9 Nov 22

APAC Benefit vs Tool of Trade: a growing concern

Compared to EU/US, the perception of a company car is slightly different in APAC. Firstly, the concept of a “car as a benefit” only extends to (very) senior levels. Secondly, tool of trade cars are highly commoditized and most eligible employees drive the same model and brand of car.

The trend towards private use in APAC

Nonetheless, even tool of trade cars are used privately; they rarely return to the company’s parking lot and instead become the family car after working hours and on weekends. Many companies have started to formalize the private usage of a tool of trade car, for instance by recognizing it in the car policy and/or regulating the utilization by, e.g., limiting the number of private miles.

By formalizing and regulating however, companies create potentially a new challenge. To understand this challenge, digitization and macro-economic realities come into play.

How APAC corporates are facing the company car challenge

European fleet managers would love nothing more than being able to review employee eligibility in function of business kilometers or true job need. This is not possible however because of employment contracts, workers’ councils, market standards… Nonetheless, it’s commonly accepted that employees who work (from home) in a highly digitized environment, don’t need a company car as much as they did a few decades ago.

Asian businesses have different traditions; face-to-face is a standard, businesses grow fast and recruit continuously from a limited pool of suitable candidates. Company cars are consequently shifting from commodity to benefit.

Globalisation and car policy

Global fleet managers aspire to consolidate, standardize, create transparency and regulate. From a procurement perspective, it’s challenging, but it makes sense to optimize buying power and negotiate the best possible deals.

From a policy perspective however, the desire to capture current practices (such as the private usage of a tool of trade car) and formalize these, can lead to a reverse effect: the creation of new benefits that will be hard to get rid of when situations fundamentally change.

APAC today

And this is where the macro-economic reality comes in. Asia is going into recession, growth projections are readjusted downwards, competition becomes increasingly more difficult as price pressure announces a “survival of the fittest” effect. In other words, it’s bad timing to increase benefits.

Integrating Asian fleets in a global car policy today benefits from more flexibility and less legacy than adjusting European policies; there’s an opportunity to design a model that reflects local realities, integrates years of learning from other regions, puts mobility on the agenda… but not to make strategic choices that will eventually become a problem.

Image: Shutterstock

Authored by: Yves Helven