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Article | Beyond Data

Revealed: the factors shaping company car policies in 2021

What trends should your organisation be aware of?

Compensation Strategy & Design
Beyond Data

By Lisa Grunditz and Samantha Rogers | November 3, 2021

As the world changes at high speed, organisations are working hard to evolve their company car benefits. Several trends emerge in Willis Towers Watson’s 2021 Company Car Benefits Survey.

What should companies consider when reviewing these benefits? In this blog we’ll examine several key factors which are influencing the direction of travel.

The climate crisis

The impact of the climate emergency is being felt throughout business and society. It’s no surprise that companies are seeking to make their company car benefits greener over the next 12 months. Introducing more environmentally friendly cars topped the list of changes that UK companies were planning.

Top five planned changes to car benefits policies in the UK*
*% of responses out of those companies planning a change
43% Introduction of more environmentally friendly cars
40.5% Makes and models allocated
27% Reduce travel by car through work-from-home policies
24% Introduction of CO2 emission ceiling on cars
22% Reduce travel by car through increased tele-/web conferencing

Source: Willis Towers Watson 2021 Company Car Benefits Survey Report – United Kingdom

UK organisations are also seeking to limit their CO2 emissions. A quarter have introduced an emission ceiling on cars.

More UK companies are also making electric or hybrid vehicles available to employees. Just over a third (35%) of UK organisations now give sales professionals and managers the option to go electric or hybrid, a rapid jump from 19% in 2020. Almost a quarter (21%) of companies will even cover the home installation of a charging point, as well as the charging costs for plug-in vehicles.

Offering these types of vehicles can be a win from a tax point of view, as well as being environmentally friendly. The UK government incentivises companies to offer electric vehicles by making them tax deductible, subject to some limitations, which are linked to emissions and the duration of the lease arrangement. Employees are also subject to more favourable, benefit-in-kind tax rates when they choose a car with low CO2 emissions which was registered after April 2020.

The impact of the pandemic

Turning to our set of international survey data, it’s clear that the pandemic has had a huge and multidimensional impact on how companies approach car benefits.

What are the triggers for a car policy review in 2021?
Countries where organisations (with over 60% of sample) have indicated they intend to review company car benefits policy during the next 12-month period:
New Zealand, Serbia, Croatia, Romania, Bosnia-Herzegovina, Slovenia, Latvia, Colombia, Jordan, Tunisia, Israel, Luxembourg, Belgium, UK.
Region (average)
% of companies intending to review company car benefits policy
United Kingdom (61%) Asia Pacific (35%)* Europe, Middle East and Africa (47%)* Latin America (45%)*
Alignment with market best practices/competitiveness 71% 80% 68% 82%
Cost reduction 34% 62% 28% 24%
Introduction of flexibility 16% 56% 23% 16%
Reduction of administration 18% 48% 20% 19%
Introduction of more environmentally friendly policies/behaviours 57% 15% 35% 5%
Harmonisation across countries or subsidiary companies 21% 45% 35% 27%
Maximise tax effectiveness to employee/employer 23% 38% 9% 7%

Source: Willis Towers Watson 2021 Company Car Benefits Survey Report

Many companies have suffered financially in the pandemic. Cost reduction comes out as a priority across the regions we surveyed, with companies in the Asia Pacific region particularly aware of squeezed corporate budgets.

However, the top concern across the regions we surveyed was staying competitive and aligning with market best practices. As companies seek to recover from the pandemic, the global war for talent is more intense than ever. For some candidates, the company car on offer can be a dealbreaker. Organisations are scrutinising what’s on offer and benchmarking themselves against the market.

As a side note: this set of international data reveals some interesting contrasts in regional approaches. It’s striking to see that environmental concerns were high up the priority list in the UK, with 57% putting it on their review list, but much lower in Latin America and the Asia Pacific regions, at 5% and 15% respectively.

Returning to the pandemic, the move towards flexible working is increasingly being reflected in UK car benefits policies. Only 3% of UK employers planned to reduce car journeys through embracing work from home in 2020. In 2021 this leapt up to 27%, with similar numbers planning to reduce car travel through increased tele-/web conferencing.

The importance of agility

We’re living in a fast-changing environment, and companies must stay agile to adapt. It will be important to factor climate concerns into future decisions about company cars. Organisations should also think hard about how the pandemic will shape their business travel needs in future.

In these uncertain times comparative market data will be critical in helping employers retain their competitive edge. Will electric cars continue to grow in popularity? Now that virtual meetings have become commonplace, will more and more organisations start to question the role of the company car? Only time will tell.

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