What does a FAVR program look like?

You know what a fixed and variable rate program is (or, if you don’t, you can learn all about it). You’re aware of its benefits and its requirements. You get the differences between fixed vs variable costs. Now you’re ready to see what one looks like in action! For this example of the Fixed and Variable Rate (FAVR) reimbursement program, we’re going to look at a large pharmaceutical company.

Gray Matter Pharmaceuticals is looking to reduce the liability of their fleet program while enabling their sales team to perform at their best. For this reason, they’ve chosen to use a FAVR vehicle program. They’ve selected the vendor they’ll be using, now they need to iron out the details of their FAVR program.

Setting Up the Program

There are a number of steps Gray Matter Pharmaceuticals will cover before rolling out the new program. A FAVR program is built around a base vehicle. Companies share information about the needs of the business and its driving employees. Vendors will use this information to provide customers with a base vehicle and a reimbursement rate that fits within their goal. In this FAVR example, the vendor suggests the best base vehicle and rate for Gray Matter Pharmaceuticals would be a mid-sized sedan and a fixed rate of $500.

With the foundation of the program decided, the vendor will guide the business through the policy creation process. This includes factors like insurance requirements, penalties for being found out of compliance and more. In an ideal scenario, they’ll use industry benchmark data to ensure best practices are met and build the FAVR program to achieve business goals. The vendor should additionally help with a launch timeline and post-launch best practices.

Rolling Out the Program

This is where those best practices come into play. With the vendor’s help, Gray Matter Pharma sticks to the launch timeline, informing employees of the vehicle program change, hosting town-halls and informational sessions about the program before launch day.

With sufficient training employees do two important things. First, they submit their vehicle and insurance information and set up a direct deposit. Second, they download the mileage capture app and begin to record business trips in their personal vehicles. Using the right vendor, this process is a cinch and launch day goes well! Program administrators have access to dashboards sharing the rate of adoption, information the company can use to take next steps in the roll out.

Reimbursement

It’s been a month and 15 days since Gray Matter Pharmaceuticals rolled out their FAVR program! Since the beginning of the program, a fair number of driving employees were skeptical of the new approach. That number has dropped off considerably as they’ve had an easy time using the vendor app to capture their miles and submit their trips.

Today, the 15^th of the month, employees who submitted their mileage logs on time now receive their first set of fixed and variable reimbursements. Unlike other reimbursements, these are specific to the individual and where they operate. That translates to the driving employees being satisfied with the reimbursements they’ve received.

FAVR Example: Sound far-fetched?

There’s just one example of what the implementation, roll out and use of a FAVR vehicle program looks like at a company. Does it sound a little too good to be true? We understand that not every company has such a sterling experience when they adopt a FAVR program. A lot of difficulty can stem simply from the vendor. Here are a number of problems we’ve heard from customers who recently left other providers.

• Vendor kept old FAVR rates, not benchmarking them within the industry or updating them to be current. These inaccurate rates result in unfair and inaccurate reimbursements.
• Vendor did little to no proactive account management, provided no automation integrations and offered no flexibility.
• Customers locked into vendor’s pre-determined rates that did not provide employees with enough reimbursement.
• Lack of experience resulted in overpromising and under-delivering, and a general lack of knowledge. This proved challenging around sensitive areas like taxation and rate calculation.
• Driving employees may compare rates and be confused when they find the payment they receive is different than a coworkers. Reminding them of the difference between fixed costs vs variable costs and how costs vary by the area they operate in goes a long way towards helping them understand.

FAVR with Motus

When it comes to vehicle programs, choosing the right vendor makes all the difference. It can mean the difference between smooth operation and serious issues. Leveraging 40 years of industry leadership, Motus shares the guidance to maximize program performance. That experience shows in the 4.5-star app rating and 99% successful trip capture with GPS-enabled technology. It also show in the over 400 implementations we do annually. Motus additionally provides the most secure solution, as evidenced by our SOCII Type 2 certification with continuous audits and no gaps in compliance for over 4 years. Interested in learning more about what partnering with Motus looks like? Check out our guide, The Road to Becoming a Customer.

Read the Guide

The post FAVR Example: What does a fixed and variable (FAVR) reimbursement program look like? appeared first on Motus.

Gasoline is made by breaking down crude oil into petroleum products through fractional distillation, after which the usable gasoline is transported to gas stations via pipelines. As of today, gasoline is among the most commonly used petroleum products, comprising approximately half of the products in use. In this blog, we answer some fundamentals like how gasoline is made and how outside forces influence its price.

What Is Gasoline? Physical Properties

Gasoline is a product of refined crude oil. It is a highly flammable, energy-dense liquid that evaporates quickly. This makes it somewhat dangerous to handle, but perfect for igniting in an engine. It mixes with air to create a combustible mixture that gets your car going. To get molecular, gasoline is made up of a mixture of hydrogen and carbon atoms. The composition depends on the refining process and the original source. Producers may include additives to improve gasoline’s longevity and performance.

Wondering how gasoline vs petrol stack up? Well, wonder no more. Petrol and gasoline are different names for the same thing. So if you’re traveling abroad and not sure what to put in the tank, there’s your answer.

Speaking of fueling up, you may notice at the gas pump that gasoline has an octane rating. This is a measure of its resistance to detonation in the engine. Higher octane indicates greater resistance to premature detonation that can damage engines.

Where Does Gasoline Come From?

As mentioned earlier, gasoline begins as crude oil, a fossil fuel. Fossil fuels are the carbon-rich remnants of dead animals and plants that have been pressurized and heated at high temperatures underground for millions of years. The end product is crude oil, natural gas or coal. 

There are many processes and phases involved in gasoline production and its subsequent delivery to gas stations. For this reason, the U.S. Energy Information Administration doesn’t attempt to pinpoint where fuel from local gas stations originates. Generally, it begins as crude oil within a petroleum refinery, where it is broken into other components. 

After that, it moves through several refining stages and is transported through pipelines to storage terminals near consumption areas. Finally, tanker trucks move the gasoline from storage to smaller terminals where fuel ethanol is blended into gasoline for motor vehicles. From there, tanker trucks deliver the finished gasoline to over a hundred thousand gasoline retail locations.   

How Is Gasoline Made?

