Transportation benefit policies like company cars and car allowances have been highly sought after for decades. For some employees, such as salespeople who travel frequently, transportation policies are necessary for their day-to-day work. For others, transportation benefits are a status symbol or reward for working their way into a better position.

In a post-2020 world where more people work from home than ever before, some have speculated that transportation policies would become a thing of the past. Yet, transportation benefits remain highly desirable today, especially among executives and managers.

Transportation benefits aren’t going anywhere anytime soon, but today they do look different. Whereas transportation benefits have traditionally been both a financial and symbolic incentive for employees, the employee’s business need for transportation today is the primary factor in determining whether or not they’re eligible for transportation benefits.

Need-based transportation policies

The two biggest factors in determining benefit eligibility are the business need and the job level or grade of the employee. In Mercer’s 2024 Transportation Policies survey, 87% of Canadian businesses used business need to determine the eligibility and 74% used job level or grade.

The balance between these two motivating factors has changed over the years. Whereas traditionally transportation policies have been distributed by job grade or seniority, 97% of Canadian employers say the necessity of a car is a major factor today.

Different roles have different needs

Imagine two employees. One is a brand-new salesperson working in the field who travels daily, and the other is a long-time manager overseeing a work-from-home team. Which employee will receive a transportation benefit?

The salesperson has a stronger business need for transportation but doesn’t have the tenure of the manager. The manager ranks higher in the company but has little need for transportation. Our survey of Canadian employers shows that both factors are relevant, and the distribution of benefits reflects that. Both employees may be eligible, but each may be eligible for different types of transportation policies. Higher ranking individuals generally receive better incentives than lower ranking employees, but the business needs of sales and non-sales professionals also contribute to how benefits are distributed.

Let’s take a look at the most common categories of transportation benefits and how they’re shaped by roles within the company.

Company cars

The company car is the most visible form of transportation benefit and one of the most iconic. A company car has long been considered a status symbol among employees, although this is one of the areas of biggest change.

Twenty-two percent of companies offer company-owned vehicle benefits, while 49% say they offer leased vehicles to employees. Interestingly, benefits are distributed differently for company-owned vehicles than for company-leased vehicles.

Professional salespeople and executives were most likely to be eligible for the company-leased vehicle transportation benefit (60% and 61%, respectively), even more so than management. However, despite only 27% of non-sales professionals being eligible for a company-leased vehicle, a shocking 52% are eligible for company-owned vehicles, the highest of any demographic. This is a significant divergence from the U.S. trend, which has salespeople setting the curve, with non-sales professionals being the least likely to receive company cars.

Car allowances

Car allowances are by far the most common transportation policy, with 79% of employers offering the perk. The biggest factors driving the amount of this benefit are market competitiveness and the job level/salary band of the employee, with 69% of employers using each.

Car allowances are the most common among executives (74%) and heads of the organization (63%), but about half of managers and sales professionals receive the benefit as well. While non-sales professionals led eligibility for company-owned vehicles, they are well behind the curve on car allowances, being eligible for the benefit only 20% of the time.

Just over half of Canadian employers (52%) require employees to use their car allowance for the cost of a vehicle, compared to only 39% in America.

Parking subsidies

While less common than car allowances or company cars, about a quarter of Canadian businesses offer parking subsidy benefits. These help employees offset the cost of parking, which can be especially costly in dense metropolitan areas with limited options.

Between 84% and 89% of managers, executives, and heads of organizations are likely to be eligible for the parking subsidies benefit. Non-sales professionals are eligible for this benefit 60% of the time, but sales professionals are the least likely to receive the benefit, with less than half being eligible.

Public transportation subsidies

Only 18% of employers surveyed offered public transportation benefits, making them more common than rare benefits like personal drivers and cycling allowances, but less common than parking subsidies.

Other types of benefits discussed so far have favored either salespeople (for their business needs) or executives (for their status and seniority). Public transportation subsidies are unique in that they favor non-sales professionals (78%) and managers (88%).

Only 35% of Canadian employers who offer public transportation benefits fully cover their employees’ transportation costs. Most commonly, public transportation benefits take the form of an allowance that covers or supplements the cost of transit passes, while only 14% of companies pay for the passes directly.

The state of green transportation

While green transportation policies are a priority for many employers, progress is slow. Only 16% say they’ve limited vehicle options to those with lower CO2 emissions, and only around a quarter have added hybrid or electric vehicles to the company fleet.

Only 4% of Canadian employers provide a monetary incentive to encourage employees to use hybrid or electric vehicles, compared to 2% of American employers. The majority of employers don’t offer the choice between combustion or green transportation because their fleets don’t include hybrid or electric vehicles.

Are transportation benefits relevant in 2024?

Some people speculated that transportation policies could disappear in the work-from-home era. However, these benefits remain highly popular and sought after in 2024, with nearly 4 out of every 5 Canadian employers surveyed offering a car allowance.

But just because transportation policies aren’t going anywhere anytime soon, that doesn’t mean they haven’t changed. Transportation benefits are distributed by both job function (business need) and seniority (incentive), which means different roles are more likely to be eligible for different types of benefits.

Transportation benefits are complex and evolving. Mercer’s Transportation & Policy Costs includes an analysis of 12 key topics in 75 markets, including the U.S. and Canada. This detailed survey of transportation policies provides key insights into the state of the transportation benefit market. To learn more, start with our Transportation & Policy Costs or give us a call at 855-286-5302.