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Small & Medium Business: Business Vehicle 101 Guide

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COMPANY-PROVIDED VEHICLES OR FLEET WHEN FLEET PROGRAMS ARE APPLICABLE Fleet vehicles – not to mention their maintenance and insurance – are a major investment for an organization. Fleet programs are a good fit when specialty or branded vehicles are required, or equipment needs to be hauled. Some add company-branding to their vehicle for marketing purposes. Company-provided cars can also be viewed as a perk. FINANCIAL IMPLICATIONS The upfront costs of vehicles and fuel costs are the biggest fleet program expenses. However, liability, damage and accident risk management become major concerns for organizations managing a fleet as well. With U.S. traffic fatalities UP MORE THAN 14% SINCE 2015, accidents are a question of when and how bad, not if. Vehicle damage and bodily harm will result in repair costs and legal fees at the very least. For employers, the average financial liability for an on-the-job crash sits at 16 cents-per-mile driven. Recurring accidents and fatal collisions can be costly. EFFECT ON EMPLOYEES Fleet vehicles are deemed fringe benefits by the IRS. That means employees' personal use is treated as taxable income. Today, 70% of organizations estimate that personal use accounts for up to one-quarter of the annual mileage accumulated across their fleets. This financial burden on mobile workers creates more work for employers to calculate the fair market value of each employee's fleet vehicle. FLEET PROGRAMS ARE A GOOD FIT when specialty or branded vehicles are required, or for equipment that needs to be hauled. THE TRUE COSTS OF FLEET VEHICLES VEHICLE COSTS LIABILITY & RISK COSTS $8,700 Average cost of a fleet vehicle $78,000+ Average cost of a non-fatal, disabling auto accident $1,104 Average annual maintenance, repair and tire costs $1,000,000+ Average cost of a fatal accident $2,860 Average annual fleet vehicle fuel/ oil costs Off-the-job crashes account for 80% of employer crash- related health benefit costs

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