2016 GLOBAL CAR POLICIES · Chile 68 Colombia 70 Costa Rica 73 Dominican Republic 76 Ecuador 79 El...

2016GLOBAL CAR POLICIES

H E A LT H W E A LT H C A R E E R

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PUBLICATIONS DIRECTORSamantha Polovina

CREATIVE DIRECTORStefani Baldwin

PRODUCT MANAGERChrisy Wilson

PRODUCTION MANAGERSumit Bajaj

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ANALYSTSDeepak GaurKavita RaiRishi KumarVishal Singla

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PUBLISHED BY: MERCER1166 Avenue of the Americas, New York, New York 10036, United States

© 2016 Mercer LLC. 2 Global Car Policies — Global

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DATA MINING & INSIGHTSIn today’s competitive race to attract and retain highly skilled global talent, organisations require current, in-depth information on everything from local statutory benefits, to salary trends, to managing a diverse workforce. Through Mercer’s own extensive global presence, we collect and analyse data and insights that help companies take the actions necessary to support their human capital strategies. You can order any of the publications below by clicking on the title links or by visiting www.imercer.com/global.

Compensation Handbook

Global Car Policies

2016GLOBAL CAR POLICIES


Global Compensation

Planning Report

Global Diversity and Inclusions

Handbook

Global Pay Summary

HR Atlas Asia Pacific

HR Management Terms

2016

AMERICASSHORT-TERM INCENTIVES AROUND THE WORLD


Short-Term Incentives around

the World

International Geographic Salary

Differentials

Total Employment Costs around

the World

Worldwide Benefit & Employment

Guidelines


I N T E R N A T I O N A L L I V I N G W A G E R E P O R T 2015

International Living Wage

Report

Talent All Access Portal

Subscription Services

Global Mobility Handbook

https://www.imercer.com/default.aspx?page=shortcutregion&shortcutId=83

https://www.imercer.com/products/compensation-handbook.aspx

https://www.imercer.com/products/compensation-handbook.aspx

https://www.imercer.com/products/global-car-policies.aspx

https://www.imercer.com/products/global-car-policies.aspx

https://www.imercer.com/products/global-comp-planning.aspx



https://www.imercer.com/products/2013/diversity-handbook.aspx



https://www.imercer.com/products/global-pay-summary.aspx

https://www.imercer.com/products/global-pay-summary.aspx

https://www.imercer.com/products/2015/hr-atlas-asia-pacific.aspx

https://www.imercer.com/products/2015/hr-atlas-asia-pacific.aspx

https://www.imercer.com/products/2013/managementterms.aspx

https://www.imercer.com/products/2013/managementterms.aspx

https://www.imercer.com/products/2015/short-term-incentives.aspx



https://www.imercer.com/products/intl-geo-salary.aspx



https://www.imercer.com/products/2015/total-employment-costs.aspx



https://www.imercer.com/products/wbeg.aspx



https://www.imercer.com/products/international-living-wage-report.aspx



https://www.imercer.com/products/2015/talent-all-access.aspx

https://www.imercer.com/products/2015/talent-all-access.aspx

https://www.imercer.com/products/2015/mercer-select.aspx

https://www.imercer.com/products/2015/mercer-select.aspx

https://www.imercer.com/products/mobilityperspectives.aspx

https://www.imercer.com/products/mobilityperspectives.aspx


INTRODUCTION 5

GLOBAL CAR POLICY MAKING 8

READING THE CAR POLICY TABLES 19

SUMMARY OF KEY FINDING 21

AMERICAS 47

REGIONAL SUMMARY 48

Argentina 53

Bolivia 57

Brazil 59

Canada 63

Chile 68

Colombia 70

Costa Rica 73

Dominican Republic 76

Ecuador 79

El Salvador 82

Guatemala 85

Honduras 88

Mexico 91

Nicaragua 95

Panama 98

Paraguay 102

Peru 104

Puerto Rico 107

Trinidad and Tobago 110

United States 113

Uruguay 117

Venezuela 119

TABLE OF CONTENTSASIA PACIFIC 121

REGIONAL SUMMARY 122

Australia 130

Bangladesh 140

China-Beijing 145

China-Shanghai 150

Hong Kong 155

India 160

Indonesia 166

Japan 171

Malaysia 176

New Zealand 182

Pakistan 190

Philippines 196

Singapore 202

South Korea 208

Sri Lanka 213

Taiwan 218

Thailand 223

Vietnam 228

EUROPE, MIDDLE EAST, AND AFRICA 233

REGIONAL SUMMARY 234

EUROPE 246

Armenia 247

Austria 251

Azerbaijan 255

Belarus 259

Belgium 263

Bosnia and Herzegovina 268

Bulgaria 272

Croatia 276

Czech Republic 280

Denmark 285

Estonia 289

Finland 294

France 299

Georgia 304

Germany 308

Greece 312

Hungary 318

Ireland 323

Italy 328

Kazakhstan 332

Latvia 336

Lithuania 341

Macedonia 345

Moldova 349

Netherlands 353

Norway 359

Poland 363

Portugal 367

Romania 372

Russia 376

Serbia 381

Slovakia 385

Slovenia 390

Spain 394

Sweden 398

Switzerland 402

Turkey 406

Ukraine 410

United Kingdom 414

Uzbekistan 418

MIDDLE EAST AND AFRICA 422

Algeria 423

Egypt 427

Kuwait 430

Lebanon 432

Morocco 434

Oman 438

Qatar 440

Saudi Arabia 442

Tunisia 445

United Arab Emirates 449

ABOUT THIS REPORT 452

Methodology 453

Glossary 467

ABOUT MERCER 473


Mercer’s 2016 Global Car Policies publication examines the trends of car benefits over a decade and gives a clear picture of the current state of car benefits globally. The publication covers essential benefit areas across 89 countries and 90 markets, including 22 locations in the Americas, 18 in Asia Pacific (including two city-specific markets in China), 40 in Europe, and 10 in the Middle East and Africa.

In today’s economic environment, the desire for financial security has grown — a trend that solidified during the financial crisis in 2008/2009 and has remained strong ever since. And, more secure rewards appeal to employees. Around the world today, organisations are now exploring more effective tools and ways to retain or attract key talent. The focus on this exploration has given an impetus to the prevalence of car benefits globally. Thus this publication offers a global perspective along with detailed regional and country prevalence data.

