The Car and Truck Fleet and Leasing Management Magazine

The Best Defense Against Reimbursement is Being Proactive

March 26, 2002

Until 1999, Jim McCarthy, director of vehicle management for Siemens Shared Services, received inquiries from an average of one operating company per year regarding the potential benefits of driver reimbursement in lieu of company provided vehicles. Now, some three years later, he is averaging three to five similar inquiries each year. “The key to dealing with the lease vs. reimbursement issue is two-fold,” McCarthy told Automotive Fleet. "First, you have to believe in your product, and I firmly believe that providing company vehicles is the best alternative for most of my operating companies. Secondly, you have to assume that this is going to be a recurring issue and proact accordingly.” In order to proact effectively, McCarthy is always pursuing information, references, and data on this subject. He recognizes that these inquiries come from various sources (finance, human resources, and sales, for example) and has developed pre-packaged materials to address each one of these sources individually. For example, when a CFO from one of his operating companies requests a lease vs. reimbursement analysis, he has found that one of the most powerful tools for this effort is an Ernst & Young study entitled "Company vs. Employee Provisions of Business Cars: An Economic Comparison." McCarthy said that this study provides an in-depth financial/economic analysis that is appreciated by the more financially-orientated managers. Additionally, this analysis ultimately finds a company vehicle to be more cost-effective than reimbursement, to both the company and the driver. "Any time we can get this resource into the hands of a vice president or CFO, it does the job for us because Ernst & Young is obviously an objective outside consultant that does the analysis from an purely economic perspective," McCarthy said. As part of his pre-packaged approach for human resources, operations, or sales, McCarthy uses a different standard of reference, including articles and references from Automotive Fleet and its sister publication, Fleet Financials. "When all is said and done, no matter how much research you do, or how many packages of information you distribute, the bottom line is that we continuously focus on the basics --- the benefits of a car program to both the driver and the company," McCarthy said. "The basic benefits to the driver are financial savings due to our leverage and productivity savings due to our efforts. As for the company, savings and productivity also remain strong as key basic benefits. However, image, safety, recruitment, and retention are additional benefits that must be understood and their importance acknowledged.”
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