Choose a Mobility Budget instead of a company car in Germany

In a nutshell

  • Key points. A mobility budget that works as an employee benefit is a more flexible alternative to a company car. It fits today's standard of changing work modes and work styles.

  • Popular with young professionals. For most young workers, flexibility and freedom in their choice of transport are more important than a status symbol.

  • New work meets new mobility. Flexible and hybrid working with a mix of office days and home office make the mobility budget much more attractive for employees and companies alike.

  • Greater choice. The mobility budget gives access to all forms of mobility and transport instead of just owning one. Those who need a car can easily make use of car sharing or rental car offers.

Move away from old-fashioned status symbol, towards more flexible mobility. 

Traditionally, a company car is a popular component of the salary for many employees. If the company offers a company car, employees rarely turn it down. In Germany alone, there are currently around five million company cars.

However, there are good reasons to reduce the number of company cars or, as a company, to do without company cars altogether and instead rely on a mobility budget as an employee benefit.

We explain the advantages of a mobility budget over a company car and how you can implement the change in your company.

For many, owning a company car is still a status symbol, especially among older employees and in traditional occupational groups.

However, a change in thinking is gradually taking place. This shift in the perception of driving a company car is getting more and more popular with young professionals.

For them, two factors, in particular, are decisive with regard to their mobility: flexibility and freedom.

Firstly, they want to decide freely and individually how they get to work and how they are mobile in their private lives. In doing so, they want to remain as unbound as possible.

They want to choose the means of transport according to their life situation, traffic situation, or personal preference.

Moreover, many young people in large cities have grown up without a driver's license or owning a car.

The 'company car' concept has a less prominent meaning to them. Not in the least because of a lack of parking spaces in the city and a growing awareness of climate change and its environmental impact.

The mobility budget, with its flexible options, is a much more attractive benefit, to address these shortcomings.

Therefore it is a great benefit or perk for recruiting to attract and retain top talent.

We think that this kills two birds in one stone. The mobility budget simplifies urban mobility for you and your team while at the same time delivering sizable benefits to the reduction of CO2 footprint.

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This is how the switch succeeds

There are many benefits to switching from having your own fleet of company cars for your team to having a wide range of mobility services covered by your mobility budget.

For one, company cars are extremely expensive to maintain, and these costs add up over the course of the year.

With a mobility budget that your employees can also use for car sharing or rental cars, these costs are covered by the mobility provider.

With a company car, the employer must bear the costs of purchasing and maintaining the vehicle, as well as the costs of fuel and insurance.

These costs can add up quickly if you have to maintain a large fleet, and they may not be justified if the car is not being used to its full potential. In contrast, a mobility budget allows the employer to set a budget for each employee, and the employee can use that budget to cover the cost of their preferred transportation option.

A company car also carries an increased liability risk for your company, a good alternative could be a car-sharing service that you can pay with the mobility budget.

This can help to control costs and ensure that the budget is being used efficiently not. The risk and cost are therefore significantly lower. 

With car sharing via the mobility budget, your employees or your company only pay for the actual use of the cars and usually at fixed rates.

If you give your employees a fixed amount of mobility credit per month, you only pay for what they actually use for their journeys.

Compared to the company car, the billing of the mobility budget becomes child's play for you and your team.

Many companies already provide their employees with mobility budgets as an alternative or supplement to the company car as part of the employee benefits.

Because a mobility budget offers more than "just" a job ticket or "just" a company car: Your employees also use the mobility budget for mobility alternatives such as taxis, rental cars with drivers ('ride'), but also for bikes, e-scooter, e-moped, and car sharing. It can also be combined with public transport services or bike leasing.

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Advantages of the mobility budget compared to the company car

A mobility budget offers a number of benefits for both employees and employers.

For your employees, a mobility budget allows them to adapt their transport choices to their needs, whether they need public transport, car services or other types of mobility.

This flexibility can be particularly beneficial for employees who travel frequently for work. For employers, a mobility budget can help to save costs for the mobility of their employees and provide employees with additional financial security.

In addition, a mobility budget can help reduce the company's CO2 emissions by encouraging employees to use alternative and environmentally friendly means of transport rather than a company car. For these reasons, a mobility budget can be attractive for employers and employees alike.

Young employees in particular no longer want to own a company car. Instead, they want to be able to switch flexibly between modes of transport.

Taking the S-Bahn or a company bike to work, taking a taxi home from the regulars' table with colleagues in the evening, and using a car-sharing car on the way to the office, to daycare, or to go shopping after work - all without having to own a car.

The company car is too often unused by many employees, and even more so with more frequent work in the home office. This has also increased the rethinking in many companies.

The mobility budget offers a flexible alternative to the company car. Your team can spend the credit for any mobility and it also offers advantages to your company:

  • Through the modern salary extra, you will become more attractive as an employer for top talents.
  • Your company becomes more sustainable and improves its carbon footprint, which in turn makes your company more attractive to many young professionals.
  • In addition to CO2 emissions, your company also saves costs, for example for company parking spaces.
  • With the mobility budget as a non-cash benefit, taxes can also be saved. Up to 50 euros per month are tax-free. Amounts in excess of this are only taxed at 30%.
  • The sick days of your employees decrease if they cycle instead of driving.

The future of employee mobility belongs to the mobility budget.

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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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