Skip to main content
Article

Company Car Benefits Trends in Europe, Middle East and Africa

Total Rewards
N/A

May 1, 2018

See the latest trends for company car benefits across Europe, Middle East and Africa

Environmental considerations in relation to cars are now common place.  Car manufacturers, governments and organisations are often quoted in media with respect to various initiatives to reduce the environmental footprint. Organisations maintaining car fleets are looking more and more for greener alternatives when designing their car or mobility policies.  

Organisations may choose to tackle this topic in various ways. Some may pick the more drastic option to not offer any company car benefits at all. It could prove very challenging, in particular if the organisation relies on its car fleet to do business. A less drastic option could be to just limit employee eligibility for car benefits i.e. reduce the number of employees having access to a vehicle.

Others may choose to offer a car allowance and/or mileage reimbursement (cash) instead of a vehicle to their employees. Although this option may limit the environmental footprint by the organisation it may very well just transfer the reduced portion to the employee, if the employee chooses to obtain a similar vehicle to drive the very same distances as in the past. The environmental footprint overall may even increase if the employee for example invests the cash to drive an even bigger or older car than they used to be entitled to by the organisation.

Greener choices for employees

There are many organisations that now allow their employees to select ‘greener’ vehicles such as LPG (Liquid Petroleum Gas), hybrid and plug-in electrical vehicles.

Organisations allowing employees to select LPG/Bio fuel/Hybrid or electric cars

Graph showing percentage of companies allowing employees to select greener cars by country

An increasing trend among organisations in Europe is to apply a CO2 emission ceiling on cars that employees can select.

Organisations applying CO2 emission ceiling on company cars

Graph showing organizations applying c02 emission ceiling on company cars

Looking across the region the ceiling applied by organisations varies. For example, the average CO2 emission ceiling for Middle Managers and Sales Professionals is 119 g/km in Portugal vs 149 g/km in Germany. Such policies are likely to be impacted by the new WLTP test (Worldwide Harmonised Light Vehicle Test Procedure) that replaced the old NEDC test (New European Driving Cycle) in September 2017. Fuel consumption and CO2 emissions figures of cars are obtained under such standardized test conditions, and the new way of testing may mean that the CO2 emission level changes for a given make and model. This is something to monitor, in particular in countries where taxation takes into account the CO2 emission level of the vehicle.

Finally, it should be noted that the changes implemented by organisations are very often influenced by other factors than just the environmental concern. For example employee expectations, having a greener car policy will hardly impact negatively on the image of the company and brand. On the contrary, implementing a greener policy may very well create a more positive image internally as well as externally when employees are on the road and park in front of clients and distributors. Tax effectiveness also plays its part. The way governments modify tax regulations or facilitate creation of infrastructures to support newer types of vehicles such as electrical ones will influence how organisations’ design their car policies. This is also the reason why ‘green’ policy changes may come sooner rather than later depending on the country you look at.

What does HR need to do?

HR’s role in this is to keep monitoring those changes and legislation, acting accordingly when needed. This keeps policies cost effective, especially as this can, after wages be a very costly benefit to have. All the data and trends we have looked at come from our 2018 Company Car Benefits Survey, and the latest version is now available around the world.

Related content tags, list of links Article Total Rewards