There was a time when getting a company car meant that you’d made it.
The keys symbolized success, status and, for employers, an easy way to reward and retain top performers.
But, that time has passed.
Today, the company car has become less a perk and more a policy problem: expensive, inflexible, and out of sync with how modern employees work.
The real benefit in 2025 isn’t parked in the company garage; it’s flexibility, fairness, and choice.
This shift is part of a larger transformation in what Motus calls the business of driving, the ecosystem of people, data, and decisions that keep organizations moving.
TL;DR: Why the Company Car No Longer Works
In 2025, the smartest “perk” is flexibility, not a fleet.
Key Takeaways:
- Rising fleet costs and liability have turned the company car into a burden.
- Employees value choice and fairness over ownership.
- Modern reimbursement programs reduce costs by up to 40% while improving satisfaction.
- The future of the business of driving is flexible, fair, and data-driven, powered by Motus insights.
The Rise of the Company Car as a Perk
The company car perk first took off in the mid-20th century, when executives and sales reps needed to travel long distances to meet clients. It was efficient for employers and aspirational for employees.
In the U.K. and U.S., it became one of the most popular fringe benefits and as far back as 1992, more employees are choosing a cash alternative to a company car, even though it was still widely seen as a symbol of achievement.
In that era, fuel was cheap, insurance was manageable, and vehicle ownership costs were stable. Providing a car was a clear win for both sides.
How Taxes, Costs, and Risk Eroded Its Value
As economies evolved, so, too, did the true cost of maintaining those “free” cars.
By the early 2000s, the company car was fast becoming a tax liability rather than a perk. Governments began treating company vehicles as taxable benefits, and insurance premiums followed suit.
Fast-forward to today: fleet costs have surged due to inflation, supply chain constraints, and rising repair costs. KPMG reports that total cost of ownership for fleet vehicles has jumped significantly in recent years, especially in insurance and maintenance. And, according to Forbes, a single accident can raise commercial auto premiums by nearly 45%.
For employers, that means more capital tied up in depreciating assets, more exposure to liability, and less flexibility in managing costs.
For employees, the “perk” can come with strings attached: limited personal use, taxable value, and a car they may not even prefer to drive.
Motus data shows that organizations transitioning away from fleets reduce total program costs by up to 40% while improving driver satisfaction.
This evolution marks a broader redefinition of the business of driving, from ownership to optimization.
What Employees Really Want Now
The workforce has changed and so have employee expectations. In a world of hybrid work, personalization, and choice, few see a company-issued sedan as a career milestone.
Modern employees, especially field teams, sales reps, and service professionals, want benefits that fit their lives. They value flexibility, autonomy, and fairness.
That’s why so many organizations are rethinking traditional passenger fleet programs.
A report from Willis Towers Watson found that multiple factors, from cost and compliance to changing workforce expectations, are forcing employers to reassess company car benefits.
And, according to The State of Corporate Driving in America: 2025 Benchmark Report, employees who use optimized mileage tracking and reimbursement systems save more than 21 hours a year on administrative tasks and report higher overall satisfaction with their vehicle program.
These are the real drivers of satisfaction in the business of driving: freedom, fairness, and efficiency.
Why Reimbursement Is the Smarter Policy
When employees drive their own vehicles and get reimbursed fairly for business mileage, everyone wins.
For employers, reimbursement programs turn fixed fleet expenses into variable, usage-based costs. You only pay for business miles driven — no idle assets, no maintenance surprises, and no large capital outlay.
For employees, reimbursement is fairer and more flexible. Drivers can choose vehicles that fit their lifestyle, keep them maintained on their schedule, and be reimbursed based on actual use, not a flat allowance or taxable perk.
Done right, under an IRS-compliant accountable plan, mileage reimbursement is also tax-efficient for both sides.
Motus data shows that companies implementing modern reimbursement models achieve:
- Up to 40% reduction in vehicle program costs
- 17% fewer expense disputes
- 23% faster processing times
That’s not just cost savings. It’s predictability, productivity, and employee goodwill. In other words, it’s good business — the business of driving, done right.
How Companies Are Making the Shift
Organizations across industries are quietly retiring their fleets and moving to data-driven reimbursement models.
In one Motus case study, a beverage distributor eliminated personal-use costs, reduced fleet size, and achieved over $200K in annual savings, all while increasing employee satisfaction.
These transitions typically start with a cost and compliance review:
- Audit your current vehicle program. Assess total cost of ownership, including depreciation, insurance, and personal-use reporting.
- Model reimbursement alternatives. Use fair market data to set equitable rates by geography and vehicle type.
- Ensure compliance. Adopt an accountable plan to avoid tax exposure.
- Modernize mileage capture. Automate mileage tracking and verification to save time and ensure accuracy.
- Communicate the why. Employees will embrace change when they understand the benefit: fairness, choice, and transparency.
The result? Lower costs, less risk, and happier drivers, all hallmarks of a mature, data-driven approach to the business of driving.
The Takeaway: A New Definition of “Perk”
The company car once represented success and mobility. In today’s workplace, it represents cost, liability, and rigidity.
The real perk now is freedom: letting employees use their own vehicles, drive where business takes them, and get reimbursed fairly.
That’s the business of driving: smarter, safer, and more sustainable for organizations and their people.
The future of vehicle benefits is defined by choice, not company ownership.
Learn more about how Motus is helping organizations make that shift with confidence.
Frequently Asked Questions
- Why are companies moving away from company car programs?
Rising insurance, maintenance, and tax costs have made company cars expensive and inflexible. Reimbursement programs offer a fair, cost-efficient alternative for employers and employees, and are reshaping the business of driving.
- What are the biggest financial risks of maintaining a fleet?
Fleet programs tie up capital in depreciating assets and expose companies to liability from accidents, compliance violations, and unpredictable maintenance costs.
- How does reimbursement improve employee satisfaction?
Employees can drive vehicles they prefer, manage maintenance on their terms, and receive fair, tax-free reimbursements tied to actual costs.
- How does Motus support this transition?
Motus provides data-driven reimbursement solutions that automate mileage tracking, ensure IRS compliance, and reduce total vehicle program costs by up to 40%. It’s how leading organizations modernize the business of driving.
