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Company Car & Auto Allowance Policies

company car & auto allowance policiesCan anyone share with me what your company policy is on company cars and auto allowances?

I'm looking for a gauge of what the current market is for auto allowances or company cars for various management positions. We are a $5 billion rev company.


Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

My experience is primarily on the reimbursement side - rentals were fully covered. Personal use of your vehicle was reimbursed at the IRS rate which as of today stands at 56.5 cents per mile. But there was one company that offered a sliding scale by level, of subsidy, for an auto purchase. You pick your car and depending on your level, you were granted an auto bonus for purchase.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Proformative offers 400+ online business courses with free CPE, many on Expense Management.

Topic Expert
Dana Price
Title: Vice President, M&A
Company: McGraw Hill Education
(Vice President, M&A, McGraw Hill Education) |

Is this US based or foreign? Policies can vary depending upon the location. When I was with a global business about half your size we had no cars for anyone in the US and Asia, but did grant senior management auto allowances. The US allowances were around $500 per month and ran through payroll. The sales team were remibursed as Regis described. In Europe that was different, we had legacy fleet issues that over time we converted into salary increases, but it's hard to do in certain countries, especially if competition is tight.

(VP & Chief Administrative Officer) |

This is entirely US based. We offer auto allowances to certain managers and sales reps as well as some company cars. I guess what I was really looking for was a gauge of the market for auto allowances vs. the total cost of ownership of a company fleet.

(EVP & CFO) |

We have a graduated program, Exec level gets company cars and about the $65k level every three years. Next level down $50k range, Salesman get $35k range, otherwise we only reimburse $.48 a mile, we do not do the IRS rate.

(7) |

We are a much smaller company and our outside sales have company vehicles but are in the $25k range and our senior management have been moved from being reimbursed for their personal vehicles to using company vehicles and the type of vehicle depends on a few other factors. We found it cheaper to buy the vehicles rather than reimburse. All others we reimburse at $0.50 per mile.

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

At my last company, certain sales and marketing executives had a car, often in lieu of an office, refreshed via fleet purchasing every three years. Only two mid level options were available and mileage/maintenance was carefully monitored. Claims adjusters had a similar arrangement, having to drive to property casualty damage scenes, with the model pegged to the lower end of the price range. (Obviously, this was an insurance company.)

Joe Call
Title: CFO
Company: Herrick Industrial Supply
(CFO, Herrick Industrial Supply) |

We did a lot of research on what would be the lowest cost. The employees preferred using their own vehicles. We decided on a rate of $580 p/mnth plus fuel. When we looked at costs of a car allowance versus providing a car we found that when you include all the costs of maintenance, tires, interest costs, insurance etc. we came out about even with the exception that our cars would still have a salvage value. It is also important to check with your insurance broker to be sure that the drivers have adequate coverage.

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

We purchase fuel efficient cars for our employee's who travel a lot between stores. They have a fleet card so we can track fuel / mileage. They submit mileage logs to account for personal use. We collect $50/per pay bi-weekly for the personal use of the company vehicle. For intermittent travel we pay the IRS standard mileage rate which is currently $.575/mile. If they will be traveling for more than a day we look at a car rental. Renting a car is cheaper than paying the IRS standard mileage rate in most cases.

(CFO) |

We do monthly car allowances through payroll in the $500 range and reimburse for gasoline, maintenance such as oil changes, tire rotation, and car washes.

Brian M Harris
Title: Owner / Executive Recruiter
(Owner / Executive Recruiter, TALENT ACQUISITION SPECIALISTS) |

My client just hired a top marketing executive for their U.S. company. He was given an Auto Allowance of $500 per month as he preferred to use his own car. Now he is asking for mileage on top of the allowance. His travel will be extensive and will quickly eat up the allowance and limit his travel. We have considered adding $0.24 per mile to his allowance. Any suggestions? Is this appropriate? Need the legalese to add to offer sheet.

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

I would think this should be either/or - the allowance or mileage reimbursement. Mileage reimbursement covers everything for a personal car including depreciation. If his spend is above the $500, I would suggest moving to the IRS allowable rate of 57.5 cents/mile. Could even sell it to him that the allowance was likely taxable as compensation (although he could have been offsetting that if he was claiming the car was solely for business, like if he was leasing it). But I suppose you could have a hybrid allowance with a lower reimbursement rate as well - just seems that it creates some issues.


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