Business Analytics Blog

Business Analytics Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

To buy or not to buy: Is a company car scheme a good option? ... that is the question

To buy or not to buy: Is a company car scheme a good option?... that is the question

Flex Benefits: One of the lovely benefits of the job, with options including travel insurance, Dental cover, and even shopping vouchers...a real perk that we want to take advantage of right?. Yet why is it, that even though we have well over 8,500 hours (that’s a year) to consider what flex benefits (we would like to choose… and a whole 500 hours (that’s 3 weeks) to register our preferred options… I’m still sat at my computer with 1 hour (that’s 1 hour) to go before the flex benefits deadline and am completely befuddled as to what options to choose!!

My main point of confusion this time around – do I get a company car? My faithful 12 year old VW Polo is giving up the ghost – she has to have an ignition coil replaced every other month, one of her lights looks like she’s got a cataract and the RAC are on speed dial. After the humiliation of the rescue van coming out to me on Halloween when I was dressed as a “Zombie Schoolgirl”, enough is enough!

But as the company cars sparkle at me from our Flex Benefits options – I can’t help but wonder....is it really the best option for me? So I used my pre-deadline hour wisely and did my research in true Operational Research and Business Analytics style – I took a mid range car (the Audi A3) and did the maths: What are the factors to consider?: • A Company Car means a brand new sweet-smelling vehicle, with pretty much everything included. But it comes at a pretty hefty monthly cost , its going to depreciate really quickly and you don’t own the car at the end of the agreement • Buying second hand means it will be cheaper to start with (or I can get a better car for the same price), it wont depreciate as quickly but I’ll need to pay for tax, repairs and insurance I think my Business Analytics colleagues would call this an Options Appraisal. So, with the help of autotrader.com I’ve had a little go at creating a mini model to cost this up.

The graph attached shows what we all know – that new cars depreciate really quickly – but my analysis has helped me to actually quantify this depreciation for the type of car that I’m considering. So what have I concluded? I’m not buying a new car – it will smell nice but it loses value WAY too quickly to be worthwhile. So with that off the table, what of the other options...

Both company car and buying second hand are viable options, what it really comes down to is do I have the cash to pay up front for a 2nd hand car, or would it be better for me to just begin with monthly payments on the company car scheme...to be decided  What I do know is: I’m now an Audi A3 expert and I don’t want one. One day I aspire to own a big family car with room for a couple of car seats and a pram... but right now I’m on autotrader.com looking at cars with funky cup holders and a roof that goes down.

About the author

Nigel Lewis
Nigel Lewis
Nigel leads the Capgemini Consulting’s 35 strong Business Analytics team, which delivers analytical, operational and strategic modelling solutions to clients. He has 18 years consultancy experience as well as 8 years experience in the UK gas industry. Nigel has successfully managed complex projects in both the public and private sector, including capacity modelling, simulating supply chain operations, strategic business modelling to support future policy decisions, and implementing complex demand forecasting systems. Nigel is currently focussing on the development of Capgemini’s customer analytics and analytics advisory services.

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