Mobility Blog

Demystifying corporate car leasing, one myth at a time.

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Demystifying corporate car leasing, one myth at a time.

So that you can drive your business into the fast lane.

Any business needs to constantly optimise in various spheres of operation, in order to be successful. Mobility is one such area that needs optimisation, to keep up with ever-changing needs and challenges the company faces. 

Car leasing is a mobility solution that brings this much-needed optimisation and a whole host of other benefits such as cost-effectiveness and efficiency that the company can leverage. But with these benefits, come a host of myths and misconceptions.

In conversation with Venkatesh K, Country Head Sales, ALD India, we bring you hard facts about car leasing, and try to put these myths and misconceptions to rest. So that when it comes to your company's mobility, you make an informed decision. 

Mr. Venkatesh, though car leasing is gaining popularity even in non-traditional markets such as India, we still see several myths and misconceptions surrounding it. Why so?

Yes, car leasing is indeed an up-and-coming mobility solution, especially in the Indian market. As for the myths and misconceptions, there are some fairly technical aspects to car leasing that corporates and businesses are still trying to get a hang of. So, it's only natural that there would be misconceptions around it. Here's where a partner like ALD Automotive comes in, to help you effectively navigate these technical aspects, so that your business can get the very best out of car leasing. 

The most common myth, however, is that leasing a car fleet is more expensive than buying one. Is it true?

Leasing your company car fleet can in fact help you save a substantial sum of money as compared to buying a fleet of cars. This is because when you lease the cars, it is recorded as a running cost which is expensed out, thereby saving you tax. Meanwhile, buying a fleet of cars for your employees goes down as a fixed sunk cost in your books. 

Car leasing also allows you to put your capital to better use, as you don't have to invest upfront or block funds for the down payment for a depreciating asset. And who doesn't like a better-looking bottom line? 

But when it comes to managing a company car lease policy it is seen as an added burden for corporates?

That's far from true. In reality, a company car lease policy can effectively help reduce overhead costs, which you would have incurred had you decided to purchase the cars and manage them in-house. You see, ownership of a vehicle requires a team of people to manage the cars with multiple contact points for maintenance and other such activities. Outsourcing car fleet management to a leasing partner like ALD Automotive not only reduces overheads, but also gives you single point coordination for all activities and better management of employee conveyance expenses. A company car fleet dictates beforehand, how much an employee's commute is going to cost every month. This helps simplify and contain conveyance and travel expenses.

Is it true that the company will have to bear liability arising from traffic violations by the employee?

No, that is not the case if you choose to go with a tri-partite lease contract such  as ALD Ugo. With ALD Ugo, you can safeguard the company from any liabilities arising from traffic violations by the employee. The registration of cars is done in the name of the employee, thus affixing responsibility to the right person (driver/employee), while ensuring other financial responsibilities like payment of monthly car lease rental continues to be in the purview of the company till the last day of the lease, as if the cars were registered in the name of the company. 

Will early termination of the contract by an employee increase administration hassles for the company?

Again, with a car leasing option such as ALD Ugo, the registration of the car is in the name of the employee. This offers an opportunity to the existing employees to continue the car lease contract individually* or through their next employer* on switching jobs (*subject to credit check clearance). Thus, employee attrition doesn't bring with it any hassles for the company, as far as car leasing is concerned.

Reimbursing employees for using their personal car for work is more convenient and cost-effective than corporate car lease. Your thoughts?

See, we all know that reimbursing employees for using their personal car on company time is a time-consuming process for employees and employers alike. Additionally, when employees use their own vehicles, companies have no control over the image and running of their fleet. When a company leases its corporate car fleet with ALD, our products like ALD Pro simplify the entire process and bring in more efficiency. It also helps reduce the dependence of the field staff on public transport and motivates employees with a company-branded, 24x7 car. All this, while making your corporate car fleet make a strong statement to impress.

It is common conception that car fleet management charges for services like maintenance, relief car etc. are very high on leased cars. Is it true?

On the contrary, ALD Automotive provides a whole range of car fleet management services like maintenance, insurance, relief car, roadside assistance in case of emergency, and door-to-door pick-up and drop - all at reasonable costs. Our strength lies in healthy relationships with the workshops as well as insurance firms, from whom we make bulk purchases. In addition to this, we have a team of specialized service engineers who look into each and every job done on every vehicle. Thus, we are able to price our car fleet management services more accurately and pass on the benefits to you. As this is a fixed monthly cost, there are no surprises with regards to maintenance throughout your car leasing journey with ALD. So, no. I think it's a misconception to believe these add-on services are going to be expensive.

Is there any message you would like to give corporates and businesses today?

I'd like to say that car leasing can be the much-needed catalyst for growth, especially when we are faced with a whole new set of challenges such as a global pandemic. Businesses today, need to look beyond just traditional mobility solutions, to be on top of innovation and optimisation, to bring their employees and staff safer, more economical and wholesome mobility options. Car leasing ticks all the right boxes, and with a partner like ALD Automotive, you can optimise corporate mobility for solid growth and returns. 

At ALD Automotive, we truly believe in building partnerships with our clients. So, we take care of all your mobility needs, while you can focus on your core business. Together, we optimise your corporate mobility, leaving behind the myths and misconceptions. So that when it comes to providing your employees with a ride, you make the right choice.