Although the rate continues to decline, better than two-thirds of companies still allow personal use of fleet vehicles, and more than a third of these organizations do not charge the employee for the value gained from this use, according to the 1998 Survey & Analysis of Financial Treatment of Executive & Business Vehicles, published by Runzheimer International, a management consulting firm in Rochester, WI. According to 385 financial professionals who responded to the survey, 68 percent permit employees to use the company cars they drive while on business for personal use as well. However, the trend since around the mid-1980s has been away from allowing such personal use of business vehicles. According to previous survey data, as many as nine in 10 companies permitted personal use of fleet vehicles in 1983 (Figure 1). This downward trend is a result of companies attempting to limit their liability during non-business hours, says survey editor Nat Workman. Of the companies that allow personal use of fleet vehicles, 63 percent do recoup some of the cost through a personal use chargeback or by imputing income equal to the value of this personal use on the employee’s income tax statement. Of the entire sample, 40 percent impute income, 16 percent chargeback employees, and 7 percent do a combination of both. That leaves a full 37 percent of the companies that absorb the entire cost themselves. The challenge to companies is two-fold: first, to be able to defend through accurate recordkeeping, all business use of vehicles; and second, to demonstrate that any personal use is fully accounted for and charged back as income to the employee. Personal use disparity exists between managers and executives Predictably, top executives enjoy the most freedom regarding personal use of vehicles. More than two-thirds, 69 percent, are allowed complete driving freedom in their use of company vehicles. For upper management, such unrestricted use drops to 49 percent, and for middle management, down to 32 percent. Limits commonly imposed on personal use include: only the employee can drive; employee or spouse can drive; only immediate family can drive; local driving only; driving only between work and home; mileage limits; and emergency use only. It is common to see a dual-policy approach—one policy for top execs and one for other levels of employment. Of course, limiting vehicle use just to employees reduces company exposure to risk.

Personal Use Limits Placed on Company Vehicles

Fewer than half of the companies that allow personal use of fleet vehicles offer unrestricted use to employees who are not top executives. Executives have the fewest personal use restrictions because companies feel they must do so to retain top managers.

Organizations that Allow Personal Use of Fleet Vehicles (By Business Classification)

Business Classification Personal Use123456789101112 Yes (percent) 53 83 100 73 80 33 46 57 79 68 100 68 No (percent) 47 17 0 27 20 67 54 43 21 32 0 32

Business Classification Key:

• Aeronautics, aerospace, electronics, business machines, computers, computer software, computer service.

• Automobiles, automotive products, industrial machinery and equipment, metals and alloys, transportation.

• Chemicals, plastics, rubber products, cement products, wood and paper products, glass products.

• Communications, telecommunications, publishing, printing.

• Consumer products, pharmaceuticals, cosmetics, food and beverage, hardware and appliances, textiles, medical equipment, health.

• Government, nonprofit, public utilities.

• Professional services: advertising, consulting, law, auditing, accounting.

• Financial services: insurance, banking, and finance.

• Petroleum, gas, refining and distribution, pipeline, construction, engineering, mining, forestry, agriculture.

• Retail, wholesale, distribution, food service, entertainment, hospitality.

• Diversified industry.

• Other.