We can go back even earlier in the process to nail down how oil is made, but that’ll take a much longer explanation. To summarize, crude oil is the byproduct of a bunch of organic material exposed to heat and compression over millions of years. It’s what’s referred to as a fossil fuel. Crude oil needs to be refined to become the gasoline we use every day. To get scientific, the hydrocarbons present in crude oil must be separated and purified to be usable in an internal combustion engine. Turning crude oil into gasoline requires a few steps. Those steps include sourcing the raw material, transporting it to refineries, and taking it through the refining process before transporting it to gas stations for distribution. Let’s dig into the main phases of the refining process, starting with sourcing the raw material.

Pumping Crude Oil

Crude oil is a combination of hydrocarbons found underground, often in formations of porous rock. It comes in several variations, such as light, medium, heavy, and extra-crude. Each differs in viscosity, density and sulfur content. Companies obtain crude in several ways.

The primary extraction process involves bringing oil to the earth’s surface  by using the natural pressure of the reservoir. A secondary method, known as fracking, uses steam, water or gas to increase ground pressure and force the oil out. Another way this can be done is by adding chemicals to the reservoir to change the physical properties of the oil so it comes out of the ground more easily. Once the crude is pumped, it needs to be transported.

Transporting Crude

Crude oil has a long journey from the well to refineries and storage facilities. It can be transported by pipeline, train or tanker. companies prefer pipeline networks, as they’re the safest, most affordable way to move crude oil over long distances. Tankers are used when the oil needs to be transported across the ocean. Trains are another method, though the high risk of spills and other accidents makes it less ideal than other options.

Employees in the energy sector have a tremendous responsibility to protect people and the environment by preventing these devastating oil spills and leaks. Failure results in environmental damage, risks to public health and economic losses. Hopefully new technologies and safety practices currently being developed can prevent these disasters from happening in the future.

Refining Crude

Refining crude oil involves turning this raw material into usable petroleum products. Those products include diesel, jet fuel, heating oil and, of course, gasoline. During refining, the components of crude oil are separated based on their boiling points. This allows for the production of products with distinct physical properties. Because the various types of crude oil require different refining levels, the gasoline process depends on the type of crude oil being processed. 

Premium and regular gasoline are the two most common types of gasoline produced during the refining process, as they yield better engine performance for vehicles. Ethanol is sometimes added to reduce emissions and boost fuel efficiency, but this addition can also influence performance and necessitate different refining methods. The refining process is broken down broadly below.

Distillation

In the first stage, crude oil is taken to a distillation tower to be heated and vaporized. Separated hydrocarbons create various components as they cool and condense at various temperatures and different levels of the distillation tower. Heavy asphalt and tar hydrocarbons condense at the bottom while light natural gas hydrocarbons collect at the top. 

Cracking

The second stage cracks and breaks down larger hydrocarbon molecules into smaller ones used to produce gasoline. This process ensures the gasoline has desirable properties, like low sulfur content and a high octane rating. Refineries use two methods. One is catalytic cracking, which uses a catalyst to speed up the breakdown of larger molecules. The other is thermal cracking, which heats the oil to high temperatures. 

Blending

Once distillation and cracking are complete, refiners selectively blend hydrocarbons together based on the end user’s needs. Those needs include altitude, season and vehicle type. The blending process determines the gasoline’s properties, including volatility and emissions characteristics. Most gasoline has 5 to 15 hydrocarbons, each with unique properties and performance characteristics. This allows refineries to create various blends for unique needs and applications.

What Determines the Price of Gasoline?

Maybe you’re wondering “who controls gas prices?” But it’s not so simple: no one person is responsible for the price of gas. A broad spectrum of factors influence gasoline prices. These factors include natural market forces of supply and demand, the price of crude oil, marketing costs, processing costs, taxes, federal policy and re-seller markup. The cost of crude oil makes up over half the cost of gasoline. Oil producers may decide to slow production or decrease supply, which drives up the price of crude oil per barrel. Geopolitical events can also slow production and diminish supply. This happened with the Colonial Pipeline ransomware attack and the Texas Freeze. For these reasons it can be difficult to anticipate gasoline prices, or bring them down.

Geopolitical Implications

Being a major producer and exporter of crude oil has decreased U.S. dependence on foreign oil and gas imports. This has helped the nation achieve energy security and stay out of foreign political conflict for many years. The growth of the domestic oil sector also contributes job and economic growth and helps the U.S. compete in the global market, challenging giants like Russia and Saudi Arabia that have long dominated the sector. But the oil industry is still subject to global events. The war in Ukraine, for example, has been a major disruptor to the industry, contributing to a spike in gasoline prices all over the U.S. and abroad.

Oil Reserves

The world’s largest crude oil reserves are located in the Middle East. At the end of 2021, the United States had the 11th largest reserve in the world, with 44.4 billion barrels available in oil-rich states. Those states include Alaska, Texas and North Dakota. Offshore reserves in the Gulf of Mexico and the Arctic have also bolstered the U.S. oil supply. ​​Established in 1975, the Strategic Petroleum Reserve (SPR) is a national reserve of crude oil and petroleum products that serves as a backup. This is to stabilize gas prices during emergencies or in case of oil supply disruption.

As of February 2023, much of the crude oil available in these reserves has been sold off. Now, only 372 million barrels remain available for wartime or emergency. The amount, the lowest available amount since 1983, is only enough to meet the United States gasoline needs for a little over a month.

Environmental Impact

On the other side of the coin, crude oil is a finite resource that the world cannot rely on forever. That’s part of the reason the U.S. is striving to use more renewable energy sources. What’s more, burning fossil fuels, including gasoline, releases carbon dioxide and other greenhouse gasses into the atmosphere. These emissions threaten to warm the earth to dangerous temperatures. The extraction, transportation and refining of crude oil can also result in oil spills, habitat destruction and other environmental impacts. For these reasons, the government and the marketplace are pushing to phase out crude oil and other fossil fuels for cleaner, more sustainable alternatives.

The Future of Gasoline

Despite the increasing popularity of electric vehicles (EVs), gasoline is still critical to the global market and has no end yet in sight. Until sustainable options are both affordable and convenient, consumers will continue relying on gasoline-powered vehicles for transportation. However, as the EV market grows and develops, the demand for gasoline may slow. Unfortunately, the Organization of Petroleum Exporting Countries (OPEC) takes advantage of this. To ensure they receive a high price per barrel, they inflate prices by reducing production.

