Click here for PDF of full article, including charts.
(Charts updated as of August 5, 2009).
The Automotive Fleet 2009 personal use survey revealed that 91 percent of the fleets surveyed allow personal use of company-provided vehicles, up from 87 percent in 2008. Of these fleets, 76 percent allow personal use at all times, whenever necessary, a response steady from 2008 reports.
Companies Continue to Allow Spousal Personal Use
Of fleets that allow personal use of a company-provided vehicle, 57 percent permit spousal use of company-provided vehicles, while 28 percent of fleets surveyed only allow personal use by employees. The remaining 15 percent of responding fleets allow personal use for domestic partners, licensed children over 25, and include exceptions for medical emergencies.
Some fleet managers who allow employee-only personal use indicated they are currently reviewing personal use policies to allow others (spouses, licensed children, and/or domestic partners) use of company-provided vehicles.
"I feel it should be open to spouses with a valid driver's license and MVR check. I am currently in the process of getting buy-in to do so," said one East Coast fleet manager.
A Southern California-based fleet recently removed spouses from the list of drivers allowed use of company-provided vehicles. "We allow personal use of company vehicles for the driver only. Spouses were recently removed as an authorized driver, and personal usage has dropped proportionately, resulting in significant savings," the fleet manager said.
Another fleet echoed this sentiment, stating, "We would like to eliminate spouses driving the vehicles, but don't think it will be well received by the drivers."
According to the AF personal use study, company-provided vehicles are driven an average of 1,632 business miles and 429 personal miles per month.
Of fleets that allow personal use, 58 percent perform MVR checks on non-employees driving company-provided vehicles.
Several fleet managers said MVR checks are an important part of the personal use process.
"From a risk management viewpoint, we choose not to restrict personal use, but to manage the safety of the driver," commented one fleet manager. "This includes driver training and MVR checks."
Personal Use Conditions Vary
As previously noted, 76 percent of surveyed fleets allow personal use of company-provided vehicles at all times, whenever necessary.
Of surveyed fleets, 14 percent allow personal use only to and from work.
Several factors govern company-provided vehicle assignment for personal use, such as job function (68 percent of survey respondents), annual business miles driven (44 percent), and job title (43 percent).
One fleet reported it is reviewing its policy regarding personal use eligibility. "We are currently considering changing company-provided vehicle eligibility to a specific number of business miles driven versus job description."
Another fleet manager respondent simply stated, "Personal use should be related to your job position."
Most fleets surveyed charge $100-$149 per month for personal use of company-provided vehicles (37 percent, compared to 39 percent in 2008). The percentage of fleets charging the next most common fee - $50 to $90 - dropped from 37 percent in 2008 to 22 percent in 2009. The average monthly personal use charge was $108.
Charging Employees for Personal Use
A majority of fleets utilize an expense account deduction for personal use charges (79 percent of fleets surveyed), while 13 percent of surveyed fleets recoup personal use expenses from employees by an employee check. The least-common process to recoup personal use expenses was a payroll deduction (1 percent).
Of fleets that allow personal use of company-provided vehicles, 63 percent charge employees directly for vehicle use and 85 percent of fleets input personal use charges directly on the W-2, if the employee is not charged directly.
Commenting on personal use charges, one fleet manager said, "Personal use is a practical way for fleets to reduce expenses and tax surprises for employees at year-end. Employees should expect to pay something for the benefit of having personal use of the vehicle."
Another fleet manager remarked on personal use fees, "It is impossible to manage the prohibition of personal mileage on a company-provided vehicle. Therefore, we allow it, but limit use by limiting the number of eligible drivers and charging a fee to recoup the cost."
When employees are asked to drive personal vehicles for business purposes, they must be reimbursed.
Of fleets responding to the AF survey, 94 percent reimburse based on a per-mile rate, while 5 percent reimburse based on a flat monthly rate. The least-common reimbursement procedure was a flat monthly rate (1 percent).
Of the surveyed fleets, 74 percent do not charge any portion of repair costs for accidents in a company vehicle occurring during personal use.
Fleet Managers Voice Compliance Concerns
Some fleet managers expressed concerns regarding personal use policy and IRS requirements.
"Document your personal use plan and establish the policy with your tax department so they are aware of the company's 'accountability plan' per the IRS Fringe Benefit section of the Internal Revenue Code," advised a fleet manager at an East Coast pharmaceutical company.
According to a fleet manager of a Midwest insurance company, personal use is "messy, because no two departments see it the same way. We are still in our first year of personal use charge-back. Prior, it was done by claiming personal use, and reimbursement came out of what the driver was being reimbursed for other expensed items."
Another fleet manager noted, "My company needs to increase the monthly personal use fee, get MVRs on spouses, and increase employee accountability, such as requiring drivers to pay something when an accident occurs on personal time. We are working on these very issues."
Personal Use Advantages and Disadvantages
Fleet managers remarked on the practice of personal use of company-provided vehicles. Most fleet managers surveyed noted personal use was a huge benefit to their drivers, while others cited concerns regarding abuse.
"Due to the nature of our business, it is an operating necessity," said one fleet manager. "Certain employees must be available for emergency call-out, and having the vehicle at their residence reduces response time."
Another fleet manager noted personal use was a job perk.
"Many of our younger employees do not own their vehicles. Allowing personal use is a great benefit that we offer, allowing us both a recruitment and retention tool," the Oklahoma-based fleet manager said.
"It helps get new employees when the salaries are on the industry low side," echoed another fleet manager.
Concern about enforcement of personal use policies was also raised.
"Personal use is difficult to enforce," noted one Midwest fleet manager. "Many employees cheat by saying they don't use the car personally and therefore don't get charged. Many don't know or remember the definition of personal use."