Transportation Benefits: Do Companies Still Offer Car Allowances?

The following article was first posted in the Blog section of Mercer’s website. It is reposted here with permission.

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It’s been a while since being provided a company car or car allowance was valued as a status symbol, something to aspire to, or an indicator of how important employees are to a company.

With the advances in green transportation technology and the shifting of employee preferences and priorities, employees are less interested in that type of benefit.

Of course, for some roles, like on-the-road sales, a car allowance or company car may still make sense, depending on the location.

In Mercer’s most recent Inside Employees Minds report, employees’ top concerns, or “unmet needs,” are:

• Covering monthly expenses
• Being able to retire
• Job security
• Workload/life balance

Sure, providing various transportation benefits will indirectly assist with those top concerns. However, other elements of an employers’ total rewards offerings, such as base pay and other types of benefits, will address employee concerns more directly.

With all that said, let’s take a look at what US employers are offering in terms of transportation benefits according to the findings in the 2025 Transportation Policies and Costs survey.

Transportation Offerings, Eligibility

Transportation benefits accomplish two purposes: they serve as a reward to employees in addition to their salary, based on their level, and they help employees get to work and perform their jobs.

Together, those two factors (i.e., business need and job level or grade) are what most U.S. organizations use to determine who in your organization is eligible for transportation benefits.

Company Cars

Company cars are one of the most common types of transportation benefits. These can be company owned but, more commonly, company cars are leased.

In Mercer’s 2025 Transportation Policies and Costs survey, 27% of U.S. companies indicated that they offered company owned vehicles as transportation benefits, compared to 42% that offered company leased vehicles.

Sales professionals are the most likely to receive a company car benefit, with 72% of U.S. employers offering company leased cars and 55% offering company owned cars to sales professionals.

Company owned or company leased cars are a relatively common fringe benefit.

Because sales roles frequently involve large amounts of travel, company owned or company leased cars are a relatively common fringe benefit.

Executives are most likely to use a company vehicle for both business and personal transportation, although across roles, a majority of employees who receive this benefit can use the vehicle for personal use.

The types of vehicles offered also depend on the employee’s role.

Luxury/premium vehicles and sports cars/convertibles are more likely to be offered to executives and the head of an organization, while sales professionals and managers are typically offered standard, midsize, or sport utility vehicles.

Car Allowances

Offering car allowances is much more widespread across companies than providing a company car.

Three-quarters of U.S. companies surveyed offered car allowances in 2025.

More than half of employers offered a car allowance for the head of organization, executives, and professional sales employees.

Just under one-half, or 46%, of U.S. companies offered a car allowance to management, while those in non-sales professions were unlikely to receive a car allowance at most companies.

Subsidized Parking

In rural and suburban areas, it’s common for businesses to have parking lots.

In metropolitan areas, parking is at a premium and can quickly become a major expense.

Now that employers have called everyone back to the office, it’s interesting to see that only 15% of U.S. companies were offering parking subsidies in 2025, down from 19% the previous year.

Parking subsidies tend to be offered at all levels of the organization, including sales professionals.

Public Transportation Subsidies

Another way of combating expensive parking and also minimizing the environmental impact is to utilize public transportation.

Many employers offer employees incentives to use public transportation by providing subsidies to contribute to the cost of fares.

It seems that this is the transportation benefit of choice provided to professional non-sales employees.

Only 7% of U.S. employers cover 100% of an employee’s public transportation cost.

Ninety-four percent of U.S. employers surveyed in 2025 indicated they do provide public transportation subsidies to their professional non-sales staff.

However, what does this subsidy actually cover?

Only 7% of U.S. employers cover 100% of an employee’s public transportation cost. When you consider that fare costs will vary by employee—based on where they live or mode of public transportation—it follows that employers are likely providing a flat rate to subsidize the fare.

Are Green Benefits on the Rise?

With the rising cost of gas, and the continued economic and political uncertainty, employees and employers alike should be considering more green transportation benefits.

The rise in electric vehicles would also push employers in that direction.

Walking and biking are probably the most optimal green transportation an employee can choose. As for a employer reimbursement or support in making that choice, only 8% of employers offer any kind of walking or cycling benefit.

When it is offered as a benefit, it’s most commonly in the form of a flat amount paid to the employee. (Note: A green transportation benefit is probably highly dependent on the location and whether it’s likely that an employee could walk or bike to work.)

While many companies have taken tangible steps toward offering a package of eco-friendly, green car benefits for employees, efforts have been mediocre across the board.

28% of U.S. companies indicated they were limiting or reducing their number of company cars in 2025.

In 2022, 20% of U.S. employers reported limiting vehicle options to those with lower CO2 emissions, with another 21% reporting plans to implement such a limitation.

By 2024, only 17% still had such limitations in place. That number has grown to 21% that have implemented a limited CO2 emissions vehicle policy, but 65% have no plans to implement such a limit on vehicle options.

Similarly, 28% of U.S. companies indicated they were limiting or reducing their number of company cars in 2025, down 2% from 2024.

Notably, 44% of U.S. employers have added hybrid vehicles and 45% have added electric vehicles to their car fleet. In 2024, those percentages were around 20%–25%.

While many positive changes are happening in the world of green transportation policies, businesses still have a long way to go to meet their environmental goals.

Are Transportation Policies Relevant in 2026?

While the role of transportation benefits has changed, they will continue to be an integral part of the EVP.

Fringe benefits like company cars, car allowances, and public transportation subsidies help employers stay competitive.

More than just being a symbolic incentive, transportation benefits also serve a business need by getting employees where they need to go.

Transportation benefits are essential not only for attracting talent but also for facilitating transportation.

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About the author: Rebecca Hall is content leader for imercer.com, where she leverages her knowledge of human resources and talent strategy to create materials supporting Mercer’s products and services in North America.