An electrified vehicle fleet increases a company’s efficiency and attractiveness in many ways, not just in terms of operations, says Marc Oliver Prinzing, Chairman of the German Federal Association for Corporate Mobility (BBM). Lately, Prinzing has had good reason to be satisfied with the members of BBM.
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What role do company cars play in today’s corporate culture?
They are significant for both employees and companies. In many cases, they are essential motivational tools. They can also become salary components when used for private purposes. A company car that is available for personal use offers considerable value to employees – it is a real financial asset. You could say that company cars count towards the benefits and compensation package. That said, changes are afoot.
What changes?
In the past, there was a growing demand for ever larger company cars equipped with all the latest features. Today, we address the issue in a more nuanced way. Many companies are now talking about mobility budgets, for which cars are only one of several instruments. Reducing the vehicle size is always an option, but for some employees, a Germany-wide rail ticket is equally attractive. The younger generation is taking a more needs-based approach.
The boom in service bike leasing demonstrates the effectiveness of tax incentives and appealing leasing models in generating demand. This principle is proving successful for cars, too. Picture: blackCAT
There are now also company bicycles.
Bicycles and e-bikes are a hot topic at the moment. They require a slightly different model. Companies offer their employees a leased bicycle, funded by salary deductions or as a remunerative add-on. The tax benefits are higher, too. We have also observed explosive growth in the e-bike market, where rising prices have made leasing models more attractive. In 2024, the corporate bicycle leasing market generated 3.1 billion Euros in turnover; over 200,000 employers in Germany have opted into leasing schemes. A comparable model exists for cars: several leasing companies and car dealerships are successfully offering similar deals.
How can the market for company cars be quantified?
In contrast to other European countries, the German market is still growing. Around 68 per cent of all passenger car registrations in 2024 were commercial. We distinguish between commercial and fleet registrations. Large fleets, such as Telekom’s, sometimes consist of 20,000 vehicles or more. The fleet segment accounts for around one third of new commercial registrations and has grown by 40 per cent over the last 25 years.
Why is the German market performing so well?
We are in a somewhat unique position, globally speaking. Our tax breaks are higher – and not by coincidence. I believe efforts were made because the German automotive industry is so important.
What is the significance of company cars for the automotive industry?
Their significance is considerable. Registrations in the private market are declining, but commercial registrations are on the rise. Vehicle procurement in fleets is predictable in terms of both quantity and model updates. This optimises capacity utilisation in production, trade, financing, servicing and the automotive parts sector. At the same time, fleets drive model turnover because they tend to replace vehicles faster than private customers do. Companies are being heavily courted by suppliers – and interestingly, fleet managers play a minor part in the decision. Under company car regulations, it is often the employee who chooses whether they will drive a Mercedes, BMW or Audi.
Company cars ensure reliable utilisation for workshops, as fleet vehicles are regularly serviced and maintained by brand service centres. Picture: Scharfsinn68
This is advantageous for workshops as well...
Company vehicles tend to be well-maintained and kept in good repair. Financing transactions usually include servicing rates. This means that the vehicles are serviced at brand dealerships. The service sector is therefore operating at full capacity. Commercial customers are key customers.
“The company car market puts a lot of cars on the road.”
Company cars also play an important role in the used car market.
Here, we can observe a curious phenomenon: two thirds of registrations are commercial, although only 12 per cent of employees in Germany drive a company car. Why is that? Commercial registrations enter the used car market much faster than private ones – after three to three-and-a-half years, depending on mileage and residual value. In contrast, private cars stay with their owners for eight to nine years. The company car market really does put a lot of cars on the road.
When did electrification take off in your industry, and how was it received?
It all started in 2018, with the introduction of certain regulations for vehicle procurement in the municipal sector. Initially, reactions were lukewarm at best – not for a lack of interest among companies, but because of delivery issues. What is more, relatively few models were suitable for fleets at that time and there were hardly any alternatives. Today, the situation is quite different. In the estate car segment, we now have the VW ID.7, which basically replaces the Passat – one of the five most widely used vehicles in the commercial sector. Other options now include the Opel Astra Electric Sports Tourer, the Škoda Superb Combi EV, the BMW i5 Touring and the Audi A6 Avant e-tron. The range is constantly expanding.
Electrification goes beyond driving a different car.
It is much more than that. Until recently, brands and models were exchanged regularly. Now, we have a whole new biotope, so you cannot simply swap cars. The entire infrastructure must be in place before you do, including qualified personnel. Fleet managers now face very different challenges: How do I set up charge-at-home facilities for employees? There are various options for charging cards and stations, which are quite complex. Suddenly, managers have to talk to facility operators and departments they have never been in touch with before.
Marc Oliver Prinzing at the National Conference on Workplace Mobility 2024
You also have to ‘manage’ the driving range...
We have vehicles with brand-new features. How quickly do they charge, what is their actual range and how much can we add on when we are already limited by heavy battery packs? Electrification is not a project you can simply walk away from if things do not go as planned. Then, the environmental bonus for companies was suddenly scrapped, which was not exactly helpful, either. But the members of our association keep moving forward. We recently spoke with Eppendorf Group in Hamburg. They have electrified almost 70 per cent of their total fleet of 400 vehicles. SAP, too, is leading the way.
“E-mobility still remains a challenge in some industries and sectors. Take mobility for at-home nursing care, for example – carers cannot afford to wait around at public charging stations.”
The EU wants to push ahead with the electrification of company car fleets by 2030 because increasing the proportion of electric cars has a disproportionately large impact on overall transport emissions. As you mentioned earlier, the company car industry puts a significant number of cars on the road …
Yes, the fleet is turning over more quickly, which is driving innovation and vehicle development. I am glad to see that politicians have recognised the volumes we move through the company car market. I do not know if quotas would be helpful here. What we need is better support in the form of extended charging infrastructure and personnel trained in mobility management. It should be noted that e-mobility still remains a challenge in some industries and sectors.
When it comes to vans, e-mobility has its limits because the necessary towing capacities have not yet been achieved in many places. Picture: Scharfsinn86
Which ones are those?
Take mobility for at-home nursing care, for example – a few hundred vehicles in every major city, operating with fixed destinations and under great time pressure. Carers cannot afford to wait around at public charging stations. Or consider vans, for which we still have not quite reached the necessary towing capacities.
Does electrification reduce the cost of the vehicle fleet?
Yes, in many cases – but not automatically. Electric vehicles generally offer advantages in terms of maintenance and energy consumption. The 0.25 per cent rule also makes them more attractive in terms of corporate benefits. Decisive factors for the total cost of ownership include the driving profile, electricity price, charging infrastructure, charging percentages, residual value and financing conditions. Companies that adopt a data-driven approach and keep charging processes under control are usually able to cut overall costs significantly, especially in cases of high annual mileage or within urban field service. If you add up infrastructure costs for only ten vehicles, the outcome will look less than appealing. If you consider the total cost of use, however, electric vehicles are cheaper than combustion engines. Where you charge makes all the difference: industrial electricity is very inexpensive, whereas prices at fast motorway charging stations come to around 70 Cent per kilowatt hour, thus pushing the energy costs above those of conventional cars. Tyre costs are also three to four times higher for electric cars due to stronger acceleration and larger dimensions (e.g. 19-inch wheels for the ID.7). But this will even out over time.
Text: Michael Hopp
Head of Content at the Gateway editorial team and an absolute pioneer in recognising automotive trends