While data reported is contingent on the region, each country summary includes the following information:

• Benefits in addition to car allowances and company cars. • Car allowances and purchase and lease costs. • Car benefits schemes. • Car makes and models. • Company car benefit eligibility. • Kilometre reimbursement. • Overall prevalence of car benefits. • Private vs. business use. • Replacement policy. • Running expenses covered (maintenance, tax, and insurance). • Transportation expenditures.

INTRODUCTION


REPORT STRUCTUREThe publication encompasses all the information on car policies and practices designed to help design a competitive car policies of organisations in each country in three regions — the Americas, Asia Pacific, and Europe, Middle East, and Africa.

This report has six main sections:

• The Global car policy making section provides insights on the evolution of car benefits. • The Summary of key findings provides analysis at the worldwide and regional levels on the prevalence of car benefits, car

allowance, purchase and lease costs, and related car expenses. • The Regional summary presents a snapshot of the number of companies participating in each country survey, the prevalence of

car benefits, benefit details, and the percentage of companies that allow employees to receive cash allowances and purchase the car. The data presents details for individual countries within each region.

• The Individual country section indicates recent trends in car eligibility, car benefit prevalence, make and model by career level, car allowance, purchase price, lease cost and replacement policy, additional benefits (maintenance, tax, and insurance), and tax information by country.

• The Methodology section explains the data sources and guides for reading the report. • The Glossary section provides the definitions for different terminologies used in the report.

This report provides information for the following career levels:

Americas

INTRODUCTION

Head of organisationExecutiveManagement (senior manager and manager)Professional (sales and nonsales)Para-professional (white collar and blue collar)


INTRODUCTION

* Note: Career levels may vary by country.

Head of organisationExecutiveManagementProfessional (sales and nonsales)Para-professional (white collar and blue collar)

Asia Pacific *

Europe, Middle East, and Africa

Top management (sales and nonsales)Management (sales and nonsales)Professional (sales and nonsales)Staff (sales)


ON THE ROAD: DIRECTIONS FOR CREATING AN OPTIMAL CAR POLICYCar benefits continue to play a significant role in attracting and retaining key talent — particularly as companies face skill shortages. When employers provide certain employees with a company car, a car allowance, reimbursement of transportation expenses, and other similar practices, they are indirectly helping to achieve their overall business goals. After all, engaged and motivated employees who receive additional perquisites typically perform better and remain with the company.

But, a car benefit is more than just a motivational tool. For employees involved in a function like sales, a company car — or comparable transportation benefits — may be necessary for them to perform their jobs. Car benefits for other employees, especially those in managerial and executive positions, indicate status — a perquisite not granted to lower-level staff. Finally, in many cases, the car benefit may simply reflect a way to maintain competitiveness with market practice.

Acknowledging that the provision of car benefits is a comprehensive and complex undertaking, proactive employers implement a formal car policy and communicate it clearly to employees. The following practical overview presents relevant decisions and typical elements involved in constructing and maintaining a car benefits programme.

GLOBAL CAR POLICY MAKING

FIVE KEY STEPS IN REVIEWING A CAR POLICY

• Initiate the project. Have a kick-off meeting to finalise the project plan; interview key stakeholders; conduct qualitative and quantitative data collection; and understand the alignment and features that may require change, as well as goals of car benefits.

• Create a preliminary car policy framework. Discuss review findings and preliminary. Recommendations, develop universal principles, and draft a global car policy template and test it.

• Conduct an analysis of market data. Benchmark car entitlements per level and job family, review employee contracts and permissible flexibility by employee segment, and review collective bargaining frameworks and obligations.

• Analyse the impact of the policy. Evaluate options and broad implications; conduct an impact analysis, including cost modelling; understand contract and consultation needs; engage senior stakeholders; and define future design and individual treatment.

• Implementation. Establish a governance framework, processes, and workflow; build implementation and consultation plans; create employee communication; initiate contractchanges; conduct a rollout for new joiners; and adjust the system.


THE NEED FOR A SOLID FRAME

Unless the workforce is small and the need for vehicles limited, implementation of a formal car policy is also preferable for other reasons. A formal policy sets employee expectations as to whether or not the benefit applies to them — and, perhaps, what they can strive toward. In the same regard, a clear policy supports equity by appropriately allocating cars and related benefits by position or other appropriate criteria.

As there will always be exceptions to policy, the addition of detailed authorisation and approval procedures can help limit exceptions to those that are genuinely necessary. With minimal exceptions, along with the use of guidelines for maximum lease/purchase costs and car models, the company has a better handle on cost-effectiveness. Ultimately, if the car policy does not provide a good return on the company’s investment in its human capital, the benefit may cost more than it is worth.

THE MECHANICS OF A POLICY

A sound car policy should reflect the company’s benefits philosophy — with regards to generosity, market positioning, and so on — without exceeding its budget. It should be internally equitable for employees and externally competitive with the market. The policy should also be relatively easy for the company to administer and sufficiently clear for employees to understand.

To create a workable, comprehensive policy, the development process requires a variety of administrative decisions and consideration of diverse issues.

Administrative procedures: Keeping track of car benefits — and their costs — is important for financial, compliance, and equity reasons. Documented procedures should establish clear steps for authorisation responsibility, requisite approval levels, accounting requirements, expense reimbursement, individual employee record-keeping, and related functions.

Tax and legal compliance: Compliance with local government mandates associated with the car benefit helps to avoid potential fines and penalties. For example, some governments require company cars to be eco-friendly, which might include the use of hybrid vehicles or cars that meet specific emission levels.



In addition, professional counsel may be necessary (either in-house or through external experts) to see whether, to what extent, and which policy elements are taxable to the employee and/or deductible for the employer. Another consideration is whether social security contributions are payable on the benefit amount.

Market competitiveness: The company should make an informed decision regarding its preferred market position, that is, whether to offer a competitive-level benefit or lag/lead the competition. For benchmarking purposes, the benefit comparison may be on a company-wide basis or focus on local practice. An additional factor is deciding where a car benefit fits within the overall total rewards programme — for example, the value of a car or car allowance as a percentage of base salary.

Benefit eligibility: Eligibility criteria should be clear, so that employees understand the rationale, whether based on business need, status, career level, seniority, or expatriate status. Establishing criteria helps to support the employee’s perception of fair and reasonable benefits, thereby avoiding the potential that managers will grant a car benefit due to “favouritism.”


