Guide for benefits managers: Advantages of mobility budgets compared to company cars

For a long time, company cars were a status symbol and a popular incentive for employees. But these times could soon be over. On the one hand, mobility needs have changed, meaning that not all employees want a company car anymore. On the other hand, climate protection and sustainability strategies are demanding a rethink, with alternatives being called for in order to reduce large, emission-intensive company cars. A flexible mobility budget can be an attractive solution here to meet the various mobility needs and keep costs and emissions under control. It can also help to explicitly promote climate-friendly modes of transport and ultimately reduce the number of large company cars. This article explains the advantages of mobility budgets over company cars.

Climate, costs and hybrid working models influence mobility behaviour - mobility budgets offer solutions

Companies play an important role in climate protection and the mobility transition. They have it in their hands and can decide whether to continue offering their employees a company car as an incentive or whether to offer their employees alternatives, such as a mobility budget, in a much more modern and democratic way.

With a mobility budget, employees can choose how they want to get to the office each day. Options include leased e-bikes, job bikes, Germany tickets or even a petrol or charging card for their private car. Employees can also use new mobility services such as ride pooling, ride hailing and various sharing options, from bikes to e-scooters and e-mopeds to car sharing.

This enables companies to conserve resources and at the same time be more cost-effective when travelling than with traditional forms of mobility such as company cars. This also means that it is not primarily about doing without, but about creating more incentives to question one's own mobility behaviour and making alternatives to the car as attractive as possible.

Advantages that flexible mobility budgets have over traditional company cars

  • Adaptability to individual needs
  • Attractiveness for employees
  • Solution for flexible and hybrid working models and returning to the office
  • Solution for company car downsizing or as a replacement
  • Promotion of sustainable means of transport
  • Pressure from the EU: sustainability report for the 2024 financial year
  • Reducing the need for car parking spaces
  • Modern occupational health management
  • A more relaxed journey to work
  • Advantages in the countryside
  • Cost efficiency
  • Tax aspects
  • Reduction of organisational effort
  • Full flexibility for companies

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Adaptability to individual needs

A mobility budget takes into account all modes of transport, not just the car. This allows employees to choose the means of transport that best suits their daily needs. In urban areas, where public transport and sharing services are widespread and efficient, this can be particularly beneficial.

Employees who do need a car can make use of car-sharing services or a flexible car subscription with a mobility budget for several months.

Attractiveness for employees

The company car as a status symbol is playing less and less of a role for employees. A study conducted by SAP Concur among German employees shows that 35 per cent say they would do without a company car and would welcome a car-sharing offer from their employer instead.

A flexible mobility budget that allows a comprehensive choice of transport can be even more attractive to employees as it offers personal freedom and is therefore seen as more modern and progressive, which in turn strengthens the corporate image.

A mobility budget is also an extremely democratic benefit, as it appeals to all employees equally. A company car, on the other hand, does not make sense for all employees.

Solution for flexible and hybrid working models and returning to the office

According to the latest figures, working from home has become firmly established in many companies, even after the end of the coronavirus pandemic. In 80 per cent of companies in the information industry, employees work from home at least once a week. In the manufacturing industry, which is more location-based, the figure is still 45 per cent. This is the result of a survey of 1,500 companies conducted by the economic research institute ZEW.

The establishment of hybrid working models also requires an adaptation of company mobility and the vehicle fleet strategy. Mobility budgets as a supplement or alternative to company cars give employees more flexibility in their choice of transport and better meet their needs.

Solution for company car downsizing or as a replacement

The mobility budget can offer attractive options for all employees. For those entitled to a company car, an incentive can be created here to downsize the company car.

  • to downsize (downsizing),
  • to electrify it (e.g. budget for reducing CO2 emissions),
  • to use it more efficiently or
  • even to abolish it altogether.

Promoting sustainable means of transport

Companies can become more sustainable through a mobility budget and improve their carbon footprint, which in turn makes companies more attractive to many young professionals. A mobility budget contributes to climate protection by encouraging employees to use alternative forms of mobility such as public transport, cycling or car sharing, which is particularly relevant in cities with traffic and parking space problems.

Not only does owning a car have a poor carbon footprint, it also stands around unused 90 per cent of the time. Shared and alternative mobility is not only more climate-friendly here, but would also create space that can be used for other purposes.

Incidentally, the idea of many companies to solve the problem by electrifying their vehicle fleets unfortunately does not help. Even individually used e-cars do not improve capacity utilisation and consume a lot of space and energy during production. The electricity is not necessarily green.

Pressure from the EU: mandatory sustainability reporting for the 2024 financial year

The tightening of the ‘Corporate Sustainability Reporting Directive (CSRD)’ stipulates that from 2025, EU-listed companies must prepare a sustainability report on their own carbon footprint for the previous financial year. This regulation can also apply to unlisted companies if they fulfil two of the following three criteria: more than 250 employees, a balance sheet total of more than 20 million euros or net sales of more than 40 million euros. This means that 50,000 companies in the EU and 15,000 in Germany will be obliged to publish a sustainability report.

If you want to shine in sustainability reporting, you also need a new and modern mobility concept for employees.

