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What Is a Company Car?

Limousine drivers may use a company car while on duty.
Employees who drive company cars are usually not responsible for the cost of maintaining the vehicle.
A company may purchase a fleet of cars for employee use.
In New York City, many high-level executives are offered the service of a car and driver by their companies.
Article Details
  • Written By: Alexis W.
  • Edited By: C. Wilborn
  • Last Modified Date: 11 October 2014
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A company car is a vehicle issued by a company to an employee. Company cars may be issued for any number of reasons, such as to serve as a bonus or as additional compensation to an employee. They may also be issued because they are a necessary tool for completing a job.

Top level executives, managers, or others in a relatively high position in a company may be issued a company car. When this occurs, the car is usually issued as a form of bonus or compensation. The car remains in the company's name and the company is the owner, but the employee to whom the car is issued is entitled to drive it.

When the company allows an employee to use the car for his personal use, the employee receives the benefit of a vehicle so that employee does not have to purchase his own vehicle. This is a form of compensation, but is not taxable, so it can be a great incentive. The company also pays for insurance and usually for maintenance and repairs on the car as well, although the employee is typically responsible for his own gas.

Company cars are routinely issued to high-level employees in the rental car industry. In many situations, managers and other employees are able to choose a car from the rental car lot to drive, although they may have to switch cars periodically. Auto dealerships also commonly issue company cars to employees.

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Other industries can provide a company car to employees as well, even if their business model or purpose does not involve vehicles. In some large cities, a company car is also issued with a driver. For example, in New York City, many high-level executives are offered the service of a car and driver by their companies.

A company may also issue a company car to an employee if a vehicle is required to perform his job. For example, a limo driver may drive a company-owned car as he performs the main part of his job. In this context, the employee generally is not entitled to use the vehicle for his own personal use and is restricted to using the car for specified business purposes.

A company that issues multiple company cars usually purchases a fleet insurance policy in order to insure the vehicle. This is optional, however. In most cases, the employer also has the option of insuring each vehicle individually.

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Discuss this Article

backdraft
Post 3

My company maintains a fleet of about a hundred vehicles and most of them were formerly owned by car rental companies. They have limits for how long they will keep a car in service and these typically fall far below the amount of miles that a car will run without mechanical troubles.

Some of the executives are given vehicles that they can take anywhere at any time. They are basically private cars. The rest are used by sales and technical staff to go on service calls.

chivebasil
Post 2

I work as a medical courier and I use a company car to run my route. It is a 2006 Pontiac Vibe. It is actually nicer than the car that I drive at home so I am not complaining about anything.

I used to work for another company that made you use your own vehicle. There were some tax advantages, but in the end it ended up costing me more money. I make about the same money now but I don't have to pay for my own gas or tires or oil changes which was a huge extra cost at my old job.

anon72036
Post 1

When the employer is responsible for paying the automobile insurance on a company car, is the employee's driving record, credit, and so on considered in the employer's quote for insurance?

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