Mobility Budget: The approach of future corporate mobility?

At the same time, new or changed regulations require a transformation in corporate mobility and thus increase the complexity for companies. For these reasons, more and more companies are opting for a mobility budget to meet the challenges of today and the future.

What is the mobility budget? 

The mobility budget is a benefit that companies provide their employees for their individual mobility needs. Therefore, employees receive monthly funding that can be used flexibly for private use or commuting. The amount of the budget can be set individually for each employee by the company. Employees are free to choose between different means of mobility such as bus, train, car sharing, or rental bikes. Throughout the process, targeted tax optimisation or other financial benefits can promote the choice of environmentally friendly alternatives such as local public transport. Depending on the use case, billing can be digital in the form of smartphone or desktop applications as well as analogue through a type of mobility card.

Why is it even necessary? 

1. Individual mobility needs

   Mobility and its conditions are constantly changing for companies and their employees. For instance, the Corona pandemic has shown that working from a home office can also be a valid alternative for employees. A study by the University of Mannheim shows that this can save many trips. According to this, an expansion of home office and virtual meetings can replace 10% of commutes and 30% of business trips. At the same time, business travel will remain essential in some areas of the company. The existing relevance of business trips, the adaptation of working methods through New Work and the resulting potentials show that the needs of employees are becoming more and more individual. Therefore, corporate mobility will have to serve many more different use cases.

2. War of talents

   Employee attractiveness and the war of talents require a rethink in providing benefits. The classic company car is increasingly losing its value as a status symbol and can no longer satisfy all the needs of employees. In the future especially young talents want to use various mobility options that allow them to commute to their needs while simultaneously protecting the environment. The relevance of sustainability for employer attractiveness is underlined by a survey of the Königsteiner Group, in which more than 60 % of respondents consider a sustainable mindset necessary when choosing an employer.

3. Sustainability goals 

   Employees are increasingly focusing on environmentally friendly mobility alternatives, and society and the economy expect companies to contribute to a sustainable future. One example is the EU Commission's CSR reporting requirement, which obliges even more companies with specific criteria to provide non-financial reporting from 2024 and 2026. These requirements confirm that corporate sustainability efforts are increasingly moving from an option to a rule.

Companies must take responsibility already by establishing a solution that combines ecological as well as economic and social advantages. Therefore, the mobility budget aims to provide companies with a solution that meets both the new demands of employees and the organisational challenges of mobility management in times of mobility transformation. For this reason, 72% of companies with over 100 employees in Germany already plan to implement a mobility budget by 2024 (Arval Mobility Observatory 2021).

How can the mobility budget help and what are the benefits?

Various positive effects can be achieved depending on the arrangement of the mobility budget and the individual use case. A given example is the mobility budget as an alternative to the company car. Alternatively, the mobility budget can be used as a grant for employees who have yet to receive a mobility benefit from the company. Used as a framework for corporate mobility, it can be more than just an alternative to the company car. Regardless of the company-specific use case, the mobility budget offers several potential benefits:

• Flexibility - Employees can flexibly use different means of transport that suits their individual needs
• Promotion of environmentally friendly mobility - Economic incentives can be used to promote sustainable mobility behaviour among employees actively.
• Simple mobility management - Process efforts can be significantly minimised, and economic potential can be leveraged. Different mobility options no longer have to be managed separately from one another.
• Single point of mobility contact - Centralised management of all mobility options in one place creates transparency and comprehensibility for both employees and the company.
• Employee attractiveness and retention - An innovative and diverse mobility concept for employees as a competitive advantage in the war for talent.

The mobility budget is the future of corporate mobility - if applied correctly

The mobility budget enables companies to meet the challenges of mobility change. It offers the potential to be a sustainable mobility solution for corporate mobility since ecological, economic, and social advantages can be leveraged compared to existing solutions. However, the decisive factor is the individual arrangement and optimal integration into the company. With the proper roadmap for implementation, upcoming challenges can be mitigated. The existing and future challenges will demand more flexibility in mobility and even increase the need. In particular, the rapid creation of fiscal standards will be crucial in determining the speed at which the mobility budget spreads. The correct implementation for the company specific use case will make the mobility budget an attractive measure that provides an organisational framework for all available mobility services.

MHP services for the mobility budget: Benefit from our network and expertise.

MHP, with its expertise and experience in mobility budget integration, can support through consulting services in the analysis and definition of legal, procedural, systemic, and functional requirements to ensure feasibility for the introduction of a mobility budget. Success depends on the way it is implemented and communicated. The holistic view of mobility depends on many factors and becomes change management, especially for companies with heavy motorised individual traffic.

Augustin Friedel teamed up with Sarah Ruhland and Mike Müller. Both are experts and trusted advisors for mobility budget solutions. The mobility transformation team at MHP is working with companies, solution providers, and cities to shape today's mobility challenges and prepare for the future. Thanks to the competencies and network at MHP, customers could create concepts and implement solutions for mobility budgets in partnership with the MHP team. The company partners with clients early on to develop the vision & strategy based on MHP's deep industry knowledge and expertise. It creates an implementation roadmap with the stakeholders to reach the project goals.

Published on 1 February 2023.