"GREEN" CARS AND OIL PRICES: A LOOK AHEAD

According to “Market Development for Green Cars,” produced by the Organisation of Economic Co-operation and Development (OECD), although green cars are generating increasing interest, their economic and environmental benefits are still uncertain. Several factors are slowing development of the market, especially alternatives such as battery electric vehicles:

• The high price of green cars relative to conventional petrol- and diesel-fuelled vehicles.

• The lack of a refuelling/charging infrastructure.

• The restricted driving range compared to conventional vehicles.

• The perceived distance needs of consumers, which often do not correspond to their regular driving habits.

• Refuelling times that are longer than that to which consumers are accustomed.

Although fuel is a consideration, it is so from a different perspective than expected. According to the Economist* magazine, there is an assumption that tumbling oil prices will adversely impact the sales of electric cars, as internal combustion engines become cost-effective to run. But the relative cost of refuelling is only a minor consideration, because electric vehicles, at present, are not very popular. Over time, the cost of the vehicles have more of an impact on their sales than the price of oil.

*“Why the Low Oil Price Will Not Harm Sales of Electric Cars,” The Economist, 24 February 2015.



• From 2001 to 2009, the annual number of vehicle miles travelled by young people (age 16 to 34) decreased 23%, and their number of passenger miles on public transit rose 40%.

• Many young people in the US choose to replace driving with alternative transportation. Many also prefer to live in places where they can easily walk, bike, and take public transportation.

• In recent years, Sweden, Norway, Great Britain, Canada, Japan, South Korea, and Germany showed a recent decrease in the percentage of young people with driver’s licenses. While, Finland, Israel, the Netherlands, Switzerland, Spain, Latvia, and Poland showed an increase in the percentage of young people with licenses.

• Vehicle-miles have either levelled off or fallen in Western European countries including Belgium, Denmark, France, Germany, Italy, the Netherlands, and Spain.

• Communications technology, which provides new social networking and recreational possibilities, has become a substitute for some car trips. Websites and smart phone apps that provide real-time transit data make public transportation easier to use and compatible with a lifestyle based on mobility and peer-to-peer connectivity. Bus and train riders can often talk on the phone, text, or work safely while riding.

Sources: National Household Travel Survey, and University of Michigan Transportation Research Institute, “Recent Changes in the Age Composition of Drivers in 15 Countries”.

TRAVELLING WITH THE YOUNGER GENERATION



Policy options: While some plans offer only one benefit, such as a company car or car allowance, comprehensive policies allow other options. For example, the decision as to whether a car allowance is appropriate in addition to, or in lieu of, a company car should reflect the company budget, workforce needs, local market practice, and so on.

Cost control: Cost-effective measures also play a key role in policy development. In Australia, for example, employers often use an arrangement — a novated lease — whereby the employer pays for the lease and deducts the payments from the employee’s pay. It provides employees with access to vehicles at a relatively low cost to the company, and employees pay through post-tax contributions.

Other cost-saving options depend on various factors. For example:

• Carpooling may be common in remote work locations.

• A cash allowance for transportation rather than a vehicle may work best in cities where public transportation is the optimal way to get around.

• Companies that allow employees to purchase the company car are likely to offer the individual a decent deal while ridding itself of inventory.



A centralised policy facilitates:

• Coordination of policy elements, approval, and administration.

• Compliance with tax rules in all locations where the company operates.

• Payment of vendor bills, such as leasing companies, rental agencies, and others.

• Documentation tracking and storage.

• Movement of requests for exceptions through the appropriate approval process.

• Timely responses to employee questions.

Decentralisation permits policy variations in local operations; however:

• When local judgment enters the picture, it may be difficult to maintain a uniform, equitable practice.

• To avoid potential inequity and negative employee morale, headquarters should establish an overall core policy to which the local office must adhere, accompanied by guidelines as to which elements are variable —similar to a flexible benefits programme.

• Central HR should monitor local practices to ensure compliance with the law, budgetary limits, exception rules, and so on.

Policy flexibility: Management needs to make a decision as to whether all company locations will follow HQ policy (centralised) or allow regional or divisional differences (decentralised) within general guidelines.

CENTRALISED VS. DECENTRALISED POLICIES

The choice of structure depends on the company’s culture and willingness to allow flexibility in policy elements and what local operations offer to employees.


ATTRACTIVE CAR OPTIONS

Car benefits represent a complex combination of vehicles, cash, and noncash components. Each element has a number of options that should align with the company’s benefit philosophy with regards to generosity.

1. The overall benefit: The eligible employee may receive a company car, a car allowance to cover related costs, or a company car plus an allowance. In addition, the employee may have a choice to receive cash in lieu of a vehicle. The company may also offer discounted car loans, insurance programmes for family vehicles, and other benefits.

2. Car usage: Some organisations only permit the employee to use the company car for business, while others allow personal use. Another provision to be considered is whether and to what extent the company will reimburse employees for business use of the family car.


1. The overall benefit

2. Car usage

3. Car replacement

4. Financial aid

5. Car-related expenses

6. Purchase and lease costs

7. Typical makes and models

8. Relocation issues


3. Car replacement: Typical policies develop guidelines for the length of time a car remains in service before being replaced. Mileage or years are the common determinants of the car’s use period. Some policies allow the employee, at the end of the replacement period, to purchase the car for personal use.

4. Financial aid: Going beyond provision of a car, there are a number of ways that employers can offer financial assistance to the employee, such as:

• Loans (sometimes discounted or interest-free) for purchase of a family car.

• Transportation allowance for public commutation to and from the worksite.

• Payment for rental cars and associated costs for travel on company business.

5. Car-related expenses: Reimbursement for car-related expenses typically includes items such as fuel, maintenance, tax, insurance, tolls, parking, registration, and depreciation. The company may cover all, partial, or specific expenses.

6. Purchase and lease costs: The price of cars that can be leased or purchased by the company for employee use differs (sometimes significantly) by job level. Each career level usually has a range of price limits.

7. Typical makes and models: Similar to the restrictions on the costs of a car by career level, employers generally set guidelines on the type of car the employee may drive — and the inclusion (or exclusion) of optional equipment.

