In 2015, average monthly personal-use charges increased to $128, up from the $123 average monthly charge reported in 2014. In just the past four years, average monthly personal-use charges have increased by $12 per month ($116 in 2012 vs. $128 in 2015). Additionally, company fleets averaged 1,742 business miles per month and 398 personal miles per month.
In the endless discussion of reimbursement vs. a company-provided vehicle program, personal use is one factor that remains front-and-center in fleet decision making.
And, personal use remains a sensitive topic, both with drivers and fleet managers, which can cause headaches beyond the obvious issues revolving around accurate mileage reporting.
As one fleet manager who wished to remain anonymous put it: “Most drivers do not like paying for personal use, and they voice their opinion clearly. My best answer is, ‘For under $220 per month you drive a new vehicle, with all maintenance included, plus paid fuel and insurance. What more could you possibly ask for?’ ”
Personal Use By the Numbers
For 2015, the percentage of fleets that operate field vehicles, 79 percent allow personal use, down from 82 percent in 2014. However, 38 percent of fleets that utilize non-field vehicles (such as executive fleets, etc.) increased their allowance of personal use by 7 percentage points over 2014.
Year-over-year, the majority of fleets allow an employee’s spouse personal use of a company vehicle, and 2015 was no different with 73 percent of fleet managers reporting that an employees’ spouse was allowed personal use of a company-provided vehicle, up from 65 percent in 2014. More fleets are allowing an employee’s licensed children personal use of a company-provided vehicle, at 8 percent in 2015 vs. 6 percent in 2014.
Only 28 percent of fleets in reported that they allow no one, aside from the employee, personal use of a company-provided vehicle, down from 34 percent in 2014.
Conditions for approved personal use remain consistent year-over-year, with most fleets (79 percent in 2015) opting to allow personal use at all times, whenever necessary, relatively flat compared to 2014.
Additionally, job function remains the No. 1 factor fleet managers use to determine the assignment of company-provided vehicles, at 70 percent of respondents in 2015, but down from a high of 77 percent of respondents in 2014. Fewer fleet managers (53 percent in 2015 vs. 58 percent in 2014) are utilizing annual business miles driven to govern vehicle assignment, followed by job title at 49 percent, equal to this past year.
However, one big change is the increase in fleets that are requiring MVR checks for all non-employees driving a company-provided vehicle, at 70 percent in 2015 vs. 61 percent in 2014, and 67 percent reported in 2013.
The majority of fleets still perform a true-up, or personal-use reconciliation each year (70 percent in 2015, up just 1-percentage point over 2014). However, an increasing number of respondents reported quarterly reconciliations, creating an all-new category. The percentage of fleets that never perform a true-up decreased by 2-percentage points, from 14 percent in 2014 to only 12 percent in 2015.
Fleet managers continue to use an industry average or competitive benchmarks in determining their personal-use charges (at 30 percent of respondents), down from 37 percent in 2014. The second-most popular method to determine personal-use charges was calculating the cost to their company at 20 percent (equal to 2014), followed by including a fuel benefit at 18 percent (up 2-percentage points over 2014). More fleets are opting to use a prorated annual lease value (ALV) when determining personal-use charges, at 14 percent in 2015 compared with 12 percent in 2014.
While overall average personal-use charges are $5 higher per month in 2015 vs. 2014, when breaking down overall average personal-use charges, the majority of fleets (58 percent) charge more than $100 per month, down from 63 percent in 2014. However, the percentage of fleets charging more than $150 per month increased by 2-percentage points in 2015 over 2014 figures.
When collecting personal-use charges, the majority of fleets continue to opt for a payroll deduction (87 percent in 2015, up 1-percentage point from 2014). This year, fewer fleet managers are reporting opting to collect personal-use charges by employee check (3 percent in 2015 vs. 5 percent in 2014), while the percentage of fleet manager respondents who utilize an expense account deduction (4 percent) remained flat year-over-year.
Additionally, the most common way employees are reimbursed for business use of a personally-owned vehicle remains a per-mile rate at 86 percent (same as 2014), followed by utilizing a fixed & variable rate (FAVR) allowance at 6 percent (down 1-percentage point over 2014 figures). The remaining percentage of fleet managers equally utilize either a flat monthly rate or combination per-mile/flat rate.
Originally posted on Automotive Fleet