Average Personal Use Charges Increase to $121 in 2013

Fuel costs are up, fringe costs are a concern, and technology is providing in-depth reviews of fleet costs, working to impact the fee drivers might be required to pay for personal-use privileges. In 2013, average monthly personal-use charges increased to $121, up from $116 in 2012 and $118 in 2011.

Automotive Fleet’s annual survey of personal-use charges and policies took place via an online questionnaire, completed by commercial fleet managers across all industries.

For the first time in this study, because not all fleet vehicles are used for the same purposes, the percentage of fleets that allow personal use of company-provided vehicles was broken out by field and non-field vehicles. The percent of fleets that allow personal use of company-provided field vehicles increased to 87 percent in 2013, vs. 85 percent in 2012. Of the fleets that operate non-field vehicles, only 38 percent allow personal use.

Based on feedback sent by fleet manager respondents, the increase in personal-use charges may be in correlation to the continuing increase in gasoline prices.

“I sent a communication to drivers justifying the increase in the personal-use fee, based on an increase in fuel expense,” said one fleet manager, who wished to remain anonymous. “When fuel prices dropped again, fleet received many inquiries about when the personal-use fee would be reduced.”

Some fleets are going to be incorporating personal-use charges in their fleets starting in late 2013 or early 2014, but are struggling to settle the logistics.

“I know we need to charge for personal use, but I struggle to find out the best way to manage it and determine who is responsible (fleet, HR, or payroll),” said one anonymous fleet manager.

One fleet manager noted concern about the fringe costs associated with personal use, such as additional cleaning charges, more frequent maintenance requirements, etc. “We are investigating the fringe costs associated with personal use. There has not been an increase in many years and we are now in the process of determining what that number should be raised to,” said one fleet manager, who wished to remain anonymous.

Other challenges are reported with determining personal-use fees. “Variable personal-use charges is one way to offset increases in costs related to choice. The problem is, it creates an administrative challenge and requires rules for reassigning cars and other swaps. These may not always look fair to the drivers,” noted one fleet manager, who wished to remain anonymous.

One fleet manager noted that her company began using a GPS tool to track business and personal mileage.

“This tool has automated the mileage collection process and provides employees with an electronic daily mileage log which is compliant with the IRS regulations,” she said. “It has automated the personal-use deduction, based on employees’ actual miles driven which is a more fair and equitable way to assess personal use of the company car.”

Finally, some increases to personal-use charges are occurring based on the vehicles used. “With increases in technology from our fleet management company, our drivers continue to get more out of the personal use of the vehicle,” said an anonymous fleet manager. “Each year, we do an in-depth calculation to determine the average personal use on a vehicle, and we base our personal-use fees as a portion of that amount.”

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Digging Deeper into the Numbers

Of the fleets that allow personal use of a company-provided vehicle, 73 percent allow an employee’s spouse to take the wheel. This is up from 64 percent in 2012. Only 25 percent of fleets do not allow anyone other than the employee to drive a company vehicle, down from 30 percent in 2012. Finally, 12 percent allow an employee’s licensed children (of any age) to drive a company vehicle, up from 10 percent in 2011.

Some fleets no longer allow a spouse to drive a company-provided vehicle, witnessing a resulting decrease in mileage and accidents. “We changed from spousal use and saw a 10-percent drop in overall mileage (one fourth of then personal use) and a drastic reduction in accidents. Not having spouses eligible also lowered our training costs for safety,” said an anonymous fleet manager.

For the fleets that do allow non-employees driving abilities, 67 percent require an MVR check, up by 12 percentage points over 2012. Fleets are performing more checks to help reduce the potential liability resulting from incidents.

Most fleets (83 percent) allow personal use at all times, whenever necessary. This is up from the 71 percent in 2012. This is followed by only 9 percent of fleets that allow only to and from work, and the 4 percent that allow only during business hours.

Still No. 1 in 2013 governing assignment of a company-provided vehicle is job function (75 percent), up 2 percentage points over 2012. Job title is the second most popular factor governing vehicle assignment at 52 percent, followed by annual business miles driven.

Almost as important as what fleets charge for personal use is how these charges are determined, collected, and reconciled.

Up from 2012, 68 percent of employees are charged directly for personal use of a company-provided vehicle. The majority of fleets (31 percent) use industry averages or competitive benchmarks. This is followed by calculating the cost to the company (20 percent).

The majority of fleets (71 percent) perform a personal-use reconciliation (or true up) each year, but 16 percent still do not participate in this practice.

One fleet manager had advice regarding true ups: “Although you may perform a true up annually, I suggest monitoring personal use quarterly, or on a continuous three month rolling average. This will accomplish several things: First, it establishes seasonal patterns in driver behavior (i.e., vacation/holiday periods that reflect higher personal use but then levels off) and second, establishes the personal-use charge policy as a document in your accountable plan just in case of an IRS audit.”

The majority of fleets (38 percent) are charging between $100 and $149 per month on average, for personal use of company-provided vehicles. This is followed by 24 percent that charge $150-plus per month.

“We recently increased our personal-use charge from $90 to $100 per month, and I’m considering increasing the amount for drivers in SUVs vs. sedans since they cost more to operate,” said one anonymous fleet manager.

The majority of fleets (83 percent) are still collecting personal-use charges via payroll deduction, down from 89 percent in 2012.

Finally, for employees that are reimbursed for business use of a personal vehicle, the majority of fleets (87 percent) reimburse based on a per-mile rate, followed by a flat monthly rate (6 percent).