8. Relocation issues: When the company transfers an employee to another location, particularly if the new destination is in a foreign country, a different set of concerns arise. For example:

• Costs: Very few companies cover the expenditures involved in shipping the family car to the new location. But, some provide assistance when the employee experiences a loss on the sale of a family car or lease cancellation necessitated by the transfer. The company must also decide whether employees should contribute to the cost of a vehicle through payment of a car norm, which represents typical costs, with the company covering the excess amount.

• Family transportation: Other decisions involve the provision of a car for the spouse, and at whose expense.

• Special conditions: Dangerous locations may make it necessary for the employee to hire a car with a driver for security reasons. And, in remote worksites, the only available transportation might take the form of a carpool or company bus. In some cases, the car may simply be a mark of social status, reflecting the local cultural expectation that executives always have a car.



TIMING IS EVERYTHING

Implementing a formal policy when there are only a handful of employees involved may not be necessary, as long as management monitors what employees receive as a benefit and ensures compliance with tax and legal regulations. But, when large numbers of employees are eligible for varying car benefits, it is critical to at least establish informal guidelines.

Bear in mind, however, that even the best formal or informal policy will not be effective without timely and clear communication to enhance employee understanding and appreciation of the value of what the company offers.




PRACTICAL COMMUNICATION POINTERS

Whether a new policy is being introduced or an existing one revised, it is important to create an announcement, then position it from the audience’s perspective. Communications require care. For example, the tone of a written message is left to the reader’s interpretation and may be misconstrued. And with spoken communications, speakers may inadvertently change the gist of a message when delivering it through their own words or forget to mention supporting points.

Afterwards, once the announcement has been made:

• Pay attention to the tone of responses, not just the words, as individuals react to emails, memos, and announcements.

• Tune into talk at the “water cooler.”

• Consider the source of feedback, and whether most of the positive or negative reactions came from a specific department or organisational level.

• Request periodic feedback from the primary users to identify the components with the greatest impact.

With implementation and communication, the process does not end. Periodic audits of all benefit components, perhaps every one or two years, can uncover provisions that may be outdated or overused/underused by certain departments or locations.

To stay abreast of benefit trends, benchmarking the policy on a regular basis determines the company’s position against its external peers — and whether adjustments are necessary. The right comparator group may be the industry in which the organisation operates, the headquarters region, workforce size, compensation/benefits comparison group, company revenue or other financial parameter, or any other category that suits the company.

A ROAD MAP FOR SUCCESS

When creating a car policy, it is important to consider the benefit’s competitiveness, the company’s financial situation, the employee’s position or business need, the total rewards philosophy and culture, and, last but not least, common sense. Carefully weighing these factors points the way to a fair, equitable, cost-effective benefit. With the addition of effective communication and market benchmarking, the policy should support the company’s objectives in attracting, motivating, and retaining the talent it requires to succeed in the global marketplace.


PERCENTAGE OF COMPANIES

HEAD OF ORGANISATION EXECUTIVE

MANAGEMENT PROFESSIONAL PARA-PROFESSIONAL

SENIOR MANAGER MANAGER SALES NONSALES WHITE COLLAR BLUE COLLAR

Company car eligibility

N= 381 395 342 277 – – – –

Eligibility 80% 82% 74% 57% – – – –

Type of car benefit scheme offered

N= 305 341 281 197 – – – –

Company car only 64% 66% 67% 64% – – – –

Cash allowance only 4% 5% 6% 10% – – – –

Choice of car or cash allowance 31% 29% 27% 25% – – – –

CAR BENEFIT INFORMATIONPREVALENCE OF CAR BENEFIT, 2015

USD1 = BRL2.44636BRL1 = USD0.40877 Exchange rate effective 6-Nov-15.

Percentage of companies that provide car-related benefits. 75% N=467

This line represents the number of companies that answered this question, for the specific career level.

N represents the total number of companies that answered the section on car benefits.

In this case, 350 of the 467 companies (75% of 467) offer some form of car benefit. With the exception of the company car eligibility section, the remaining tables in the country provided data on those 350 companies.

READING THE CAR POLICY TABLES

While dependent on the country, in some cases, the number of companies that provided an answer for eligibility is higher than the number providing car-related benefits, because it is a subset of total N for the country.


HEAD OF ORGANISATION EXECUTIVE

MANAGEMENT PROFESSIONAL PARA-PROFESSIONAL

SENIOR MANAGER MANAGER SALES NONSALES WHITE COLLAR BLUE COLLAR

Car allowance (annual median gross amount)

N= 33 39 34 27 – – – –

In BRL 19,491 22,804 10,465 6,776 – – – –

In USD 7,967 9,322 4,278 2,770 – – – –

Car allowances include the following items

Value-added tax (VAT) or sales tax Yes Yes Yes Yes – – – –

Maintenance Yes Yes Yes Yes – – – –

Insurance Yes Yes Yes Yes – – – –

Fuel Yes Yes Yes Yes – – – –

Purchase price (typical median price)

N= 272 278 245 170 – – – –

In BRL 165,929 118,846 78,775 69,118 – – – –

In USD 67,827 48,581 32,201 28,253 – – – –

READING THE CAR POLICY TABLES

NATURE OF CAR BENEFIT, 2015

Pay close attention to whether monetary figures are presented as median or averages. (Most data are presented as median.)

USD1 = BRL2.44636BRL1 = USD0.40877 Exchange rate effective 6-Nov-15.

Content varies by country; if specific questions are not present in a given country, it is because data was not available from the local source.

In some cases, looking at the number of companies that answered each corresponding section can help to provide further guidance.

From the following example, the N values relating to the car allowance are much lower than the N values for purchase price figures. As a quick guide, it could indicate that the provision of a company car is more prevalent than a car allowance.

Currency exchange rates appear on every page.

Monetary figures are always provided in both the local and USD currency for easy reference.

Pay close attention to sample sizes; the smaller the N, the less data that were available for the given year. Small data sizes lessen the ability to draw large conclusions from this data set alone.


LATVIA


TREND INFORMATIONPREVALENCE OF CAR BENEFIT, PERCENTAGE OF COMPANIES – ALL EMPLOYEES

CAR BENEFIT INFORMATION

LATVIA

Percentage of companies that provide car-related benefits 83% N=170HEAD OF

ORGANISATION EXECUTIVE MANAGEMENTPROFESSIONAL PARA-PROFESSIONAL

SALES NONSALES WHITE COLLAR BLUE COLLARCompany car benefit eligibility (% of companies)

N= 102 105 122 114 97 75 50

Eligibility 95% 94% 88% 95% 65% 27% 26%

Type of car benefit scheme offered (% of companies)

N= 96 99 107 107 63 20 12

Company car only 82% 83% 79% 81% 75% 75% 92%

Cash allowance only 1% 1% 1% 1% 2% 5% 0%

Choice of car or cash allowance 13% 12% 18% 13% 17% 5% 0%

Compensation for personal car usage 4% 4% 2% 5% 6% 15% 8%

USD1 = EUR0.89051Exchange rate effective 6-Nov-15.