In the end, the future of gasoline will hinge upon environmental, economic and technological factors and developments. Interested in learning more around the topic of oil and its impact? Check out our Oil Check content!

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Frequently Asked Questions Around Gasoline

Is there a difference between gasoline from big brand names and small retailers?

Gasoline from no-name gas stations used to be considered cheap and low-quality. Today, however, gasoline brands primarily differ in terms of the cleaning additives they offer, as well as the unique components that make up the gasoline. There isn’t one brand that’s better for every vehicle, as everyone has unique driving habits and a car with individual needs. Seek out the one that is best for your engine according to the owner’s manual that came with your vehicle. This is usually indicated by the octane rating. 

How do summer and winter blends differ?

During the winter, cold temperatures cause gasoline to be thicker, which makes it more difficult to vaporize and ignite. Winter gasoline blends have incorporated high levels of light hydrocarbons that can evaporate more easily for higher volatility. Summer blends, in contrast, have lower levels of light hydrocarbons for lower volatility so that the gasoline doesn’t evaporate too quickly and contribute to air pollution and reduced fuel economy. 

Are gas additives worth it?

A common misconception among vehicle owners is that additives can magically boost your fuel efficiency. What fuel additives really do is clean and protect the fuel system and the integrity of the gasoline and prevent rust. This reduces the likelihood of buildup that can reduce engine performance and fuel efficiency. Common examples of fuel additives include corrosion inhibitors, fuel stabilizers, and detergents. These prevent rust, gasoline degradation while in storage and clean the fuel system. 

Should I select premium or mid-grade fuel?

Premium-grade gasoline contains the same ethanol content and is no more powerful or quality than mid-grade fuel. It’s simply more detonation-resistant. This may be required for certain vehicles like luxury cars, high-performance trucks, and sports cars. Those vehicles need gasoline to withstand higher temperatures without premature detonation so the engine doesn’t sustain damage.

The post Oil Check: How Is Gasoline Made? A General Overview appeared first on Motus.

Let’s look at how vehicle recalls could affect your business and what your options are moving forward.

The Sweeping Impact of Vehicle Recalls

Vehicle recalls can happen to any manufacturer and for any number of reasons. And when cars are recalled, it’s frustrating for drivers, car lots, and company fleets alike. Here are some of the biggest vehicle recalls by manufacturer from the last decade. 

• Chrysler — Roughly 154,000 Jeep Wranglers and Jeep Grand Cherokees models from 2020 – 2024 were recalled in early October, 2024 for risk of fire.
• Mercedes-Benz — Roughly 1 million vehicles made between 2015-2017 had to be recalled due to an issue with the starter. This prevented the engine from turning over and created a fire hazard. 
• Dodge — Around 1.2 million trucks were recalled for the 2017-2018 release years. This vehicle recall had to do with transmission failure caused by an issue with the Brake Transmission Shift Interlock system. This led to overheating and the system catching fire. 
• Volkswagen — The company had to recall about 3 million 2013 models thanks to a gearbox malfunction affecting the stop/go function, which caused the vehicle to lurch forward or backward while driving. 
• General Motors — Roughly 3.6 million vehicles (most of the 2016 lineup) had to be recalled due to a defective sensor that caused the front airbags to open randomly and potentially not deploy in an accident. 
• Volkswagen — Around 140,000 2018-2021 Atlas and 2020 Atlas Crossovers had to be recalled thanks to a faulty front passenger airbag sensor. The sensor would switch off even if there was a passenger in the seat, which was a severe safety risk in case of an accident.  
• BMW — The company had around 90,000 vehicles recalled with manufacture years between 2000 and 2006. The Takata airbags in these cars had a high risk of failure during a collision, and drivers were advised not to drive their vehicles until the issue was fixed. 
• Tesla — More than two million vehicles have been affected by the recall spanning manufacture years between 2012 and 2023. The company decided that it was too easy to misuse the Autopilot active driving assistance (ADA) System.

The range of issues in these vehicle recalls highlights why companies must stay informed on active recalls and recall-related issues. By monitoring recalls and potential issues as they arise, you can prevent bigger issues while maintaining company operations and reputation. 

Are Your Fleet Vehicles Recalled? 

You never want to worry about the cars in your fleet. But, as demonstrated above, recalls happen across brands and at unexpected times. If you catch a glimpse of a headline or hear something on the radio that alarms you, you can always check. Just visit the National Highway Traffic Safety Administration here to see if your vehicles are in active recall. 

How Can Vehicle Recalls Impact Your Company?

Vehicle recalls can affect your company in several ways. This will vary based on your vehicle program. From mileage reimbursement to company-provided vehicle programs, the impacts range from minimal to incredibly challenging. Here are some of the impacts your company could face from vehicle recalls. 

Vehicle Recalls Impacting Reimbursement Programs 

If your drivers use their own vehicles and are compensated through a reimbursement program, vehicle recalls can be problematic. Employees may be able to acquire rental cars from their local dealership in case vehicle recalls. If not, your company might offer rental cars so the repair does not impact business. When offering replacement vehicles during a vehicle recall, consider the following: 

• The financial implications of providing a rental car during vehicle recalls. 
• Coordination and logistics of reporting recalls and communicating with rental companies. 
• Creating policies around recall procedures and driver expense documentation. 
• Effectively communicating with employees during recalls and repairs to minimize disruptions. 

Vehicle Recalls Impacting Company-Provided Vehicle Programs

Vehicle recalls by manufacturer pose a significantly higher threat to businesses with company-provided vehicle programs. If most of your fleet vehicles are the same make and model, business might come to a stand still if those vehicles are recalled. Scrambling to replace a fleet of vehicles will be a costly logistical nightmare. Your business may struggle to meet demand, and customer satisfaction might also take a hit.

It’s important to have a contingency plan if you’re ever faced with mass recalls. A good plan will help limit downtime, prevent service disruption and reduce surprise costs. 

• Financial consequences: When your fleet has cars recalled, the vehicles may need costly repairs. Worse, they may need to be replaced entirely. This could significantly impact your budget, especially if you have a sizable fleet or operate in multiple locations.
  

