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Survey Report

Company car benefit trends 2019

Cash or car in Europe, Middle East and Africa

Health and Benefits|Total Rewards
N/A

May 24, 2019

When deciding on a company car benefit for employees is is better to have a cash or car?

Can – should - my organisation switch company car benefits type to cash in EMEA ?  This is a question we often hear from our clients. Cash is often perceived as more easily managed in comparison to car fleets, hence an attractive consideration when reviewing car benefit policies.

Our 2019 Company Car Benefits Survey Report enables us to display where cash is typically provided currently, either as the sole benefit type or as an option for the employees. For the purpose of the below map we have looked at employee category Middle Manager and Senior Professional (Non-Sales) but it should be noted that plans vary per employee category (eg if the role needs a vehicle to do the job, seniority of the role):

Map - benefits for employees

Total Cost of Mobility (TCM)
There are various reasons as to why the car benefit landscape looks the way it does.  But the factor with the most impact is tax effectiveness. Cash is rarely the sole benefit type offered when this isn’t considered tax effective in comparison to a vehicle.

The short answer to the raised question is: Yes. Replacing the company car with cash compensation in the region is feasible but it may cost companies more than anticipated if the transition is not done carefully. An alternative, softer approach that companies may consider is to introduce a dual cash/car option plan. For the existing dual plans what the employee finally chooses varies greatly across the region and is very often aligned with the tax environment in the given country. We can for example see that that practically no employees in Greece or Luxembourg pick cash over a car when they have the possibility to choose, in comparison to the United Kingdom and the United Arab Emirates where 50% and 70% of the overall employee population choose cash over car in the respective country (median value).  Employees appreciate being in control of this benefit. They can chose the option that may better suit their personal situations (could even be regardless of tax efficiencies!).  And it may not necessarily increase the cost to the organization.

Another alternative also is to look at extending choice beyond the traditional car in kind and cash. The principle is to consider mobility in a more holistic way. To no longer assume that mobility is linked to a vehicle, and to look at the cost and management of mobility regardless of the means. Companies that are at the forefront of this change are moving away from traditional car policies to mobility policies where employees may be offered a range of options and combinations that include car sharing, taxi services, public transport allowances, special city parking arrangements and bike or e-bike equipment.

Mobility is becoming a bigger part of the overall talent value proposition. In many ways, the Total Cost of Mobility (TCM) approach reflects broader trends in society around employee choice and flexibility in reward packages, focus on health and wellbeing, and of course the ging importance of sustainability and environmental issues. TCM also better incorporates more diverse working practices like remote working, home-working/satellite offices, and it can take into account health and wellbeing risks like stress and accidents, and costs linked to absence for example. Our latest research shows which are some of the more common options among those organizations providing alternative mobility solutions across the region:

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