PREVALENCE OF CAR BENEFIT, 2015

88% 94% 95% 92% 92% 81% 82% 83%

2008 2009 2010 2011 2012 2013 2014 2015


LATVIA

PREVALENCE OF CAR BENEFIT, 2015, CONTINUED

NATURE OF CAR BENEFIT, 2015

Percentage of companies that allow employees to receive cash allowances instead of a company car 17% N=113

HEAD OF ORGANISATION EXECUTIVE MANAGEMENT

PROFESSIONAL PARA-PROFESSIONALSALES NONSALES WHITE COLLAR BLUE COLLAR

Car allowance (annual median gross amount)

N= 5 6 10 5 5 – –

In local currency 5,000 5,061 5,061 5,122 4,200 – –

In USD 5,615 5,683 5,683 5,752 4,716 – –

Typical cars provided

Make and modelAudi A6, Toyota

Avensis, Volkswagen Passat

Audi A4, Toyota Avensis, Volkswagen

Passat

Toyota Avensis, Volkswagen Passat

Volkswagen Golf, Volkswagen Jetta

Toyota Avensis, Volkswagen Golf – –



Company car usage (% of companies)

N= 91 93 104 100 58 16 11

Business and private use 86% 83% 86% 80% 72% 31% 27%

Business use only 14% 17% 14% 20% 28% 69% 73%

Company car provision criterion (% of companies)

N= 89 87 102 98 55 16 11

Status/seniority 79% 76% 55% 9% 20% 6% 0%

Business need 56% 59% 76% 95% 87% 94% 100%

Other 1% 1% 1% 2% 2% 0% 0%



LATVIA

NATURE OF CAR BENEFIT, 2015, CONTINUED

Percentage of companies that allow employees to purchase the car at the end of the replacement period 66% N=116



Purchase price (typical median price)

N= 44 41 49 43 27 8 4

In local currency 39,422 31,102 26,000 20,220 21,000 18,138 16,584

In USD 44,269 34,926 29,197 22,706 23,582 20,368 18,623

Lease cost (annual median gross amount)

N= 27 28 42 42 15 4 –

In local currency 7,860 7,548 7,080 5,580 5,592 5,568 –

In USD 8,826 8,476 7,951 6,266 6,280 6,253 –

Replacement policy (median values)

N= 38 39 48 53 25 9 6

Distance in kilometres 125,000 140,000 145,833 150,000 145,000 145,000 132,500

N= 56 58 70 76 34 11 6

Term in years 4 4 4 4 4 4 4



ADDITIONAL BENEFITS, 2015



Fuel expenses covered (% of companies)

N= 85 88 100 96 53 16 11

All purposes 37% 31% 32% 26% 30% 0% 0%

Business needs 47% 52% 49% 58% 60% 94% 91%

Business and some private use 16% 17% 19% 16% 10% 6% 9%

Other expenses covered (% of companies)

N= 83 86 99 96 54 16 11

Maintenance 98% 98% 95% 96% 98% 94% 100%

N= 82 84 93 91 52 16 11

Tax 92% 91% 88% 90% 94% 94% 100%

N= 83 85 98 93 54 16 11

Insurance 99% 99% 97% 98% 100% 94% 100%

LATVIA USD1 = EUR0.89051Exchange rate effective 6-Nov-15.

TAX INFORMATIONCompany cars are subject to Vehicle Operation Tax and Corporate Light Vehicle Tax (Car Tax Act).

According to the act, car tax is paid by merchants, branches of foreign merchants, or farms for a light (passenger) vehicle registered in a taxpayer’s ownership or holding, or used on the basis of employment contract or lending agreement.

Car tax is not charged if the light vehicle is used solely for business purposes. In such cases, records of performed business trips will be prepared, using a route control system set in a vehicle – that is, equipment with a global positioning system. The vehicle should also be declared at Road Traffic Safety Office (special registration), indicating the route control system provider's name and registration number.

If car tax is paid, vehicle maintenance costs are attributable to business-related expenses in full, regardless of carried out business-related trips and trips for personal use.

From 2016, the car tax rates have been increased.Source: Legislation of the republic of Latvia, Vehicle Operation Tax and Corporate Light Vehicle Tax Act.


ADDITIONAL INFORMATION Regarding eco-friendly policies, Latvia is in the early stages. However, the Ministries of Economy, Energy, and Transport and Communications completed a thorough study on the matter and suggested the introduction of tax benefits, which has been approved by the government. In order to promote the use of environmentally friendly vehicles, the government of Latvia has implemented certain incentives and benefits such as:

• Electric vehicles are not suitable for Vehicle Operation Tax and Car and Motorcycle Tax.

• There is a reduced Corporate Light Vehicle Tax rate for passenger vehicles – EUR10/month (previously, EUR42.69/month).

• Initial registration is free of charge.

• First kit of a visually different number plate is free of charge. Electric vehicles with these plates are allowed to drive the public transport lanes.

• Some incentives and benefits are introduced at the local government level. For example, in Liepaja, electric vehicle parking is free of charge, and, in Jurmala, electric vehicles are exempt from the entry fee of the city administrative territory.

Interest in electric vehicles is on the rise, though at a slow pace. In 2015, the number of registered electric vehicles increased by 12%. In total, 277 electrically powered vehicles on 1 January 2016 were registered in Latvia. There are 16 public charging stations currently operating in Latvia, 10 of them are located in Riga. By 2020, the plan is to complete construction of the Latvian national charging network, installing 235 charging stations.

LATVIA

Source: Road Traffic Safety Directorate.


ABOUT THIS REPORT


READING THE REPORTMercer’s 2016 Global Car Policies report presents concise information on car benefits for different employee levels — derived from various Mercer databases. There was not a separate survey conducted to capture this information.

