Eco friendly: Natalie Wallis finds out how Provecta Car Plan's specialisation in structured car ownership schemes has led to its success

When it comes to explaining Provecta Car Plan's success within the structured employee car ownership (Eco) market, managing director and founder Nick Sutton knows its specialisation is its secret.

"What sets us apart from other companies is our dedication to this product. We are a totally independent company that is not involved in any other form of car funding; our sole purpose is to provide Eco services.

"We are also very much focused on quality of service for both our corporate customers and each individual driver, Our ability to provide both corporate services and a retail infrastructure sets us apart from other providers."

Fair comment coming from a man who managed to create one of the pioneering companies of Eco schemes in just nine years. From its inauspicious beginnings as a one-man operation in London, Provecta has grown into a thriving business-based in the heart of Reading's business sector--with 53 employees, 60 corporate clients and over 6000 cars. But the company has not lost its personal touch--those cars are referred to as 6000 "customers" because the company still focuses on the individual driver.

Along the way, Sutton has been joined by other key team members Nick Phillips--the former head of corporate sales for Honda as sales director; Nick Pattas, operations director; and chairman David Vess--already known within the industry as founder and md of Velo.

Ironically as it seems, Sutton credits his background in the financial markets--not the leasing sector--for equipping him for this market. "When I came on board, I had no pre-conceived ideas about cars but instead a broad knowledge of the tax situation. It was the perfect time to introduce a new product as the company car was just reaching the zenith of its financial benefits. Driven by the drivers themselves, companies were noticing how much company cars were costing in tax.

"The timing was right to introduce a product that replicated the benefits of the company car for the employee but also offered cost savings for the employer as well as the option to reduce or remove administration."

Since then, the advent of C[O.sub.2]-based taxation has also been a major catalyst in prompting companies to turn to Eco schemes. By effectively changing ownership of the cars to the employees, such schemes exempt them from company car tax while potentially opening up the choice of vehicles available. In addition, employers can choose to benefit from cost savings themselves, or to stay cash neutral and pass the full force of savings onto drivers.

The growing issue of health and safety has also prompted growth within the Eco market. This is particularly true of companies that previously opted for non-structured cash-for-cars schemes and have now realised the corporate manslaughter implications of this. Around 20% of Provecta's business comes from such companies.

However, Eco schemes may even have the potential to offer health and safety benefits to companies operating traditional company car mechanisms, according to sales director Nick Phillips: "Although Provecta's Eco schemes cover for health and safety issues as effectively as a well-managed traditional fleet, we've discovered an additional benefit in the form of an 'ethic of ownership'. By giving an employee an allowance to buy a car, you effectively change their attitude towards that vehicle. Most people drive it, park it and generally maintain it better than a company car, even as far as servicing it more regularly and checking the oil or tyres."

According to a report undertaken by Provecta, this leads to a direct reduction in accident claims, which in turn affects insurance costs, offering savings of up to 12% for fleets switching to Provecta's schemes. In addition, by keeping a car in good condition, drivers can benefit from more options at the end of the contract; they can sell the vehicle and reap the profit or pay to keep the vehicle as a second car--in excess of 50% of drivers choose to do the latter.

However, while health and safety will continue to factor in the growing popularity of Eco schemes, Sutton sees a new issue as being more important. "The FRS 15 change to accountancy standard, whereby listed companies will have to show all leased assets on their balance sheet, will play a key role in Eco sales over 2004. Although the rules have not been framed yet, a lot of forward thinking companies have realised they have to make changes now to avoid problems come the time for renewal. That and the issue of health and safety will be the two main drivers for business this year."

The next few months will also see more changes for Provecta as organic growth forces a move to larger premises, again in Reading. The company also says it is undertaking trials of a new product which, if successful, will reinforce Provecta's record for innovation.

In the longer term, the company says it will remain focused on fleet needs, Sutton comments: "We are booking to evolve to the next stage of the company car. Whatever the next process is, we will be part of it. If Ecos are not what companies want in the future, we will provide them with whatever it is that they need."

If the company's past record is anything to go by, I have no doubt about that.

COPYRIGHT 2004 DMG World Media Ltd.
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