Drive home a better deal on used company cars by selling them to employees
What do you do with company vehicles coming off their leases? Many employers now sell them to employees, a move that’s trending upward thanks to some attractive financial benefits and a new breed of technology to help manage the process.
It can be a win/win situation: Employers rid themselves of vehicles faster, often at higher prices and without having to pay transport, auction or recon fees. Employees gain a well-maintained vehicle at a fair price.
At least 30 percent of fleet vehicles are sold to employees at the end of their lease periods, according to an Automotive Fleet magazine study. That number is rising, thanks in part to a dismal used-car market and a growing employer interest in the trend. Companies are realizing that they can sell vehicles to employees for more than they’d get at auction.
To drive home the best deal with employees, follow these tips:
1. Consider pricing strategy carefully. There’s no industry consensus about pricing vehicles for internal employee sale. So, use fairness as your guide, especially if you view your program as an employee perk. Profiting at employee expense by setting prices at the high end of wholesale or retail value could sap morale.
Don’t reduce the price based solely on condition; that rewards the driver (if he’s the buyer) for not taking care of his assigned vehicle. And steer clear of negotiating, which may cause employee anger if he or she buys a car for more than a co-worker pays for a similar vehicle.
2. Check into tax implications. If you sell a vehicle to an employee for substantially less than market value, the difference is taxable income and must be treated as imputed income on the employee’s W-2. That’s more reason to set a fair price.
3. Bring family, friends and even customers into the act. Your resale strategy doesn’t have to be an employee-only program. Example: Philips Electronics in Cleveland expanded its program with great results. One employee got her mother, mother-in-law, brother and son to purchase off-lease vehicles.
4. Consider services that manage the resale process. If you have a fair number of company vehicles, look into a new breed of services that help manage the process. Leading vendors: Driveitaway Inc. (www.driveitaway.com), Donlen Corp. (www.donlen.com) and Automotive Resources International (www.arifleet.com).
It can be a win/win situation: Employers rid themselves of vehicles faster, often at higher prices and without having to pay transport, auction or recon fees. Employees gain a well-maintained vehicle at a fair price.
At least 30 percent of fleet vehicles are sold to employees at the end of their lease periods, according to an Automotive Fleet magazine study. That number is rising, thanks in part to a dismal used-car market and a growing employer interest in the trend. Companies are realizing that they can sell vehicles to employees for more than they’d get at auction.
To drive home the best deal with employees, follow these tips:
1. Consider pricing strategy carefully. There’s no industry consensus about pricing vehicles for internal employee sale. So, use fairness as your guide, especially if you view your program as an employee perk. Profiting at employee expense by setting prices at the high end of wholesale or retail value could sap morale.
Don’t reduce the price based solely on condition; that rewards the driver (if he’s the buyer) for not taking care of his assigned vehicle. And steer clear of negotiating, which may cause employee anger if he or she buys a car for more than a co-worker pays for a similar vehicle.
2. Check into tax implications. If you sell a vehicle to an employee for substantially less than market value, the difference is taxable income and must be treated as imputed income on the employee’s W-2. That’s more reason to set a fair price.
3. Bring family, friends and even customers into the act. Your resale strategy doesn’t have to be an employee-only program. Example: Philips Electronics in Cleveland expanded its program with great results. One employee got her mother, mother-in-law, brother and son to purchase off-lease vehicles.
4. Consider services that manage the resale process. If you have a fair number of company vehicles, look into a new breed of services that help manage the process. Leading vendors: Driveitaway Inc. (www.driveitaway.com), Donlen Corp. (www.donlen.com) and Automotive Resources International (www.arifleet.com).
