11:51 am, August 13, 2020
No sector has escaped the effects of Covid-19 and the ensuing lockdown, including the UK automotive industry.
CBS doesn’t need to explain to motor dealer groups the current impact the pandemic has had on their businesses. However, there are ways in which dealers can make immediate and material financial savings by operating their employee cars and demonstrators in new ways.
Reduce Demonstrator Costs
Write-downs represent a huge cost for dealers, and new rules around sanitisation and social distancing have made using company cars as demonstrators (or vice versa) impractical for a number of reasons.
This leaves dealers in a difficult situation, needing an alternative to demonstrators for their company car-driving employees which doesn’t result in additional costs, and ideally generates financial savings.
How can bottom-line savings be achieved using an Employee Car Ownership Scheme?
1. Eliminate employee car and demonstrator write-down costs
As an Employee Car Ownership Scheme removes the company car tax liability for the employee, these savings can be utilised by the dealer to eliminate or at least materially reduce write-down costs on their demonstrators and employee fleet. This realises immediate and material savings for the business.
2. Remove Class 1A National Insurance contributions
Company car tax has risen again during lockdown, increasing both employee taxation and employers’ Class 1A NIC liability by 10 to 20 per cent since April 6. Under an Employee Car Ownership Scheme, Class 1A NIC costs are not payable.
3. Demonstrate commitment to consumer safety
With employees in an alternative arrangement, requirements for valeting and sanitation of demonstrators are reduced, along with the associated business costs. Consumers can be reassured that the dealer has implemented Covid-19 safety measures.
Generate Used Car Stock and Registrations
Consumer demand is high but many of the channels that traditionally generate used car stock have been impacted. There is a need to create an efficient pipeline of used car stock for this currently lucrative sector.
Furthermore, the rising cost of company car tax influences employees to choose cars that work for them financially, rather than a vehicle which is an attractive used car prospect at the end of the term.
Every employee placed into a CBS-scheme vehicle provides an incremental registration, thereby kickstarting the vital new car market. Crucially, at the end of the contract term, this vehicle returns to the dealer as part of a guaranteed used car pipeline, forming a quality consumer offering.
These cars provide a plentiful, timely supply of premium known cars with no acquisition costs or logistical difficulties.
Employees will retain their employee car benefits, as well as enjoying short-term contract lengths and low repayments when compared with consumer arrangements and no credit reference agency checks – critical in these uncertain times.
The CBS Optimiser; Savings Made Simple
The new CBS Optimiser is a tool designed to identify the ways in which dealers can make timely and critical savings for their business, without disruption to business operations or employee benefits.
On average, dealer groups could save £130,000 per site by switching to a CBS scheme.*
CBS makes the process deliberately simple and easy. After a short consultation with CBS’s team of experts, CBS will analyse dealers’ existing demonstrator and employee fleet using the CBS Optimiser.
A report detailing the best solution to maximise savings based on each dealer’s unique business requirements will be provided. There is no cost for this consultative service.
We Consult. We Analyse. You Save.
CBS provides a full service solution, which includes full implementation, training and, most importantly, long-term management of the scheme using CBS’s tailor-made digital platform and bespoke systems.
Contact CBS today for your consultation or email [email protected]
*Approximation based upon illustrative dealer structures across 18 manufacturer brands. Savings calculated using data from CAP and HMRC company car tax BiK rates, as of July 2020.
- Got a beef with your car manufacturer? Love your suppliers? Tell us why in our Car Dealer Power survey here.
- Get the latest news updates in our WhatsApp group. Broadcast only, headlines direct to your phone. Send us a message and ask to join here.
- There’s a fresh new design and exclusive content for Car Dealer! Download issue 149 for free here.