• Brand reputation: Vehicle recalls can limit the functionality of your fleet, meaning you may not be able to meet customer needs. A vehicle recall could indicate safety concerns and quality issues, leading to a loss of customer trust and loyalty. Customers may hesitate to use your services or vehicles. Changing that perception will be challenging.
  

• Operational disruptions: Your company cannot use recalled vehicles until the issue is fixed. That will limit the productivity of your mobile workforce and potentially the services you can offer. This could be highly problematic if your entire fleet consists of one specific vehicle model, shutting down operations entirely.
  

• Compliance and regulatory issues: Fleet companies are held to strict regulation and safety standards. Vehicle recalls could signal non-compliance in these areas. Additionally, not complying with these requirements could lead to financial or legal repercussions. It’s essential to address vehicle recalls promptly to avoid further issues.
  

• Supplier relations: If your fleet vehicles are used for transportation or other supply services, vehicle recalls could tarnish supplier relationships. Vehicles recalled for faulty parts or components could reflect poorly on the supplier, straining their partnership with you. When this happens, suppliers may reconsider your contracts and look for other options instead of waiting for a resolution. 
  
• Customer satisfaction: When you have cars recalled, it can directly impact customer satisfaction. If a customer is inconvenienced due to a recall, they may view your company negatively. This could result in negative company reviews, reduced customer loyalty, and loss of future business. 

To help limit the potential effects of vehicle recalls on your business, it’s important to have a plan for dealing with recalls quickly and efficiently. 

Rethinking the Investment in Fleet Vehicles

In certain instances, fleet vehicles can benefit companies. They ensure the company provides the type of vehicle that employees need to meet their responsibilities. They allow companies to choose how much to invest in the technology and safety features. Fleet vehicles also provide a level of continuity: people may know a brand by the vehicles their employees drive.

These positives sound great, right? But after the initial investment and continual maintenance, recalls may impact your fleet. Chip shortages disrupted new vehicles hitting car lots which resulted in waiting lists for new vehicles. Strikes in the automotive industry can also impact the fleet vehicle supply chain, delay vehicle deliveries and fleet operations.

As we mentioned above, there are times where fleet vehicles can benefit a company’s needs to be effective. That doesn’t mean every company is a good fit for the program.

What can your company do to prevent recall-related issues?

While companies with a mileage reimbursement program may not be impacted as severely by a recall, companies with fleet programs aren’t so lucky. For that reason, businesses with fleets must prevent recall-related issues when possible. To best mitigate potential risks, companies can: 

• Proactively monitoring and reporting on current recall announcements and industry news. 
• Selecting fleet vehicles with solid track records of reliability and safety. 
• Implementing a comprehensive fleet maintenance and inspection program.
• Effectively communicating with drivers, vehicle manufacturers, and supplies when vehicle recalls happen. 

But, at the end of the day, there are only three paths to dealing with potential fleet vehicle recalls.

Business as Usual 

Taking this approach means changing nothing. Your fleet vehicles don’t have active recalls and you aren’t experiencing recall-related issues. But past and current vehicle performance doesn’t guarantee future performance. Issues may develop at anytime. You might save costs by not changing your fleet for now, but you should save up for any future recalls. 

Diversify Your Fleet 

Instead of having all your vehicles be the same make and model, try purchasing similar vehicles from different manufacturers. This approach could help minimize the impact of vehicles recalled since the whole fleet won’t be affected. Before making purchases, research different vehicles to find the ones with the best reliability and safety records. 

Switch Vehicle Programs 

Vehicle prices and maintenance costs continue to rise, making fleet management an increasingly costly venture. To mitigate the expenses of running and maintaining a fleet, consider alternative vehicle programs. The best option would be to switch to a vehicle reimbursement program like FAVR, with drivers using their own cars. This approach relieves you of the financial burden of vehicle ownership and maintenance, making it a better choice.

Since the beginning of the COVID pandemic, the need for vehicles is still present. Rental vehicles continue to saturate the used vehicle market. When it comes time to sell old vehicles and purchase new ones, you may not see the return of investment in the resale value.

Next Steps for Your Company

Whether you decide to keep business as usual, diversify your fleet or switch to a vehicle reimbursement program, there is much to consider here. The best step you can take moving forward is educating yourself. To make an informed decision regarding vehicle recalls for your company, you should: 

• Consider all of your available options. 
• Research the pros and cons of remaining in a fleet.
• Evaluate the financial impacts of maintaining a fleet compared to alternative options. 
• Assess how the different choices would impact your overall operations. 
• Speak with industry experts to gain further insight. 

If leaving a fleet for an alternative program is right for you, develop a plan for approaching this change. Feel free to reach out to our team to get started! If you’re not quite ready for that, we get it. At Motus, we want you to feel empowered and informed about every aspect of your business. That’s why we’ve created a guide to help you learn more about transitioning out a fleet if that’s what you want.

The post Vehicle Recalls: How Is Your Company Affected? appeared first on Motus.

What is a company-provided vehicle (fleet) program?

With a company-provided vehicle program, businesses provide their employees with a purchased or leased car to meet their driving needs. If you’re wondering “what is a fleet vehicle?” it’s exactly that: a car purchased or leased by a company to meet their driving employees’ needs. Companies can manage their fleets internally, or outsource to a fleet management company. Regardless of management, this program has a number of benefits and downsides. We’ll start with the benefits.

Benefits of Company-Provided Vehicles

There are a number of benefits to a fleet vehicle program. Those include specialized vehicles, employee benefit, control of corporate image and vehicle branding. Let’s dig in a little deeper, starting with the specialized use.

Specialized Vehicles

This is an important consideration if your employees are transporting equipment or need access to a specialty vehicle like a service truck, van, or delivery vehicle. When considering the pros and cons of buying fleet vehicles, the need for specialized vehicles can play a big role. The more specific the type of vehicle needed, the stronger the case for providing that employee with a company car.

Personal Use

When the industry doesn’t require specialized work vehicles, employers typically allow employees to drive them for personal reasons. There are a few caveats that keep it from being an employee-owned vehicle. Businesses spell out rules in their company-provided vehicle policies. They typically include restrictions on using fuel cards outside of business hours, prohibiting friends or family members from using the vehicle and a required  personal-use chargeback.