For many countries, the data source is Mercer’s 2015 Total Remuneration Survey (TRS) Policy and Practices Report, which provides comprehensive information on compensation and benefits across the globe. Human resources (HR) professionals from some of the world’s leading organisations obtain this information from Mercer because TRS provides consistent, accurate, and high-quality data covering the full reward package.

The report also extracted Asian country results from Mercer’s country-specific Detailed Benefits Reports, the Benefit Practices Summary Report, and the Spotlight on Benefits Report.

For a few countries, the report considers Mercer Benefits Monitor survey results, and tax information is extracted from the Personal Tax Report, 2015. The report also presents additional information (topics not surveyed in questionnaires, general observations, and qualitative information) for most of the countries.

The report based the prevalence percentages in the tables on the number of companies (N) that offer company car benefits to their employees. All other statistics provided in the country summary reflect data from sub-groupings of companies that responded to the question. When reviewing prevalence figures, please be sure to note the number of companies for the specific country.

In addition, all non-percentage figures are median values unless otherwise indicated. Purchase price and reimbursement amounts in local currency (in country reports) for some countries are in thousands, depicted with (000s).

In some cases, companies could select more than one answer, which resulted in totals that exceed 100%. In other cases, not all companies responded to each question, so that a total of a sub-section may not equal 100%. Moreover, in some cases, data requires careful interpretation due to small sample sizes.

METHODOLOGY


EXCEPTIONS AND NOTES • Trend information (2008–2015) depends on data availability. For the Asia Pacific countries, this information is not available due to

a change in the source in past years.

• In the Americas, the management category includes senior manager this year.

• The methodology and employee categories for Asia Pacific differ from the other two regions. Further, Australia, Japan, and New Zealand have different employee categories within Asia Pacific.

• Updated data for Canada and the United States was not available at the time of publication. As a result, data from the 2015 Global Car Policy report was provided.

• For Canada, car allowance, purchase price and lease cost data are updated from Canada Mercer Benchmark Database, 2015.

• Not all countries include the "Additional information" section.

• Currency exchange rates are as of 6 November 2015.

METHODOLOGY


COUNTRY CURRENCY CODE USD 1=

AMERICASARGENTINA ARS 9.47

BOLIVIA BOB 6.92

BRAZIL BRL 3.88

CANADA CAD 1.31

CHILE CLP 684.29

COLOMBIA COP 2,944.08

COSTA RICA CRC 534.79

DOMINICAN REPUBLIC DOP 45.24

ECUADOR USD 1.00

EL SALVADOR USD 1.00

GUATEMALA GTQ 7.70

HONDURAS HNL 21.93

MEXICO MXN 16.59

NICARAGUA NIO 27.29

PANAMA PAB 1.00

PARAGUAY PYG 5,649.56

PERU PEN 3.24

PUERTO RICO USD 1.00

TRINIDAD AND TOBAGO TTD 6.35

UNITED STATES USD 1.00

URUGUAY UYU 29.31

VENEZUELA VEF 6.30

Note: Exchange rates in this table are rounded to two significant digits; however, the data presented in the report were prepared using a higher degree of precision.

METHODOLOGY

CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015


METHODOLOGY

CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015COUNTRY CURRENCY CODE USD 1=

ASIA PACIFICAUSTRALIA AUD 1.39

BANGLADESH BDT 77.91

CHINA–BEIJING CNY 6.35

CHINA–SHANGHAI CNY 6.35

HONG KONG HKD 7.75

INDIA INR 65.02

INDONESIA IDR 13,842.05

JAPAN JPY 120.11

MALAYSIA MYR 4.26

NEW ZEALAND NZD 1.50

PAKISTAN PKR 104.60

PHILIPPINES PHP 46.34

SINGAPORE SGD 1.40

SOUTH KOREA KRW 1,147.22

SRI LANKA LKR 141.01

TAIWAN TWD 32.50

THAILAND THB 35.71

VIETNAM VND 22,368.38




METHODOLOGY

CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015COUNTRY CURRENCY CODE USD 1=

