9 March 2020

A question employers often ask is, ‘how can a company car improve employee productivity?’

While a company car might at first glance seem completely unrelated to productivity, it does have a very significant impact. There are two ways in which it can help:

  • Recruitment and retention
  • Employee satisfaction

Employee satisfaction is highly relevant to productivity, as happy employees tend to perform better. It also makes them stay on at a job, which has a huge impact on employee turnover.

How does a company car improve staff satisfaction? 


Company cars, particularly from organisations that have negotiated a good deal with a vehicle leasing company, can offer significant savings to employees. Around 41% of employees who took part in this survey said they were able to drive cars they couldn’t normally afford thanks to this type of employee benefit scheme.

Therefore, it is clear that providing a company car as a part of your benefits package can be a good motivator for your employees, if only because it fulfils an aspirational need at an affordable cost.

However, there can be other financial benefits for your workers.

If a company offers a vehicle as part of a salary sacrifice package, it reduces some of the National Insurance and tax burden on the employee. Furthermore, if they opt for a low-emission vehicle like a Plug-In Hybrid Vehicle (PHEV) or a fully electric vehicle (EV), they get even more savings via Benefits in Kind (BiK) tax.

In the case of leased company vehicles, the leasing company also undertakes maintenance, repairs, and recovery, which is another expense that is taken care of.

As a result, employees can expect significant savings over the course of their employment, which helps to boost their morale. Most employees tend to be mindful of the fact that their company takes care of their interests, and as a result, they have an incentive to work harder.

Employee appreciation

Appreciation is one of our fundamental psychological needs and all human beings crave it. If employees feel like their work is valued and appreciated, they feel more satisfied with their job. This, in turn, also motivates them to improve their performance.

A company car is one of the ways of showing appreciation to employees. It also shows them that their employers trust them, which can be another motivator.

Employee being handed a gift by employer while co-workers look on and clap 

Stress reduction

As we mentioned earlier, one of the benefits of a leased company car is that the driver does not need to worry about repairs, maintenance, or recovery, in case of breakdown. This means your employees are free from one of the major stresses of car ownership without having to go carless. 

Having said that, being without a personal vehicle can bring its own stresses. Employees would need to rely on public transport or a car share to get to work. Most people find using public transport quite a strain, be it because of crowded spaces, their unreliability, or the additional time needed for the commute.

Also, with both public means and car share (or carpools), there is a loss of control, which can make some people anxious.

With a personal car provided by their company, they have none of the worries and all of the benefits of car ownership. It means they are mentally healthier and able to apply themselves more to their responsibilities at work.

Additionally, modern cars come with a number of safety features and technology that make driving much safer. Since they can now afford newer and safer cars, your employees are also less worried about their safety on the roads.

EV adoption

As the initial cost of electric vehicles is higher than that of traditionally-fuelled vehicles, offering EVs via a company car scheme can be a great motivator for employees who wish to go green.

Plus, with enough people driving emission-free cars, the air we breathe will become healthier, leading to fewer health problems all around.


Further reading

If you are an employer who is interested in having an efficient fleet and happier employees, here are some other resources that you might find useful.

If you are considering offering company cars to your employees, we offer fleet management and leasing, employee benefits solutions, and driver services. Call us on 0844 854 5100 or email CSalmon@sgfleet.com to get the help you need.

A speedometer progressing from 0 to 80 in increments of 20 and ending with Great Job!