it also allows the employee to showcase a look or impression that they might not otherwise be able to. They need to make a great impression on your behalf and it’s always a good idea to help make that possible. And if the employee needs to cover an area that you consider drivable, that’s going to make theirs and your life much easier in the long run.

Tax Reasons

Company cars don’t just benefit the employee; they can also benefit the employer as well come tax time. The employee can claim a tax deduction on the expense of the car, which includes mileage, maintenance, gas, etc. Of course, only business-related usage counts. They can’t deduct anything during personal use. As for the employer, you have tax deduction privileges as well. Since you are financing the lease or purchase of the car, you can count all usage, personal or business, towards tax deductions. You can make usage claims such as maintenance, tolls and insurance as well as depreciation claims on the value of the car overall. Even in tougher times, a company car still provides plenty of value for you and your employee.

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Nick Walz is an active blogger and writer who likes to share his advice and tips to the online community. Nick loves to read and catch up on any car gossip. You can contact him on Twitter @Nick_Walz.