subject: Exploring The Key Company Car Acquisition Models [print this page] You venture to explore the key company car acquisition models. In other words (and in simpler terms), you are trying to understand how companies normally acquire cars. This is against a background where, as you all know, cars tend to be quite costly. With respect to each car acquisition model, you will be paying attention to several things. You will be, firstly, seeking to understand how each car acquisition model works. Secondly, you will be seeking to understand what the pros and cons to each car acquisition model are.
Now, the first company car acquisition model is the one where companies opt to simply buy the cars. In this case, the companies gain full ownership of the cars after purchasing them. In order to be in a position to purchase the cars, the companies in question (naturally) have to put together the funds they need for the acquisition. Some companies opt to seek credit facilities for the purpose. Others opt to use their own money to buy the cars. However they go about it though, in the final analysis, this acquisition model means as mentioned earlier that the companies in question ultimately get to (fully) own the cars they purchase. They can, subsequently, use the said cars as they wish, without having concerns as to what the cars owners would think. The same cant be said of the other two acquisition models we will be looking at later. Furthermore, this particular car acquisition model often turns out to be very cost-effective, in the long run. On the downside though, this particular car acquisition model requires huge capital expenditures (in terms of the hefty prices paid out for the cars).
Furthermore, companies that opt to acquire cars in this way end up being responsible for the cars depreciation costs. In other words, given the fact that they own the cars fully, they have to set aside sums of money regularly for the eventual and inevitable replacement of the cars once they get worn out. Further still, the said companies have to be ready to deal with the issues of disposing the cars once they get worn out (again, given the fact that they own the cars fully).
The second company car acquisition model is the one where the companies opt to lease the cars. The companies in question subsequently get to sub-own the cars for the durations that the cars are leased to them. They retain them in their garages, get them serviced as the need arises, fuel them on a day to day basis and do pretty much everything theyd do with them if they owned them. But once the leases expire, they are required to return them to the people from whom they were leased (unless the leases are renewed). The main advantage with this car acquisition model is in the fact that it gives the companies a chance to use cars conveniently without actually having to purchase them. On the downside, this particular acquisition model can actually turn out to be very costly in the long run (though it seems cheap in the short run).
The third company car acquisition model is the one where the companies opt to rent the cars. The difference between leasing and renting cars is in the fact that the companies opting to rent the cars only (typically) get to use them for short durations of time. Leases, on the other hand, tend to be long: with some leases actually being several years long. Now the key advantage associated with this particular car acquisition model is in the fact that it can be a convenient way to acquire a car for short-term use. On the downside, just like leasing, renting cars for corporate use can be rather costly in the long run.
