Does your business require the use of company-owned vehicles? While you can never recover your entire investment in business cars, vans or trucks, you have ways to ensure that you get the most from them — and the most value when you’re ready to replace them.
Lease or buy?
Start by asking your accountant whether it makes more economic sense in the long term to buy or lease your vehicle. Chris Brown, executive editor of Business Fleet magazine, says leasing may be the best choice.
"There are a lot of regionally located, small-fleet leasing companies that can give business owners a soup-to-nuts, cradle-to-grave program that helps them maintain their vehicles, with a menu of services based on their needs. Many small businesses need to outsource their fleet management to someone who knows what they’re doing so that the business owners can concentrate on their business," Brown says.
If you’d rather buy your business vehicles, pick ones that will maintain their value.
"You may have to pay a little more upfront, but the costs over the cycle of ownership will be better and the resale value should be better," says Phil Reed, senior consumer advice editor at automotive website Edmunds.com.
The Edmunds site has a "True Cost to Own" feature that factors in insurance premiums, fuel costs, maintenance and repairs to help you determine what a particular vehicle is likely to cost to operate over time.
Maintain them well
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
Practicing preventive maintenance and preserving a good relationship with your mechanic are paramount when it comes to retaining the value of a business vehicle.
"You also need to keep an eye on your drivers; there should be a strict written policy as to how business cars can be used," Brown says.
Routine maintenance tasks like rotating tires and changing windshield wipers should be done regularly, but Reed suggests that business owners may want to carefully evaluate the frequency of oil changes. Few vehicles today need their oil changed every 3,000 miles; many can go 6,000 to 7,000 miles between changes.
If you have just a few vehicles, consider doing some basic work yourself. Changing a cabin air filter costs $75 to $150 at a dealer, but you can do it yourself in five minutes for the roughly $10 cost of the filter.
Tires are one place you shouldn’t economize, though, as they’re key to vehicle safety. Get them rotated at each oil change, but resist "upselling" of other services by automotive shops. "Alignments are expensive, and you don’t have to do it every time," Reed says. "The time to do it is when you’re seeing abnormal wear on your tires."
Keep them clean inside and out
AAA spokeswoman Ginnie Pritchett advises cosmetic care to help preserve your business vehicle’s value.
Using floor mats will help reduce wear and tear on a vehicle’s carpeting, and cleaning any spills on carpet or upholstery immediately will prevent stains from setting. Applying a UV-protective coating on vinyl and rubber surfaces extends their life.
If you’re hauling something, cover your flooring and seats with some kind of protective covering to keep them from being damaged.
Get into a regular washing schedule for your business vehicle — every two weeks is good — and wax it twice a year. Get any windshield chips repaired immediately to save money, and have small scratches on the vehicle’s body repainted to prevent rusting of exposed metal.
"There are certain time periods when it’s good to resell a car — before 36,000 miles or before 75,000 miles," Reed says.
Most extended car warranties expire at 36,000 miles, leaving your business open to additional repair costs. At 75,000 miles, vehicles usually are due for major work that can include replacing coolant, brake fluid or rear differential fluid. These can run you anywhere from $300 to $1,000. If you intend to sell the vehicle soon anyway, why not avoid those charges?
If you do decide to keep your vehicle beyond the expiration of the extended warranty, Reed suggests looking around for an independent repair shop instead of taking it to a car dealer. You’re likely to pay a lot less for repairs there, he says.