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Build a European car policy (part 1): That is no picnic !
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 Yes it is possible to build a European car policy ! But, as you already know, it is not simple…So here are some hints and guidelines to support the initiative.
Before we look at how to build such a document, it is important to know that the initiative can only become reality if Finance and Human Resources directors succeed to translate their antagonist objectives into a shared ultimate goal.
Human Resource directors mostly push for a maximum free choice policy of nice cars to keep employee motivation at the highest levels and maintain an attractive recruitment advantage.
Finance directors, driven by cost decrease and cost control objectives, mostly consider fleet in terms of restricted policy, limited brands, models and engine types for reduced cost.
On top of this situation, countries and Headquarters need to share a common view about what should be included in the European document (core guidelines) and what should remain local.
Considering these above mentioned elements, policy harmonisation is possible only if Human Resource directors understand the financial targets and if Finance directors are sensitive to some fundamental Human Resource concerns, both parties supported by an International purchasing team taking into consideration local reality to build a coherent International strategy.
Harmonisation challenge
The car policy harmonisation challenge can be divided into sub-categories :
- "Rules harmonisation" could have as basis a limited brand-model scheme. In Europe, the trend of Multinationals is to select 3 generalists and 2 premium brands.
- "Product harmonisation" is possible but mainly depending on countries involved. The main financing-management alternatives are different depending if you operate in the UK, Continental Europe or the Scandinavian region. An increasing number of companies with large fleets seem to select the option own financing with outsourced fleet management.
- "Cost harmonisation" could have as basis a cost per kilometer budget per level. The budgets are identical but the brands are different, due to different popularity and price competitiveness. Harmonization should never mean one brand across Europe as it financially does not make sense at all.
Building a European car policy
A European Car Policy is built around a core content structure with standard headlines but subdivided into three levels of rules :
• rules without local addition
• rules with local addition
• rules with local intervention
This article will focus on rules without local addition and rules with local addition.
1) Rules without local addition
General scope
The introduction of a European document typically mentions the specific categories of employees to be provided with a company car as a part of compensation or as tool for the job. It continues confirming that the level of car provided is dependent on job need, grade and/or local practice and that the policy is based on local market practice and conditions.
The introductory section is a perfect opportunity to mention if pool cars will be used in priority for new hires and employees changing cars. In that section, you can also state when employees, eligible for a new car category because of job change, will be allowed to take a new car.
Optional equipment
A European umbrella document should describe minimal standard safety and comfort features, going from airco, ABS, alarm, etc…
One other core principle included in this paragraph should address the opportunity for employees to order - in compliance with the policy – extra accessories, the limits associated with this opportunity, the cost for the employee, the payment calculation, process and timing as well as the formula (or not) for reimbursement.
Car usage
This part of the document addresses the elements such as but not limited to the authorization levels (e.g. usage for business only or including private use), the usage limits (e.g. vehicle not to be used for driving lessons) the driver levels (e.g. limited to the employee or extended to others), the associated requirements (e.g. minimum age), the responsibility (e.g. no transportation of dangerous goods).
A specific paragraph reinforces the need for a valid driver's license, the filing of the appropriate documents at country fleet administrator’s level, the process for immediate reporting and potential hand over of the car by the employee in case of suspension, withdrawal or loss of the license.
Drugs
The core European document also reiterates the prohibition of alcohol consumption and medicines, as well as the use of narcotics in connection with driving a company car.
2) Rules with local addition
Car Allowance
If the company envisages the car allowance scheme as an alternative to the company car (e.g. UK), a common rule must define when the move to the car allowance scheme can happen and how the car allowance amount will be paid. This section must include a paragraph on the insurance coverage and the relief vehicle rule. Here too, local policy documents will provide the additional details.
Fines
“Fines” is a topic that can easily be harmonized in a European document. The traditional approach is to consider that the cost of a fine incurred while the car is under the responsibility of the employee or driven by another person, is to be paid by the employee. In the case the company is charged for fines, the amount is deducted from future expense claim reimbursements.
Maintenance and Repair
This part of the document will enforce the employee to comply with rules such as respecting warranty conditions, servicing the car on time, handling the vehicle properly and maintaining the safety. Concerning repairs, a common rule should manage the process of repairs exceeding a reference amount (to be decided by the company). The process should for example indicate prior approval by the local fleet administrator before placing such a repair order.
Petrol Card
A European document can foresee a standard policy on fuel cards. The classic core principles advise that the fuel card is only applicable to the company car and may cover private mileage. Local policy attachments should complete the rules on eligibility and use.
Mobile phones
The European car policy can also issue core directives on what type of mobile phone is needed (e.g. approved hands free kit) and what type of usage is allowed while driving (e.g. earset or hands free).
Accidents
The document must clearly reiterate the imperative for all employees to drive carefully and according to the local laws and to report any accident injury to the applicable Human Resource and/or Risk Managers. From here, the document should direct to the specific local accident reporting process instructions (e.g. reporting by e-mail to all parties within 48 hours).
Insurance
The European document will confirm for which type of risks the company has arranged for.
A harmonised insurance deductible / excess rule can here be considered for situations where the driver is responsible for an accident. The document will state which maximum amount per accident the driver is liable to pay and over what time frame.
This paragraph should also state if the insurance covers the company’s or employee’s stolen property and if not, strongly recommend to not leave any property within the vehicle or ensure that it is locked in the boot/trunk.
Final tip
To keep the necessary flexibility for future updates or changes, foresee a section stating that the company reserves the right to cancel or amend the policy anytime. Do not forget to indicate the person who will have the power to authorise any future variation or exception to the policy.
| 01/01/2007 |
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