EUROPEARMENIA AMD 472.50

AUSTRIA EUR 0.89

AZERBAIJAN AZN 1.05

BELARUS BYR 17,403.70

BELGIUM EUR 0.89

BOSNIA AND HERZEGOVINA BAM 1.74

BULGARIA BGN 1.74

CROATIA HRK 6.79

CZECH REPUBLIC CZK 24.15

DENMARK DKK 6.64

ESTONIA EUR 0.89

FINLAND EUR 0.89

FRANCE EUR 0.89

GEORGIA GEL 2.39

GERMANY EUR 0.89

GREECE EUR 0.89

HUNGARY HUF 277.30

IRELAND EUR 0.89

ITALY EUR 0.89

KAZAKHSTAN KZT 275.86

LATVIA EUR 0.89

LITHUANIA EUR 0.89

MACEDONIA MKD 54.59

MOLDOVA MDL 19.89

NETHERLANDS EUR 0.89

NORWAY NOK 8.27

POLAND PLN 3.78

PORTUGAL EUR 0.89

COUNTRY CURRENCY CODE USD 1=

EUROPEROMANIA RON 3.94

RUSSIA RUB 63.13

SERBIA RSD 106.90

SLOVAKIA EUR 0.89

SLOVENIA EUR 0.89

SPAIN EUR 0.89

SWEDEN SEK 8.33

SWITZERLAND CHF 0.97

TURKEY TRY 2.93

UKRAINE UAH 21.86

UNITED KINGDOM GBP 0.65

UZBEKISTAN UZS 2,632.03

MIDDLE EAST AND AFRICA ALGERIA DZD 105.85

EGYPT EGP 7.92

KUWAIT KWD 0.30

LEBANON LBP 1,509.93

MOROCCO MAD 9.71

OMAN OMR 0.39

QATAR QAR 3.64

SAUDI ARABIA SAR 3.75

TUNISIA TND 1.97

UNITED ARAB EMIRATES AED 3.67


DATA SOURCES, 2015 — AMERICAS

METHODOLOGY

COUNTRY SOURCE

ARGENTINA

Total Remuneration Survey, 2015

Personal Tax Report, 2015

Local Mercer Experience

BOLIVIATotal Remuneration Survey, 2015


BRAZIL




CANADA


Personal Tax Report, Canada-Ontario, 2015

Canada Revenue Agency

CHILE




COLOMBIA





COSTA RICATotal Remuneration Survey, 2015


DOMINICAN REPUBLIC Total Remuneration Survey, 2015

COUNTRY SOURCE

ECUADOR Total Remuneration Survey, 2015

EL SALVADOR Total Remuneration Survey, 2015

GUATEMALA Total Remuneration Survey, 2015

HONDURAS Total Remuneration Survey, 2015

MEXICO




NICARAGUA Total Remuneration Survey, 2015

PANAMATotal Remuneration Survey, 2015


PARAGUAYTotal Remuneration Survey, 2015


PERU




PUERTO RICO Total Remuneration Survey, 2015

TRINIDAD AND TOBAGO



UNITED STATES


Personal Tax Report, United States-Illinois, 2015

United States Internal Revenue Service


METHODOLOGY

COUNTRY SOURCE

URUGUAY




VENEZUELA Total Remuneration Survey, 2015

DATA SOURCES, 2015 — AMERICAS, CONTINUED


COUNTRY SOURCE

INDIA

Benefit Practices Summary Report, 2015




INDONESIA





JAPAN






MALAYSIA





Malaysia Benefits Survey, 2014

National Automotive Policy, 2014

DATA SOURCES, 2015 — ASIA PACIFIC

METHODOLOGY

COUNTRY SOURCE

AUSTRALIA




Mercer Benefits Survey, January 2014

BANGLADESH




Mercer Benefits Survey, January 2014

CHINA-BEJING





CHINA-SHANGHAI





HONG KONG




"Benefit Practices Summary Report, 2014 H2, and Spotlight on Benefits Report, 2014–2015"


COUNTRY SOURCE

SOUTH KOREA






SRI LANKA






TAIWAN





THAILAND





Thailand Mercer Benefits Monitor Report

DATA SOURCES, 2015 — ASIA PACIFIC, CONTINUED

METHODOLOGY

COUNTRY SOURCE

NEW ZEALAND





PAKISTAN






PHILIPPINES






SINGAPORE







DATA SOURCES, 2015 — ASIA PACIFIC, CONTINUED

METHODOLOGY

COUNTRY SOURCE

VIETNAM






DATA SOURCES, 2015 — EUROPE, MIDDLE EAST, AND AFRICA

METHODOLOGY

COUNTRY SOURCE

EUROPE

ARMENIATotal Remuneration Survey 2014


AUSTRIA

Total Remuneration Survey 2014

Personal Tax Report 2014


AZERBAIJANTotal Remuneration Survey 2014


BELARUSTotal Remuneration Survey 2014


BELGIUM




BOSNIA AND HERZEGOVINA


Personal Income Tax Law


BULGARIATotal Remuneration Survey 2014


BULGARIATotal Remuneration Survey 2014


CROATIATotal Remuneration Survey 2014


COUNTRY SOURCE

CZECH REPUBLIC




DENMARK




ESTONIA




FINLAND




FRANCE




GEORGIATotal Remuneration Survey, 2015


GERMANY





DATA SOURCES, 2015 — EUROPE, MIDDLE EAST, AND AFRICA, CONTINUED

METHODOLOGY

COUNTRY SOURCE

GREECE




HUNGARY



Taxation Regulations, 2015


IRELAND



Department of Environment, Community, and Local Government

ITALY




KAZAKHSTAN




LATVIA


"Legislation of the Republic of Latvia, Vehicle Operation Tax and Corporate Light Vehicle Tax Act"

Road Traffic Safety Directorate

COUNTRY SOURCE

LITHUANIA




MACEDONIA


"Amendments to the Law on Environment, Official Gazette of Republic of Macedonia no.187, 30 December 2013"


MOLDOVATotal Remuneration Survey, 2015


NETHERLANDS




NORWAY




POLAND






METHODOLOGY

COUNTRY SOURCE

PORTUGAL




ROMANIA




RUSSIA




SERBIA




SLOVAKIA




SLOVENIA




SPAIN




COUNTRY SOURCE

SWEDEN




SWITZERLAND


Personal Tax Report - Switzerland-Geneva, 2015


TURKEY




UKRAINETotal Remuneration Survey, 2015


UNITED KINGDOM




UZBEKISTANTotal Remuneration Survey, 2015




METHODOLOGY

COUNTRY SOURCE

MIDDLE EAST AND AFRICA

ALGERIA




EGYPT




KUWAITTotal Remuneration Survey, 2015


LEBANON




MOROCCOTotal Remuneration Survey, 2015


OMANTotal Remuneration Survey, 2015


QATARTotal Remuneration Survey, 2015


SAUDI ARABIATotal Remuneration Survey, 2015


TUNISIA




COUNTRY SOURCE

UNITED ARAB EMIRATES





TERMS AND DEFINITIONS Car allowance: Median (or average, if specified) gross allowance amount paid in lieu of a car or to subsidise car-related expenses.

Car benefit scheme: Percentage of companies that operate a scheme, which includes only a company car, only a car allowance, or that provides a choice of car or cash allowance.

Company car: Car provided for an employee’s business use only, or for both business use and private use; usually, a car is a benefit only for employees who can use company cars for private use on an ongoing basis.

Company car eligibility: Percentage of companies that provide eligibility for a company car to a specific employee level.

Company car provision criteria: • Status/seniority: Percentage of companies that provide a company car based on status or seniority.

• Business need: Percentage of companies that provide a company car for business needs.

Company car usage:

• Business and private use: Percentage of companies that provide a company car for both business and private use.

• Business use only: Percentage of companies that provide a company car for business use only.

Employee position level: Data are reported, where available, by the following categories:

• Head of organisation: For purposes of this report, the head of organisation refers to Tier 3, country/local business leader. The head of organisation leads, directs, and controls the activities of a country or local business unit so that it achieves its short- and long-term financial and operating objectives (for example, increased profitability, productivity, or market share) as set by the overall corporate business plan.

• Executive/senior executive: These senior-most employees in the organisation generally include top executives and directors within the organisation, or employees with managerial responsibilities at the top level of a business unit or organisation. Executives focus on defining strategies for the organisation.

• Senior manager: These employees direct the business activities for the achievement of short- and long-term business/policy objectives and increased profit/market share. Participate in the establishment of the policies and programs within the context of the overall corporate/division goals and, where appropriate, recommend standards and set targets (may include sales, marketing, distribution, and administration).

GLOSSARY


• Management: These employees with important supervisory and managerial responsibilities are usually the higher levels within a business unit or organisation. Management-level employees focus on managing people and implementing policies and strategies to meet the organisation’s objectives.

