hkp/// group surveys show that around two out of five companies have recently modified their company car policy or are currently planning a far-reaching adjustment. The Covid 19 pandemic has clearly increased the need for action, notwithstanding all other dynamic changes. hkp.com talks with hkp/// group experts David Voggeser and Jonas Friedrich about the current trends in company car policies.
Mr. Voggeser, Mr. Friedrich, what is the impact of the current Covid 19 pandemic on the changes for company car policies?
David Voggeser: In essence, the pandemic makes a mockery of all the predictions claiming that the company car is a thing of the past when it comes to corporate mobility plans. The crisis has prompted managers and employees to attach more importance than ever to the company car as a safe individual means of transportation, especially in a work-related context. Accordingly, companies need to realign their priorities with regard to company car policies.
What exactly was the driving force behind the change in company car policies until the outbreak of Covid-19?
David Voggeser: Company car policies are increasingly geared towards environmental protection and sustainability. The issue of sustainability has become the most important factor when it comes to rethinking company car policies. And there is a continuous change from a simple company car policy to a comprehensive overall mobility plan for companies. Mobility plans often go far beyond the policies for company cars. As a first step, however, a review is usually always about significantly reducing the CO2 emissions of the company car fleet…
Jonas Friedrich: …with the focus on developing a systematic approach towards electrification. Over 60% of the participants in our studies now focus on plug-in hybrid models or purely electric vehicles. For example, bonus-malus schemes are used to create incentives for vehicles with low CO2 emissions.
What is the reason for this move towards electrification?
David Voggeser: One very important factor are certainly the attractive tax incentives for hybrid or purely electric vehicles. But also the growing popularity and availability of electric or hybrid vehicles and the steadily improving infrastructure make them a viable alternative to conventional vehicles. For larger car fleets, even small savings can lead to significant cost reductions in individual cases.
Jonas Friedrich: It has proven to be a good idea to establish clear and reasonable CO2 limits without jeopardizing the appeal of company cars. The emission thresholds are introduced increasingly to promote more environmentally friendly driving, which in turn often contributes to a corporate social responsibility strategy.
It means companies can reduce their environmental impact and position themselves accordingly. How common are CO2 emission limits?
Jonas Friedrich: In the meantime, more than 50% of DAX and MDAX companies have set a CO2 limit for their company car policies, and the trend is clearly on the rise. This also applies to companies that are not listed on the stock exchange. In particular medium-sized companies often play a model role here.
How are the changes implemented?
David Voggeser: Often the selection of a more efficient car is promoted with lower CO2 emissions and fuel consumption. This is also cheaper to buy and maintain, a process known as downsizing. Funding is provided via company grants or other benefits, such as an additional company bike.
A company bike in addition to a car?
Jonas Friedrich: This is an approach that is becoming increasingly important in the context of overall mobility plans. Well over a third of our survey respondents stated that they were also planning to offer company bicycles. We are not talking about individual cases.
Will companies need to maintain their own charging stations for their company cars in the future?
David Voggeser: If companies intend to move towards e-mobility, the necessary charging infrastructure is needed, whether for cars or bicycles. Installing sufficient charging stations is therefore inevitable, but a few charging stations on the company premises are not enough. Also the infrastructure for charging at home needs to be improved. And here the question is who is going to pay for it. The payment of the regular electricity charges for the supply of electric vehicles must also be addressed. These are not as clearly distinguishable as the costs of fuel.
Will there be changes due to Covid-19?
David Voggeser: Perhaps the subject of business travel is not that important at present. But individual mobility is increasingly important. In recent years, collective means of transport, such as the train, have often been preferred, whereas today employees often prefer to use their own car. This means that companies will have to deal with the more demanding needs of their employees.
What other exciting developments do you see for company car policies at the moment?
Jonas Friedrich: In our current projects we are experiencing two fundamentally conflicting approaches relating to company car policies. Some companies want to reduce the complexity and only specify the key points in the guidelines so that decisions can be made on a case-by-case basis or be intentionally delegated to the management's discretion.
David Voggeser: Companies must treat their employees seriously and hold them accountable, regardless of the level of hierarchy. We have reached the point of full provision and we will see significant corrections here.
Jonas Friedrich: But many companies continue to make their company car policies as specific as before, some even more so. There are different approaches on the market. Remuneration and additional benefits are always a reflection of the corporate culture.
What approach do you recommend?
David Voggeser: If a company decides to review its company car policy, it must be clear which details are up-to-date, attractive and also sensible for cost reasons. This includes, for example, the group of entitled persons, possible options for the choice of car, equipment and motorization etc., but also the choice of alternatives such as a rail card or e-bike. We recommend that a review of the company car policy should not be carried out casually, but that the time required be invested in order to clarify the details in advance. This pays off quickly.
Jonas Friedrich: What is not provided for will need to be addressed later. Subsequent adjustments often result in significant extra work and, if employees are treated differently, this can quickly lead to resentment, even though company cars are intended to achieve exactly the opposite.
Will company car policies persist?
David Voggeser: As long as there are company cars! But the conventional company car policy is gradually replaced by general mobility plans linked to remuneration. Digitization makes a lot possible what has been discussed years ago, but which had been rejected due to the effort and costs involved. Just think of cafeteria-style benefits plans.
And the costs?
David Voggeser: Companies should look at company cars and mobility on the basis of a current and future cost-use analysis. There will be significant changes, which can then be immediately seen in financial terms. However, they do not necessarily have to be more expensive in view of the technological developments and changing employee preferences.
Mr. Voggeser, Mr. Friedrich, thank you for the interview.