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Article | Beyond Data

Will flexible working patterns and reduced employee mobility impact company car policies?

Results from 2021 Company Car Benefits Survey

Compensation Strategy & Design|Total Rewards
Beyond Data

By Lisa Grunditz | May 26, 2021

The pandemic brought employee mobility to a halt in early 2020. Even if mobility steadily picks up in 2021 and beyond, travel limitations and lockdowns around the world created numerous set-backs.

Employee mobility may never return to pre-pandemic rates. According to our Flexible Work and Rewards Survey: 2021 Design and Budget Priorities, respondents expect the proportion of their workforce who are full-time employees working from home in three years to be almost eight times what it was three years ago.

To what extent the increase in remote working will impact company car policies in the long run may be hard to predict.

Employees going to the office and visiting clients less frequently will certainly have an impact on a wide variety of reward elements including public transportation reimbursement, meal allowances/vouchers, allowances to support working from home as well as company car and vehicle allowances. To what extent the increase in remote working will impact company car policies in the long run may be hard to predict. It will depend on the level of flexibility that organizations implement, e.g. how often employees will choose/be asked to go to a work location for example, as well as changes in commuter preferences (car vs. public transportation vs. other means of transportation).

What’s driving changes to company car policies and car allowances in 2021?

We launched the Willis Towers Watson 2021 Company Car Benefits Survey in 2020 during the pandemic. Nearly half of respondents (45%*) confirmed they intend to review company car benefits policy during the next 12 months. We also explored topics such as the focus of these reviews and where organizations see opportunities to optimize employee mobility schemes, when mobility itself is reduced and may continue to be long-term.

Below, we have summarized the findings across Asia Pacific, Europe, the Middle East, and Africa and Latin America. We observe great variation across regions, as well as variation between countries in a same region.

Company intends to review its company car benefits policy during the next 12-months (Top 3 by region where >15 respondents)
Asia Pacific
Philippines 52%
Indonesia 43%
Vietnam 43%
Europe, Middle East and Africa
Romania 74%
Belgium 62%
United Kingdom 61%
Latin America
Colombia 61%
Chile 59%
Mexico 58%

After over a year of pandemic life, it’s not surprising to find organizations are focused on cost reduction as an objective for a policy review. More than a third (34%*) of respondents stated that reducing costs is an objective of their policy changes. Other more prominent areas of concern also rose to the top of the list.

of organizations seeking to align their future car policies with updated market best practices in 2021

73%* of respondents felt alignment with market best practices and ensuring competitiveness was a critical objective of their future car policy review. When provided, company car is generally considered an important component of the total remuneration package. Offering a car can be a dealbreaker to some candidates when recruiting. The recruitment deal can be further impacted by the make and model provided.

The second more common objective of company car policy review in 2021 is to harmonize policies across countries or subsidiaries. 36%* of respondents will review this. Decentralized management of car policies and practices is common due to local tax legislation, business needs and employee preferences for example. That said, the objective suggests that companies’ headquarter locations are interested in understanding differences and similiarities between countries to shape a global or regional framework.

How will company car policies change in 2021 and beyond?

Company car benefit policies are made up of a lot of detail. There are many things to consider when optimizing your policy: from the vehicle make, model and options, fuel type/electric charging, tires, parking spaces, maintenance and repair to eligibility, CO2 emission ceilings, fines or alternative mobility solutions such as bikes, car-pooling and public transportation.

  1. 01

    Organizations will review car makes and models they offer

    Not surprisingly, the most common changes to company car benefit policies are linked to makes and models (36%* of respondents). Reviewing makes and models is a focus for more than half of respondents across seven countries surveyed in Latin America. In Europe, changes are planned by at least half of respondents in Hungary, Poland and Spain. A leasing contract typically spans 3-5 years, after which a new car can be selected. Simultaneously car manufacturers and leasing companies keep updating their offerings. Also, when the market is based on imported vehicles, currency fluctuations can impact the availability and cost of new vehicles. It is therefore important to keep an eye on both the organization’s requirements as well as vehicle market conditions to maintain a competitive policy. The review of makes and models can also enable possible synergies when managing the fleet from a regional perspective, through regional deals with car manufacturers or leasing companies.

  2. 02

    Organizations will introduce more environmentally friendly cars to their fleets

    25%* of respondents are also looking to introduce more environmentally friendly cars in 2021. The markets where such initiatives are more common (more than half of respondents planning) are all in Western Europe: Denmark, France, Italy, Luxembourg, Spain and Sweden. More and more countries have introduced legislation to promote low-emission vehicles or alternatives to cars as a mean to be mobile. Therefore, offering hybrid or electric vehicles may not only help reduce the organization’s CO2 emission footprint, but also help reduce cost through tax efficiencies. In Ireland, the Netherlands and Norway, executives have a greater chance of selecting a pure electric vehicle through the car policy. The high prevalence is likely to be linked to the tax breaks offered in relation to electric cars and/or CO2 emissions in these markets.

  3. 03

    Organizations will introduce choice between company car or cash allowance

    The third most common change would be to introduce a choice between a company car or a cash allowance for employees entitled to a car benefit (14%*). This option is interesting as it provides flexibility to the employee and can be of particular interest in a new working environment. Provided the introduced benefit type is cash, this will also ease the burden of managing vehicles for the organization.

    There are markets where employee choice in benefit type is already prevalent, for example in Scandinavia.

    The plan to introduce choice is observed in markets regardless of the current prevalent benefit type (car or cash). For example, in Indonesia where cash is more common than cars, 46% of respondents are looking to introduce choice. In France, where car is the most prevalent benefit type, one third (33%) of respondents plan to introduce employee choice between a car and an allowance.

    In many countries, car and/or car allowances are provided for a better take-home salary, and this should not be ignored when deciding on the type of benefit to offer; car or car allowance or the ability to choose.

How do these company car policy trends impact HR executives and fleet managers?

HR and fleet management can use market data to understand the multitude of practices that drive employee mobility, and to benchmark budgets, in a given country. It’s critical to helping ensure your local programs are competitive given changing market trends we’re seeing. We are just beginning to understand the impact of the pandemic on the way we want and can work. Monitoring car and employee mobility policies will impact how well an organization manages costs and employee expectations as well as how it meets environmental criteria.

*Average across 78 countries surveyed

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