For decades, a company car was the default answer for any role that required regular driving. It was simple to explain and familiar to employees, but company cars carry real, often underestimated costs: depreciation, maintenance, insurance, and the administrative overhead of managing a fleet. That cost picture is why more leaders are taking a closer look at whether a company car is still the right call for every driving role.
That reassessment doesn’t mean fleet is wrong for every organization. Vehicles that log high annual mileage or require specialized equipment still make sense as company cars. What’s changing is that leaders are no longer assuming company cars are the right call by default. They’re comparing vehicle-program options and matching each driver population to the approach that best fits how people actually drive.
Why the comparison is happening now
Cost control is the biggest driver of this shift. Fleet costs don’t move in a predictable direction, and depreciation, maintenance, and insurance can make company cars an expensive way to support employees who drive for work. Growing scrutiny of driving-related liability and a more distributed workforce add to the pressure, but cost is what’s putting fleet on leaders’ desks in the first place. None of that means fleet is failing outright. It means the calculation looks different than it did ten years ago, and leaders want to run the numbers before renewing a program on autopilot.
The alternatives to a company car
There are three main paths organizations use instead of a company car, and each fits a different kind of driving.
Fixed and Variable Rate (FAVR) reimbursement. FAVR can align reimbursement more closely to local vehicle costs and actual business driving. It combines a fixed monthly amount with a per-mile rate, giving organizations a structured alternative for employees who drive consistently for work. It’s structured around IRS requirements, calibrated to local costs like insurance and fuel, which makes it a common choice for organizations moving away from fleet without giving up structure. Motus analysis shows that companies moving from fleet to personal-vehicle reimbursement save an average of 35%, though results vary by driver population, vehicle mix, and program design.
Cents-Per-Mile (CPM) reimbursement. Employees are reimbursed a fixed amount for each business mile driven. It’s simple to administer and easy for drivers to understand, and it tends to fit occasional or lower-mileage drivers well.
Car allowance. A car allowance gives employees a flat monthly payment to cover vehicle costs, without tying the payment to actual business mileage. It’s the simplest option to set up, but it’s taxable income, which erodes its value for both the employee and the company: roughly $38 of every $100 in car allowance goes to taxes, based on IRS Publication 463.
Matching the method to how people actually drive
The organizations getting the most out of this shift aren’t picking one method and applying it everywhere. They’re segmenting their driving population: FAVR for employees who drive consistently for business, CPM reimbursement for occasional or low-mileage drivers, and company cars reserved for roles that genuinely need one, like high-mileage field service or specialty vehicles.
For HR and people leaders, the shift can also create a more equitable experience by giving eligible employees greater vehicle choice while preserving a structured benefit.
That segmentation is also where the liability conversation comes in. Moving employees off a company-owned vehicle doesn’t eliminate an employer’s responsibility to monitor driver eligibility, insurance coverage, and ongoing compliance.
What this looks like in practice
This isn’t a hypothetical shift. When Pittsburgh Paints became an independent company in late 2024, it inherited a fleet program that no longer made sense to run on its own. Rather than default to rebuilding that fleet, the company moved its entire US and Canadian driving population, more than 1,350 drivers, onto FAVR reimbursement in roughly 60 days, while also strengthening its driver safety monitoring in the process.
Atlanta Beverage Company made a similar move for different reasons. After decades of running a company-owned passenger fleet, rising insurance premiums and claims volatility made fleet ownership harder to justify. The company transitioned to FAVR reimbursement, avoiding an estimated $1 million in claims-related costs by removing that liability exposure and identifying up to $5 million in potential savings from moving away from company-owned vehicles altogether.
Other Motus customers across beverage, energy, and retail have made similar moves, citing the same core drivers: cost control, less 24/7 liability exposure, and more flexibility for employees than a company car ever offered.
What this means for leaders evaluating their program
None of the alternatives to a company car are a universal fix. The point isn’t to declare fleet obsolete. It’s to make sure the reimbursement method matches the way a given role actually drives, instead of defaulting to whatever the program has always used. That’s a more useful question than “should we get rid of company cars,” and it’s the one more leaders are asking.
Ready to take a closer look at your current program? Continue the series with [next cluster article], which explores how to determine which drivers should remain in fleet and which may be better suited for reimbursement. [Replace with Buyer’s Guide link after launch.]
