The Future of the Company Car
Making the case for corporate car sharing
If there was ever an example for the failure of governments to effectively tackle climate change, the persistence of company car subsidies is a good place to start. With mobility an essential part of daily life, tax exemptions on the upfront costs and the running of cars, provide what is in effect a salary increase for employees; a no brainer for employers looking to attract talent.
Yet the classic company car model is looking more and more like a relic of times gone by. The environmental costs are becoming increasingly difficult to justify while the cost to taxpayers in the form of foregone taxes, have brought the whole company car system into question.
While there are different options out there, including mobility budgets which provide subsidies for any vehicle form, we highlight shared mobility as a potential alternative. The future of the company car is changing and should become more shared - it may not even be a ‘car’
The great company car robbery
In a report by Transport & Environment, in the 8 largest European markets, taxpayers were paying €32 billion every year in VAT deductions and write-offs. With huge corporate subsidies it is no surprise, then, that company cars represented 6 out of 10 new cars sold.
And while the purchase of new cars is one problem, the negative effects of exemptions on fuel and running costs are even more pernicious. As work trips are considered part of production, they too are tax-deductible. This, in turn, encourages more driving and an increase in second-car ownership.
This aggregate increase in car usage is exactly the opposite of what is required to reduce global CO2 emissions. What is more, the whole tax regime for company cars is highly regressive as it is skewed in favour of high earners. This means low earning taxpayers end up subsidizing the polluting activities of higher earners.
While investing in electric fleets would go some way to alleviating this, a greater unbundling of corporate mobility would go far deeper without the need for costly tax exemptions. On demand mobility would be a more effective way of allocating the appropriate vehicles when they are needed, while putting money back into greener investments that benefit everyone.
The case for shared mobility
With the environmental damages and inequity of the existing model in mind, to what degree could shared mobility be used to replace the company car?
Shared mobility makes sense for corporate mobility for a number of reasons. First, much economic activity happens in urban areas where commuting to work can be delivered by modes of transportation other than the car. Second, when vehicles are being used for productive uses such as visiting clients, having vehicles sitting idle for much of the time doesn’t make much sense. It would be better therefore for employees to share the usage of vehicles to maximize their utilization. Money previously given to company cars could be reallocated to alternative transport modes.
A thriving sector
Luckily a number of corporate shared mobility solutions already exist such as those offered by GreenGo and Zipcar. They enable companies to reserve cars by the hour or by the day, giving businesses greater flexibility and decreasing their overhead costs. There is an obvious benefit here for companies with large fleets but such car sharing would also benefit smaller companies who may lack the capacity to dedicate resources to fleet management.
Yet it isn’t just cars on offer. The scooter provider Tier gives companies the opportunity to offer scooters as well. This allows companies to avoid paying large administration costs in the form of managing individual receipts, while benefiting from a sustainable mode of transport. And from an employer branding perspective, a fun means of urban travel is always going to be attractive by providing a meaningful benefit to employees.
Yet shared mobility doesn’t just have to change the way we move to and from work. Premium sharing options can change the way we do business, too. UFODRIVE is one of those companies on the premium end. The Luxembourg-based company provides rentals of premium electric cars through an app, giving a business person landing in Berlin or London, say, the opportunity to jump straight into a luxury EV without having to deal with paperwork or key handover. It may be unaffordable for businesses to provide Teslas for all employees, but by providing them as shared assets, employers can even enhance the mobility experience of their employees and clients.
New considerations for operators
Corporate car sharing throws up additional challenges to the car sharing operational model. Cars may need to be cleaned more often, for example, especially on the premium end. And while fleets of economical cars could be well integrated with general demand for sharing vehicles, more expensive vehicles may need to be more strategically placed throughout the day so that business districts have a regular replenishment of vehicles. There are only so many Teslas to go around after all.
Old habits die hard
Unfortunately without changes to subsidies, it will be difficult to completely transform the status quo. The current incentive structure will always tempt businesses to offer company cars. Yet, shared mobility points to a better way and private companies can already start to take responsibility for making greener decisions. With more and more young people looking at alternative modes of transport, the company car may find itself being bypassed. Shared vehicles would be more equitable for employees and taxpayers, but more importantly - the environment we live in.
Ubiq’s rebalancing and charging services help corporate mobility sharing services to become profitable. By ensuring fleets are available in the right place at any given time, Ubiq’s data-driven services optimize shared mobility fleets.
To find out how Ubiq can optimize your corporate fleet operations, contact us here.