A fully-fuelled company car is worth $4000 more than a year ago - and businesses are trimming salaries to claw cash back, writes Esther Harward. If you've got a company car, don't expect a pay rise.
Bosses are cutting salaries to compensate for higher vehicle running costs and cancelling perks such as allowing staff to take vehicles away for long weekend trips.
Remuneration consultant Helene Higbee said higher petrol prices and interest rates had pushed up the value of a company car to an employee. A medium- sized 2.4 litre company car for personal use was now worth $17,306 a year - up from $13,199 last year.
Higbee said employers were now less willing to give staff unlimited use of company vehicles and most set a spending limit on personal travel. One employer asked last week if she could do anything about an employee running up an $800 monthly fuel bill.
Cars were the most emotive part of remuneration negotiations and most companies tried to keep them out of contracts so they weren't forced to meet rising costs, she said.
Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson said employers were starting to factor in the increasing value of a company car when considering a pay rise. It was now very common for employers to reduce salaries to make up for higher vehicle running costs, he said. Companies tended to revise the value of car and fuel packages every year, and the price of petrol had risen by more than a third over the past 12 months.
At the same time bosses were increasingly wanting to cash up vehicles and paying employees the equivalent in cash because they were sick of the hassle of insurance claims, administration and staff abuse of vehicles.
HR consultant Kevin McBride said most employees preferred the cash equivalent of a company car, despite paying more for fuel. "Whereas in the past a company car was a bit of a status symbol, increasingly employees prefer to make their own decisions about what sort of vehicle they buy."
Staff who use their own car for work and claim costs back from their employers could find they are not getting properly reimbursed.
Many companies use the IRD's mileage rate of 62 cents a kilometre to claim back tax. The rate was set in 2005 when petrol was $1.53 a litre, and is under review. The AA says it costs 79c a kilometre to run a medium-sized car.
Meanwhile, the AA says motorists are getting stranded in increasing numbers as they try to stretch out the last few drops of fuel in their tanks. Its staff delivered 2061 emergency fuel drops in May - a 20% increase on the February total.
National road service manager John Healy said more city dwellers than rural people got stranded, and in many cases they ran out of fuel on motorways and bridges. "People are taking a risk, thinking 'I'll just let it get down a bit further and wait till I see a petrol station where fuel's a bit cheaper, or they have fuel vouchers for a particular type of station."
Superintendent John Kelly, of Waitemata's road policing unit, said drivers who got stuck on high- volume roads such as the Auckland Harbour Bridge caused chaos and made it dangerous for police and AA staff to rescue them. "They don't save anything . . . It defies any sort of common sense really."