Corporate Image

For some companies, employees’ vehicles play a large role in how their brand is perceived. Showing up to a meeting in an old, rundown vehicle may make the company look unsuccessful. On the other hand, rolling up in a luxury car may come off too showy or may raise eyebrows about company prices and spending. For many companies, the only way to control the make, model and year of the car that your employees drive is to provide them with a corporate vehicle.

Companies may also choose to showcase the brand on employees’ cars. As much as employees may love the business they work for, they may not want the corporate logo plastered on their personally-owned cars.

Full Control and Oversight

With fleet vehicles, companies not only choose the car, they also manage employees’ insurance and upkeep of vehicles. Businesses can also choose any safety features they find important. This might mean installing telematics to track vehicles and gain 24/7 insight into vehicle location. That’s not something employees are likely to volunteer to install in their personal cars. 

Challenges of Company-Provided Vehicles

We’ve walked through the benefits of the company-provided vehicles. But there are also downsides to having a fleet of company-owned vehicles. Those downsides include risk exposure, considerable costs, driver choice and audit exposure. Let’s dive into each of these, beginning with risk.

Increased Risk and Liability

When considering the pros and cons of buying fleet vehicles, this is one of, if not the biggest con. Let’s look at an example. An employee driving a fleet vehicle is found at fault in an accident. Following the accident, the company is targeted for negligent entrustment. Because of the perk of personal-use, that risk isn’t limited to business hours. Too many companies have put off considering the fallout of this until they’re faced with it.

Large, Upfront Capital Expense

Purchasing an entire fleet of cars requires a large amount of capital. For small businesses, this presents an especially big challenge, since it can mean choosing between funding cars or inventory. To reduce the upfront expense, companies may choose to lease vehicles rather than purchase. Businesses should evaluate the advantages and disadvantages of both before making a decision.

Other Costs

Outside of the cost of the vehicles themselves, and potential lawsuit, there are other costs to consider. When a company has a fleet of vehicles they have to pay for automotive repairs, for oil changes and upkeep. Those costs may only come once every three months or so, but across a fleet, they add up quickly.

Fuel is another expense to consider. Businesses typical provide employees with a gas card. Even when employees are limited to using it during the week, fuel spend is incredibly difficult to control.

The Costs of An Idle Fleet

Company-owned cars are sitting idle, but the fixed costs to own those cars haven’t gone away. Companies are still paying for things like leases, insurance and maintenance. For companies with 100 idle fleet vehicles, that’s costing them $60,000 each month. Add in the fact that companies lose $13,000 per year to idle vehicles from employee turnover alone. Not to mention, Motus research finds that most employees prefer driving their own vehicle.

Downsizing a fleet program also requires finding a place to store idle vehicles and a way to transport them there. That’s another expense added to the fixed costs of a fleet program. Imagine if you could save that $70k+ and reinvest it back into the initiatives that matter most right now, whether that’s saving jobs or improving your bottom line? That could make a serious impact.

And the drawbacks of fleet programs don’t stop there. The risk and liability the company takes on can result in costly lawsuits. There’s also the administrative burden of managing a fleet program, think about how that employee’s time could be focused on more strategic initiatives.

Cyber Risk of Fleet

Much like an enterprise server or network, fleet vehicles become subject to risk once they’re connected to the Internet. This opens the door for hackers to infiltrate the vehicle, backend servers or telematics systems within the vehicle. This type of risk could potentially jeopardize user and corporate data – something that companies of all sizes can’t afford to put at stake.

Employees Choice

While this can be a benefit for companies (i.e. control of corporate image), it also means inflexibility for employees. Employees with families may want a car with specific safety features for their kids. Employees with medical conditions, like back pain, may want a car that’s more comfortable to drive around in all day. These employees will either need an exception to use their own personal vehicle, or they’ll be stuck with a car that doesn’t quite meet their needs.

Capturing and Reporting Personal Use

Many companies allow their employees to drive corporate vehicles outside of work, without insight into how often employees are using the vehicles for business vs. personal reasons. This lack of insight exposes organizations to audit risk and increased costs. Companies are required to report personal use of fleet vehicles to the IRS as a fringe benefit. Inaccurate reporting could lead to penalties or back taxes in the event of an audit. Unless companies have a process in place to accurately charge employees for their personal use, organizations may be losing money each month in foregone personal-use chargebacks.

Fleet Mileage Tracking App

Even with the risk of IRS audit, employees can find tracking their personal use a challenge. Manually recording every non-business trip isn’t anyone’s idea of a good time. However, with the right technology, employees can accurately capture their personal miles. This ensures they’re charged an accurate amount for their personal use. No more, no less. Additionally, with an accurate measure of personal use companies can achieve a high level of visibility without resorting to costly telematics.

Alternatives to Company-Provided Vehicles

Sometimes, a fleet program isn’t the right choice. It could be the size of the company’s mobile workforce, the lack of need for specialized vehicles or potentially the cost. Regardless, there are alternatives to a company-provided vehicle program, including: car allowances, mileage reimbursement and fixed and variable rate (FAVR) reimbursement.

Car Allowance

With a car allowance, employers simply pay employees a flat amount each month. This is easy on administration and easy to plan for financially. It’s also taxable. Typically, all employees receive the same amount, which may be providing some drivers with more than they need while not giving others enough.

Mileage Reimbursement

With a mileage reimbursement, employers pay employees at a cents-per-mile rate. Most companies that provide mileage reimbursements do so at the IRS mileage rate. Like car allowances, businesses provide mileage reimbursements at the same rate across their mobile workforce. Again, this can create winners and losers.

Fixed and Variable Rate (FAVR) Reimbursement

With a fixed and variable rate (FAVR) reimbursement, employers pay employees for both the fixed and variable costs of driving. The right vendor ensures these payments are specific to each employees location. Unlike the other options, mobile workers must drive 5,000 miles monthly to qualify for FAVR.

Weighing Your Options

Company-provided vehicles clearly have a unique set of advantages and challenges to consider. In general, the more specific the car your employees need or the more control your organization wants over the vehicles, the more reason to provide company cars. On the other hand, if your company wants to mitigate risk or provide more flexibility to employees, reimbursement for personal vehicles may provide a better option.