• Professional: — Sales: These employees are in a technical function or professional sales role. They are individual contributors without

supervisory responsibility, but who may provide coaching/mentoring to less-experienced staff. They typically hold a university degree or full-trade equivalent.

— Nonsales: These employees are in a technical function or, typically, a nonsales professional role. They are individual contributors without supervisory responsibility, but who may provide coaching/mentoring to less-experienced staff. They typically hold a university degree or full-trade equivalent.

• Para-professional: — White collar: This category refers to salaried employees typically in a business support, analyst, administrative, or technical

role. Para-professionals are in skilled, semi-skilled, or unskilled roles without supervisory responsibility. They do not require a university degree, but may require formal professional training or certification, and may be paid on an hourly or a salaried basis.

— Blue collar: Para-professional blue collar refers to production workers generally in the manufacturing sector. Collective agreements may or may not cover operations employees. Para-professionals are in skilled, semi-skilled, or unskilled roles without supervisory responsibility. They do not require a university degree, but may require formal professional training and certification, and may be paid on an hourly or a salaried basis.

Fuel expenses covered: Percentage of companies that reimburse fuel expenses for all purposes, business needs, and/or private use.

Lease cost: Median (or average, if specified) annual lease cost of the car provided to the employee based on position level.

Maintenance, tax, and insurance: The percentage of companies that cover maintenance expenses, government taxes, and/or insurance costs of the car.

N = numerical value: Number of companies participating in the country’s car survey or responding to an individual question.

Percentage of companies that allow employees to purchase the car at the end of the replacement period: A prevalence figure denoting the capability of employees to purchase their car at the end of the replacement period.

GLOSSARY


Percentage of companies that allow employees to receive cash allowances instead of a company car: A prevalence figure denoting the capability of employees to receive a cash allowance instead of a company car.

Percentage of companies that provide company car benefits: A prevalence figure denoting the provision of company car benefits across all employee levels.

Purchase price: Median (or average, if specified) purchase price (market value) provided to the employee based on position level; it refers to the list price — the price a car dealer quotes to a buyer for a new car without any discount or negotiations.

Reimbursement/kilometre: The median rate of reimbursement for use of a personal car for business purposes. When available, the report provides these figures for employees who are provided with a company car and for those who are not.

Replacement policy: • Distance in kilometres: The median number of kilometres that a car must cover to be eligible for replacement.

• Term in years: The median number of years the car is used by the employee before the car is eligible for replacement.

Tax information: Details on federal/national tax liability that arises when an employee uses the car as a benefit. (This information is only a general overview and should not be treated as professional tax advice; the report does not address taxes imposed below the federal/national level.)

GLOSSARY


The methodology for Asia Pacific is different from that used in the other two regions.

ADDITIONAL DEFINITIONS: ASIA PACIFIC

Benefits in addition to car allowance: Percentage of companies that impose a cap on additional expenses covered.

Benefits in addition to company car provision: Percentage of companies that impose a cap on additional expenses covered, provide the option to purchase the company car after the replacement period, or provide the option to receive a cash allowance in lieu of a company car.

Company car allowance eligibility: Percentage of companies that provide eligibility for a company car allowance to a specific employee level.

Company-leased car: Vehicles, whereby the company obtains the use of certain fixed assets (owned by a third party) for which it must pay a series of contractual, periodic, tax-deductible payments.

Company-owned car: Vehicles over which companies have the legal right of possession.

Depreciation: Percentage of companies that provide either an allowance or a provision in their financial records for “wear and tear” and “technical obsolescence” on plants and equipment, including company cars.

Employee position level: Data are reported (where available) by the following categories:

• Top management: Senior managers, including heads of organisations and managers who report to them:

— Nonsales: − Head of organisation: For purposes of this report, the head of organisation refers to Tier 3, country/local business

leader. The head of organisation leads, directs, and controls the activities of a country or local business unit so that it achieves its short- and long-term financial operating objectives (for example, increased profitability, productivity, or market share) as set by the overall corporate business plan.

− Function head: The senior-most positions in the company within a country, which generally include top executives and directors within the company or employees with managerial responsibilities at the top level of a business unit or company. Executives focus on defining strategy for the company. They typically report to the head of organisation in the local country.

GLOSSARY


— Sales: − Head of sales/marketing

• Management: Typically reports to senior managers and (other than sales) functional managers including finance, human resources, information technology, and so on:

— Nonsales: − Sub-function heads/senior management − Management: Employees with roles such as sub-function head, and functional managers. They have important supervisory

and managerial responsibilities and are usually the higher levels within a business unit or company. Management-level employees focus on managing people and implementing policies and strategies to meet the company’s objectives. They have managerial responsibility for a department or team. The role combines both middle and senior management, and typically reports to an executive.

— Sales: − Senior sales/marketing management/senior management − Sales/marketing management/management

• Professional: Typically refers to jobs requiring a professional or technical qualification:

— Nonsales — Sales

• Staff/para-professional: — Nonsales:

− Customer service representative: Non-exempt staff, support staff, or customer service representative. These salaried employees are typically in a business support, analyst, administrative, or technical role. They are generally employees in skilled, semi-skilled, or unskilled roles without supervisory responsibility, and typically report to a manager/supervisor. This level does not require a university degree but may require formal professional training and certification.

Petrol: Percentage of companies that cover fuel expenses for business or non-business purposes.

Registration fees: Percentage of companies that cover the cost of vehicle licence registration.

GLOSSARY


GLOSSARY

Road tax: Percentage of companies that cover a tax levied on an individual or business for the use of a vehicle on roads within a city, state, or municipality.

Road toll cost: Percentage of companies that cover a fixed charge or tax for a privilege, especially for passage along a road, for business or non-business purposes.

Running expenses covered in addition to car allowance: Percentage of companies that provide for the specific reimbursements to employees to cover the cost of running expenses in addition to the car allowance provided.

Running expenses covered in addition to company car provision: Percentage of companies that provide for the specific reimbursements to employees to cover the cost of running expenses of the company car provided.

Running expenses included in car allowance: Percentage of companies that include the specific running expenses in the car allowance provided.

Subsidy for employee-owned cars (China only): A subsidy provided to employees who use their own cars for business purposes; it can be in the form of a cash allowance, mileage claim, or an actual reimbursement.


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