Companies should therefore focus on sustainable mobility solutions in order to be successful in the long term and make a contribution to climate protection. By implementing mobility budgets, car sharing and pool vehicles, for example, companies can effectively save CO2 in their vehicle fleets and increase fleet efficiency. In addition, alternative mobility options such as company bikes and mobility budgets have an enormous leverage effect in terms of sustainability and the carbon footprint.

Reducing the need for parking spaces

In cities in particular, saving parking space by using public transport or bicycles can reduce operational costs and minimise urban development problems.

Modern occupational health management

Almost one in two people in Germany (48 per cent) have resolved to do more sport in 2024. Of course, this can easily be done by bike or e-bike - leased via the mobility budget - on the way to work. And it's quick too. Within the city and for distances of up to 7.5 kilometres, the e-bike is unbeatable. As half of all car journeys are shorter than five kilometres, the switch is worthwhile for many people. In addition, employees' sick days are reduced when they cycle instead of travelling by car.

A more relaxed journey to work

In large cities and urban centres, where traffic jams are a daily occurrence, switching to stress-free alternatives such as public transport or bicycles can increase employee satisfaction.

Advantages in rural areas

Mobility budgets can also be attractive in rural areas by helping to avoid the need for a second car or promoting the combination of different modes of transport such as cycling, regional transport and car sharing.

The number of car sharing schemes is also increasing in rural areas: new schemes have been added, particularly in small towns in rural areas. At the beginning of 2024, 1,285 towns and municipalities in Germany were equipped with car sharing. The vast majority of these are towns with fewer than 50,000 inhabitants. As a result, 1,127 towns and cities in Germany now have a car sharing service. This is an example of how the general shift away from owning and towards sharing is also reaching more and more residents of rural regions, despite their different starting situations.

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Cost efficiency

The cost of company cars for employers can be between 200 and 800 euros per vehicle, depending on the model. Compared to other employee benefits and company mobility offers, a company car is therefore not a cost-effective option for employers. A mobility budget is generally more cost-effective for companies than a company car.

While a company car incurs fixed and often high costs such as leasing instalments, insurance or maintenance, regardless of whether it is used or not, the mobility budget allows it to be used as needed and can therefore lead to cost savings.

With car sharing via the mobility budget, employees or the company only pay for the actual use of the cars and usually at fixed rates. A company car also harbours an increased liability risk for your company, whereas this risk is significantly lower with car sharing. If companies only need a vehicle on a seasonal basis, they can use flexible and time-limited car subscriptions as a module of a mobility budget.

Even if employers cover all the costs of the company car, employees have to accept significant deductions from their net salary. If, on the other hand, the employer provides the costs incurred for the company car, for example 300 euros, as a mobility budget, employees can decide freely and individually which means of transport they would like to use when travelling.

If employees use public transport, these amounts can even be paid out completely tax-free. Monthly amounts of 300 to 800 euros, as can occur with company cars, are also utilised by very few employees. Companies can therefore not only promote sustainable mobility for their employees with a mobility budget, but also save considerable costs.

Employers can use these savings for other benefits, such as a meal allowance, childcare or health programmes that are used on a daily basis.

Tax aspects

If employees use the mobility budget for a job ticket, no tax is payable. The same applies to the use of a company bicycle if the mobility budget corresponds to a salary supplement and not a salary conversion. Mobility budgets as benefits in kind, for example in the form of virtual prepaid cards, are taxed at a lower rate than a salary payment. Companies and employers should seek (tax) advice regarding the structure of a mobility budget and its taxation.

Reduction of organisational effort

Managing vehicles means a significant amount of extra work for the company. Mobility budgets can reduce the administrative burden compared to the provision and management of company cars.

Automated and tax-optimised mobility budget solutions as an app or software application reduce the administrative burden for companies. With NAVIT, everything works without receipts. Employees receive the mobility budget at the beginning of the month and then choose which of the available mobility options they would like to use by allocating the budget to the corresponding cards. They can use these cards to conveniently pay directly in their favourite Mobility app or, if possible, use the integration in the NAVIT app directly.

Full flexibility for companies

With a mobility budget platform, companies are not limited to a single mobility solution, but have the option of creating and catering to different user groups. The following modules, for example, are available on the NAVIT mobility budget platform:

  • Mobility budget card
  • Deutschlandticket
  • Bicycle leasing
  • Refuelling & charging
  • Car subscription

Different user groups can be organised accordingly:

  • Group 1 - Germany ticket only as a job ticket
  • Group 2 - All modules, e.g. mobility budget card with budget, refuelling & charging, car subscription, etc.

Companies have full flexibility when it comes to combining mobility: Should employees only have access to shared mobility? Or just shared mobility and a Germany ticket? Or just shared mobility and refuelling & charging? Companies can choose the modules and configure them themselves.

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Stefan Wendering
Stefan is a freelance author and editor at NAVIT. Previously, he worked for startups and in the mobility sphere. He is an expert in urban and sustainable mobility, employee benefits, and New Work. In addition to creating blog content, he also produces marketing materials, taglines, and website content, as well as case studies.
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