Regardless of which works best for you, to maximize the benefits of your vehicle program while minimizing the drawbacks, it’s important to have a company policy in place that promotes driving safety, provides visibility into driving behaviors and ensures a fair and cost-effective program for your employees and your company.

Next Steps

Adopting a new vehicle program or transitioning from an old one is a big decision. Learning everything about the potential alternatives would be a good next step. With a proper understanding, you’ll be able to make the best decision for your company. If transitioning from company-provided vehicles to personally owned vehicles seems like too big of a step, you might want to consider implementing a fleet mileage tracking app. Interested in learning more?

The post What is a Fleet Vehicle Program?: The Pros and Cons of Company-Provided Vehicles appeared first on Motus.

When companies decide to make the transition away from a CPM program, it’s understandable that employees used to receiving a reimbursement will have questions about how the change will impact them. So, what are some questions that employees will have when switching away from a CPM reimbursement program? 

Will my fixed rate update? If so, when? 

Your fixed rate will only be updated if your address changes or your company’s program changes. Typically, if you are living in the same location and driving the amount of mileage expected, you’ll only see an update to your fixed rate once a year when your company reviews the program. However, if you move to a new zip code, take a new role, or are driving considerably less or more than expected, your fixed rate may be adjusted accordingly.

Can I submit multiple times per month? What if I submit before the month is over? 

It’s important to remember that mileage entry and mileage submission are different. If you’re submitting your mileage, that means that you’re finalizing the month and you’re informing Motus that you’re no longer driving for the month.  

This should only be done once at the end of the month. If you submit mileage early, the month closes so you won’t be able to continue logging mileage. Although you’ll enter/log mileage daily via GPS or manually, make sure to only submit mileage once per month. 

If you’re carpooling, who logs the mileage? 

It’s fine if you rideshare for work. Please note that the only person who should be logging mileage for reimbursement is the owner or renter of the vehicle that’s in motion. 

What if you’re stuck in traffic and your vehicle is not moving? Does the reimbursement account for idling? 

Great Question! Reimbursements will directly account for expenses that everyone experiences across the board for business use of a personal vehicle but won’t directly reimburse for things like tolls or idling situations because those are situational.  

When you’re reimbursed, we do consider something called a metro percentage which estimates the amount of driving you’ll do in stop and go conditions (or consistently under 35mph). This indirectly accounts for things like idling during your day and driving in the city where you’re using more gas, but not additional idling that happens by choice.  

I bought a new car after I put my other car in to start with Motus. Should I just change the information on the website? 

Yes. You can change this information via the website or the app by simply completing the same process as you did before. If you’re on the web, the links will say update rather than submit/upload. To clear the vehicle information, you may need to click “modify” once the vehicle information form opens. 

Does the Motus App track my speed? 

No, it does not. The IRS doesn’t require speed data to validate travel for reimbursement, so it’s not something that Motus calculates and records. You can see the start and stop time and trip duration as that is information the IRS requires for compliant logs, but calculating your speed would have to be done manually considering our app doesn’t do so automatically. 

Pro Tips:  

• Your reimbursement won’t be affected by having a vehicle with an odometer reading above or below the miles in the retention period. The number of miles is an estimate and is not related to receiving or not receiving the reimbursement. 

• We’re looking for the actual vehicle age, not time on the program. 

• You can drive whatever vehicle you want, regardless of age. Reimbursements will undergo taxability testing if you’re out of compliance. 

If I get a new car, do I get more money back than an older car?

Great question! The reimbursement that’s calculated is based on the standard automobile, which is always brand new each year. Since we’re not using your personal vehicles to calculate reimbursements, then the fixed payment would not increase due to the purchase of a new vehicle.  

Admins and drivers alike have questions when transitioning from a cents-per-mile reimbursement program  

It’s normal for questions to pop up from all areas of the company. Drivers will likely wonder how the program affects them, while admins will want to know how to manage it. Getting everyone on the same page is key to making the transition smooth. 

That’s why we put together this guide—to help business leaders get a clear picture of what it’s like to work with us. 

The post Frequently Asked Questions By Drivers Transitioning From CPM appeared first on Motus.

Driving Risk Stats From 2023

In 2024, there will be a projected 239.24 million licensed drivers on U.S. roadways. This is up from 236.4 million in 2023. Does more drivers mean more accidents? Let’s take a look at the accident statistics gathered from 2023. Bear in mind, government agencies like the National Highway Traffic Safety Administration and Center for Disease Control will conduct studies over multiple years and share data with a fuller picture. Many of these takeaways are from the first few months or roughly half of the year.

• According to the Bureau of Labor Statistics, an automotive accident occurs every 13 minutes in the U.S.
• Over the lifespan of the average person, they’re likely crash their car 3-4 times.
• Talking on the phone while driving increases likelihood of being involved in an automotive accident by 400%.
• Traffic accident fatalities decreased January through March year over year by about 3.3%. This is the fourth year in a row we’ve seen a drop in accident-related deaths, and a hopeful trend.
• Beyond the first quarter of the year, all the way to July, automotive deaths dropped by 15% or more in nearly 10 states compared to last year.

2024 Driver Safety Trends

Looking at these stats, there’s a lot of positivity. The rate of automotive accidents has decreased year over year not just for the first three months of the year country wide, and for a fifth of states that decline has extended as far as July. Those are good driver safety trends! But, alongside those statistics is the underlying concern: preventable accidents are still occurring.

Outside of the impact this can have on company employees, automotive accidents aren’t cheap. For some companies, that impact is missed time and potential new hires. For others, it can mean lawsuit. Both are costly and neither is ideal. For the safety of their driving employees, to mitigate risk and minimize costs, more companies are making changes.

What can your company do?

Driver safety is a tricky thing. Accidents are bound to happen, regardless of safety measures. That doesn’t justify not doing everything possible to create an environment that prioritizes the livelihood of driving employees. Businesses can do this successfully with a comprehensive company driver safety program. What makes a driver safety program “comprehensive”? The pieces that go into it. Let’s start with insurance verification.

