Employees' perspectives on sustainable corporate mobility policies: The company car and its alternatives

In Belgium and in many European countries, companies offer company cars as a fiscally beneficial
incentive to attract employees. However, the system of providing company cars is associated with
unsustainable travel behaviour. The private use of company cars contributes to externalities such as
climate change and air pollution. This is especially problematic in Belgium, where congestion and air
pollution levels are amongst the highest in Europe, as well as the fiscal benefits associated with
company cars. However, the topic of company cars has received little attention in scientific literature,
leaving an important gap in understanding how to balance the competing interests of all stakeholders
involved in developing new corporate mobility policies. Many European reports are unanimous about
the fact that the current company car policy is unsustainable in the long term. However, few reports
to-date describe a clear direction of how to improve this. The aim of this dissertation is therefore to
provide recommendations on how to make corporate mobility more sustainable, while considering
the interests of all stakeholders involved. To address this, two research objectives are pursued. First,
corporate and policy measures that provide alternatives to the conventional company car system are
identified by means of a literature study, scenario analysis and a Multi-Actor-Multi-Criteria Analysis
(MAMCA). Second, the acceptance of such measures and policies by employees is studied in more
detail.
First, based on a literature study, measures that companies can take to promote sustainable mobility
patterns among their employees were identified, while taking current trends and developments into
account. A scenario analysis revealed that the level of technical implementation and sharing potential
were critical uncertainties that resulted in four possible future scenarios of corporate mobility. The
most sustainable scenario was characterised by the implementation Mobility as a Service (MaaS) and
shared autonomous vehicles. On the other hand, providing electric company cars was associated
with a less desirable scenario, which is characterised by a low sharing potential (private ownership).
Next, preferences of different stakeholder groups towards alternative policy measures, including a
mobility budget, mobility allowance, tax shift and electrification of company cars, were analysed
using MAMCA. The analysis entailed workshops and expert interviews as well as quantitative analysis,
among all stakeholders in the company car system. In MAMCA, the criteria of the stakeholders were
defined and the impact on these criteria was calculated, to measure the impact of potential future
policy measures. Results indicated that there is currently no alternative that is beneficial for all the
stakeholders. From a societal perspective, a tax shift is the most logical choice. However, the
complexity and the welfare loss of employees with access to a company car makes that this policy
measure cannot be implemented easily in the short term. Among the respondents with access to a
company car, a mobility budget was the most preferred option. The stakeholder analysis revealed
the importance of identifying heterogeneous stakeholder groups, in particular employees with and
without access to a company car, due to the differential impacts of the current company car system.
Understanding the preferences of employees towards future corporate mobility policies had not been
given much attention in academic literature. Compared to non-company car owners, employees with
a company car are less convinced of more sustainable alternatives, which made them the further
focus of this study.
In a survey among 529 company car drivers, their interest in opting out of the traditional company
car system is explored. First, a choice based conjoint analysis revealed that there was no alternative
that was both more sustainable and more preferred by the sample, which confirms earlier research.
The price or cost of the company car was considered the most important attribute. The results
indicated an overall preference for hybrid cars, but a shift towards fully electric vehicles is necessary
to have a significant impact on climate change. Next, the effectiveness of a financial compensation
as a motivator to dispose of company cars is evaluated. 20% of the respondents indicated that they
were interested in trading their company car for an amount of cash that would not be spent on buying
viii
a privately owned car. 55% of this sample indicated that they were not interested in trading their
company for a monthly compensation, and 25% was interested, but would buy their own car with
the received amount of cash. On average, the respondents required a monthly compensation of €683
net per month to give up their company car. The resistance of employees to get rid of their company
car confirms earlier research. This research expands current knowledge by studying the association
between the required compensation and socio-demographic, attitudinal and mobility related
variables, using stepwise linear and logistic regression analysis. The heterogeneity of employees as
a stakeholder group was thereby further illustrated: the respondents that were interested to trade
their company car for a mobility budget and the subgroup that was not interested in a mobility budget
differ significantly in terms of age and environmental concern. A stepwise linear regression model
showed that the subgroup that was interested in a mobility budget, keeping other variables constant,
required €229 less compensation per month than the subgroup that was not interested. Earlier
studies found that the degree of environmental concern can have a positive impact on modal shift.
This study indicated that this association can also be applied in a corporate context. Environmentally
concerned respondents were found to be more interested in alternative policy measures, they
required a lower financial compensation, and they attached less importance to the size and price of
a company car. This shows that targeting environmentally concerned employees could be effective
in promoting sustainable corporate mobility policies.
The results presented in this dissertation can advance transport research and benefit policy makers.
This research expands current knowledge on the resistance of employees to exchange their company
car for more sustainable transport alternatives. Addressing attitudes related to environmental
concern in future analyses can lead to a better understanding of the decision-making process of
employees and commuters. On a policy making level, this study allows for a better understanding of
why certain policy interventions are not successful in reducing the number of company cars. Three
main policy recommendations stem from this study, namely the promotion of automated, electric,
and shared company cars, using financial incentives to encourage sustainable behaviour, and
involving stakeholders in decision-making. Concerning new vehicle technologies, policy makers could
incentivise organisations towards a scenario where company cars are automated, electric and shared.
It is hereby important that the economic and social dimensions of sustainability should be considered,
as electrification and automation may not be sustainable in the long-term. Policy makers should also
be aware that the lower cost of electricity compared to diesel and petrol might result in an increase
in the total distance travelled by electric vehicles, which could lead to increased congestion. A second
implication concerns the effectiveness of financial incentives in changing the behaviour of company
car drivers. The results indicated that financial incentives could make company cars more sustainable
and promote alternative transport modes. However, the perceived benefits are often too insignificant
to motivate company car drivers to dispose of their company cars. The evaluation of the mobility
budget revealed crucial weaknesses and opportunities for improvement, such as complex regulations.
In the longer term, a transition towards a more fundamental tax reform, where company cars are
no longer fiscally stimulated, is the most sustainable option. Finally, this dissertation suggests a
comprehensive and coordinated approach between all stakeholders to effectively address the
rigidness of Belgium’s legislation concerning corporate mobility. In addition to employers, leasing
companies and the car industry, company car drivers form a small but remarkably strong interest
group in this discussion.