Ian Hughes, Commercial Director for Zenith Provecta, explains why Salary Sacrifice for Cars looks set to grow as an increasingly popular employee benefit.
Zenith Provecta has seen more demand in 2011 for Salary Exchange, its Salary Sacrifice for Cars product, than at any other time since launching the product three years ago. In the first quarter of 2011 we have seen a rise in enquiries about Salary Exchange and in new customers signing up to take the product and we believe that the sector will continue to grow.
One of the reasons behind this growth is that understanding is increasing, amongst HR professionals and other decision makers, of the benefits that Salary Exchange can deliver to drivers and the all employee population. There has most certainly been an element of ‘wait and see’ with companies wanting to assess the experiences of early adopters and, in particular their competitors.
Growth in demand has been noticeable across all industries with companies seeking to provide an exciting new benefit to their employees, helping them to attract and retain the best employees, whilst promoting the use of low emission cars. Within the professional services sector corporates and partnerships, such as law firms, are assessing whether Salary Sacrifice for Cars is right for their business.
While it appears that the darker days of the credit crunch are behind us, businesses are continuing to look closely at costs. Employers are continuing to seek cost cutting measures without impacting directly on employees through, for example, salary freezes or even cuts. Job security and confidence may be stabilising, but redundancies are an ongoing risk and these can impact on early termination costs if not addressed correctly by providers. It is important for both public and private sector organisations to engage with all key stakeholders and work with a provider with years of experience in running schemes in order to truly understand the potential cost exposure.
Many employees have been finding that they have less disposable income due to rises in inflation, fuel and insurance costs, with salaries not necessarily rising to compensate. Salary Exchange offers employers a way to ensure that employees make substantial savings on a new car, at little or no cost to the employer.
Salary Exchange and leasing in general has become more desirable following the rise in VAT. Other factors driving interest include concerns over the costs of grey fleet and health and safety issues, which are prompting employers to seek a way to encourage cash allowance drivers back into company cars.
We expect to double the number of Salary Exchange cars on our fleet over the next few years, as more and more employers learn about the added value that a Salary Sacrifice for Cars scheme can bring to their business. However, Salary Exchange is not going to simply replace the traditionally funded company car. It is important for companies to fully explore all fleet funding options, and in many cases a mixed funding approach will continue to be the optimum solution.
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