Insurance Verification

One important and often overlooked area of a driver safety program is simply insurance verification. Whether it’s a new hire or a veteran employee, insurance is an essential. In fact, in almost every state it’s illegal to drive without insurance. That doesn’t mean people don’t do it from time to time. More often than not, they simply didn’t realize their policy had lapsed. With insurance verification, your company knows when policies are up for expiration and can get ahead of it before it becomes an issue.

Motor Vehicle Record (MVR) Reports

Driver safety is more than knowing whether an employee has insurance or not. Previous driving history can be a great indicator for future performance. That’s why so many companies pull motor vehicle record (MVR) reports on potential employees during the hiring process. One hitch in this practice? Once the employee is hired on, companies no longer pull MVRs. Just like that, they no longer have insight into their employee’s driving performance. Having been caught unawares by a major accident, some companies have opted to have reports pulled annually or, even better, continuously. This isn’t a free service. Costs vary on cadence. For some companies, being alerted of an employee’s concerning pattern of driving behavior is well worth it.

Driver Safety Training

No one wants to have to go through driver safety training. When people hear the term “driver safety training” their minds jump to dusty classrooms and outdated animated videos that deliver simple messages like “don’t forget to use your blinker when turning!” They hear “driver safety training” and they think waste of time and money. But the right driver safety training offers far more than that.

The right driver safety training assesses driver’s abilities on an individual basis, then provides lessons that focus specifically on the areas they need to improve. These lessons have real life examples, not animated visuals, testing awareness and reaction time. And the training isn’t just a half day lost, but a number of reasonably-timed sessions delivered on a regular basis. The results? A pro-active approach to preventing accidents in your company’s mobile workforce.

The Right Vendor

We’ve gone over the three essentials of a comprehensive driver safety program. We like to refer to it as a “good, better, best” approach. By applying any one of these to your company, you’re putting your employee’s safety first, and that’s good. Making use of all three? That’s best practice. The challenge here is finding a vendor that offers each of these components together. That’s where we come in.

Motus has been in the mileage reimbursement business for years. Seeing the need for a best-in-class driver safety option, we launched our Motus Protect solution. Learn more about Motus Protect today!

Learn More Today

The post Driver Safety Trends: Mitigate Risk and Minimize Unexpected Costs appeared first on Motus.

A hybrid vehicle program is defined by a company’s policy and informed by an employee’s job function. It’s a combination of any these types of programs: Cents-Per-Mile (CPM) Reimbursement, Car Allowance, Fixed and Variable Rate (FAVR) Reimbursement, and Fleet. So, what are the primary goals of a hybrid vehicle program?

There may be several primary goals of a hybrid vehicle program. That might include enhancing transparency across the driving workforce, accuracy in reporting, and increased compliance.

How Do Companies Benefit from a Hybrid Vehicle Program?

Companies benefit from a hybrid vehicle program by bringing all their vehicle data into one system, which helps them uncover insights and make smarter decisions. With better visibility and control, they can set benchmarks, track progress, and plan for long-term success. Plus, having a consistent and transparent approach helps align company culture, boosts employee buy-in, and fosters accountability across the board. 

When does a hybrid vehicle program make sense?

If you’re like most businesses, not all your employees have the same job. And if your workforce isn’t uniform, how often your employees drive for work probably isn’t uniform either. Your business likely needs to implement a hybrid vehicle program, but you might not have considered this solution before. Why? It’s likely because you currently have no ability to marry the data or understand the “full picture.” 

Let’s walk through a few examples of when a hybrid vehicle program is the best choice for businesses and their mobile employees. 

The Hybrid Approach for a Medium-sized Pharmaceuticals Company  

A medium-sized pharmaceuticals company has regional salespeople who use company cars for their daily work, while executives frequently drive to meetings and the airport—often several times a month.

To support the executives, we provide them with a $1,000 monthly allowance for their driving needs. For our mobile workforce, we use a handy app that captures mileage through GPS, ensuring accurate logs, and we also conduct Motor Vehicle Record checks and provide driver safety training to keep everyone secure.

On the sales side, we handle personal use chargebacks and reimburse lower-mileage employees using a Fixed and Variable Rate (FAVR) method. Meanwhile, our executives benefit from a cents-per-mile reimbursement rate, making it easy to manage their driving costs.

The Hybrid Approach for a Fortune 500 Consumer Products Company

Let’s talk about how our vehicle reimbursement system works for different teams in the company. We provide company cars to our regional salespeople and executives, while our in-store employees and marketing team get reimbursed based on how many miles they drive. Our Account Managers receive a $600 monthly allowance to help cover their driving expenses. To make things easier for our mobile workforce, we use a handy app that automatically tracks mileage, so everyone can easily log their trips. We also make sure to conduct background checks and provide driver safety training to keep everyone safe on the road.

For the sales team, we keep track of personal use chargebacks and reimburse lower-mileage employees in a straightforward way. Executives have the option to choose between a cents-per-mile reimbursement or a car allowance, but they need to verify their insurance first. The same goes for our Account Managers; they can also be reimbursed either by cents-per-mile or through a monthly allowance, depending on how far they drive. This hybrid approach helps us accommodate different needs while keeping things simple and fair for everyone involved.

Here’s a simple test to gauge if a hybrid vehicle program makes sense for you.

In the chart below, if more than one of the employee personas match your workforce, you should consider a hybrid approach to vehicle reimbursement.

The Bottom Line

In short, business leaders have plenty of options when it comes to managing their mobile workforce and handling mileage reimbursements. Most of these choices can work well, as long as they’re backed by the right tech, data, and insights.

The post Hybrid Vehicle Programs 101: What Is It and When Does It Make Sense for Your Business? appeared first on Motus.

What is a Car Reimbursement? 

A car reimbursement is a business vehicle program that reimburses employees at a cents-per-mile rate or the business use of their personal vehicle. This program has other names such as mileage reimbursement, cents-per-mile program, CPM reimbursement, etc. There are also many ways a company can stand up a car reimbursement program.

Benefits of a Car Reimbursement 

A car reimbursement sets itself apart from other vehicle programs in that it can be a tax-free option administered to multiple employees. Companies also stand to control costs by implementing a rate lower than the IRS standard. However, these benefits depend greatly on the way the program is implemented.

Downsides of a Car Reimbursement 

CPM reimbursement programs are only ideal for companies where their drivers have lower mileage reported in the year. Employees that drive more than 5,000 business miles receive larger reimbursements than necessary, at the companies expense. This is compounded by the fact that most companies use the IRS mileage reimbursement rate (which is not the purpose it is intended for).

Additionally, when employees track their mileage manually, they will often round their mileage. This rounding, more accurately labeled mileage fraud, may not seem like a big issue. However, take the rounded amount on each trip, multiply it by the workforce and the working days in a year and that amount becomes substantial.

Finally, CPM reimbursement programs aren’t always fair to driving employees. If the company’s drivers all operate in the same area, there’s no issue. However, with most companies, drivers live and drive in different regions and states. The price of owning and operating a vehicle varies across those areas. To reimbursement everyone at the same rate is not fair to the employees that live in higher cost areas and pay more for vehicle expenses. 

When should a company use a Car Reimbursement? 

Car reimbursements work best for companies with low-mileage drivers focused in one general area. Companies that use IRS-compliant automated mileage tracking apps mitigate the risk of mileage fraud and audit. With precise mileage capture, employers control costs that generally run rampant with mileage fraud. Further, companies should implement a reimbursement below the IRS mileage rate that still covers the geographic costs of operating a vehicle. Above the IRS mileage rate and the reimbursement becomes taxable income. Too low, and your company may be violating labor laws. 

What’s next for your company? 

If a CPM reimbursement program seems like a good fit for your company, explore your options! We have a lot more information if you’d like to know more about our CPM offering. If it seems like your company doesn’t quite work with this type of reimbursement program, don’t worry, there are other options to choose from! Don’t fall into the trap of thinking there’s only one choice for your company. You can learn more about the vehicle reimbursement program (or programs) that will bring serious benefits to your business.  

Learn More Here

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Fleet vehicles must always be covered by insurance and compliant with IRS standards. Insuring a fleet of business vehicles can be a considerable expense, but it comes with the territory. Learn more about fleet vehicle insurance trends and how they impact your company.

Fleet Vehicle Insurance: How It Works

Companies who have a fleet of company cars can opt for an auto insurance policy that insures the entire fleet, providing an easy alternative to insuring each vehicle individually. Essentially, the entire fleet is covered under one policy. The company pays a premium that assures any catastrophe will not result in financial ruin. And since it is all one policy, the vehicles don’t have to be the same and it is not on a person-by-person basis.

Fleet vehicle insurance ensures the vehicles do not need to be uniform. This allows coverage of any vehicle for business-use, like large shipping trucks, construction machinery, passenger vehicles and cargo vans.

Fleet Vehicle Insurance Requirements

The basic requirements for fleet vehicle insurance are simple: be a business and have a fleet of two vehicles or more. A typical fleet can range from two to five hundred vehicles. The fleet size and industry determine how much coverage is needed. It’s important for businesses to discuss coverage with their insurance provider. The provider should ensure companies have the coverage needed for the business, and that they are staying within state specific requirements.

Any company, regardless of their industry, can obtain fleet insurance, but certain industries will have their own specific type of fleet insurance, such as taxi fleets.

Fleet Vehicle Insurance Basic Coverage

There are two areas of basic fleet vehicle insurance coverage. The first is bodily Injury. If a fleet vehicle causes injury to a person, fleet insurance will cover the damages and will usually include compensation for legal entanglements. The second is property damage. Property damage insurance generally covers costs for legal defense if the organization is sued over the damage that a fleet vehicle has caused.

Fleet Vehicle Insurance Additional Coverage

As with most insurance plans, there are additional add-ons that can be incorporated depending on the needs of the business and the level of protection they prefer.

Uninsured Motorist: If a fleet vehicle is involved in an accident with an uninsured driver or motorist, the company will likely need to pay for all damage, including all medical expenses from accident-related injuries. This coverage can help avoid paying these out-of-pocket expenses.

Personal Injury Protection: Personal injury protection ensures financial assistance for medical bills in the event of an accident, no matter who is at fault. For companies with large fleets, this is a must, as, “chances of getting into a motor vehicle accident are one out of 366 for every 1,000 miles driven,” according to Esurance.

Collision Coverage: Collision coverage protects businesses against costly replacements and repairs if a fleet vehicle is involved in an accident. For companies with large fleets, this is a must.

The Cost of Fleet Vehicle Insurance

Various factors will affect the cost of fleet vehicle insurance. The specifics on vehicles within the fleet are all determinants, such as the vehicle’s age, its condition and resale value. What the fleet is used for is also a major contributing factor. While fleet vehicle insurance is essential, companies must also be aware of their employees’ driving habits. An employee with a poor driving record can raise premiums significantly.

Outside of these factors is the rate of insurance itself. This rises with the price of vehicle repairs and the amount of payouts. According to a report by Insurify, vehicle insurance rose 17% in the first half of 2023. And that rate is projected to rise further.

What will this look like for your company?

Depending on the size of the company, smaller companies operating in smaller areas have less to pay, while larger companies with hundreds of vehicles in their fleets will pay more. However, regardless of company size, the worse the accident, the more expensive it will be for companies. This is why it is important for business leaders to stay connected with their insurance provider to analyze their size and risk profile to ensure the correct coverage plan.

Alternatives to Fleet

Offering company-provided vehicles is a popular path, however, the cost of this program adds up quicker than one may realize. The first step in finding the right alternative is learning more. Companies should know the vehicle program options they can choose from like fixed and variable rate (FAVR), cents-per-mile or car allowance. Businesses will likely be surprised at the benefits to fleet alternatives than cost savings and risk mitigation.

Take a Smaller Step Toward Insight

Transitioning a vehicle program, let alone a fleet, is a big undertaking. With concerns over change management and efficiency, companies can have a hard time making the switch. However, one way companies are gaining a better understanding of how their vehicles are being used by driving employees is with a fleet mileage tracking app.

Fleet vehicles are a taxable benefit. If employees aren’t keeping track of their personal travel and paying employers for that usage, they expose themselves and the company to audit risk. To ensure employees are paying the appropriate amount for personal use, companies can implement a fleet mileage tracking app. This ensures companies charge employees appropriately for personal use. And it has the additional benefit of sharing how much employees drive fleet vehicles for business or personal reasons.

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