German corporations are increasingly using company cars not just as a perk but as a high-visibility way to prove their eco-friendliness, according to the Wall Street Journal.
Car makers that rely on high-end corporate vehicle sales for a big chunk of their profits are scrambling to comply with pressure to lower carbon emissions. German companies want BMW AG, Mercedes and Audi to offer more fuel-efficient cars for employee use.
The company car is a status symbol in Germany. A common rite of passage into middle management is getting a vehicle such as a Volkswagen Passat, while a Mercedes S Class is a favorite perk of executives.
Many are pushing executives to take cars that emit less carbon dioxide, giving new auto makers a crack at Germany's company-car market. Other employers are getting rid of the biggest, high-horsepower models in their fleets that typically yield the highest margins for BMW and other luxury car makers.
Managers at Munich Reinsurance AG, for instance, can select only cars that meet new stricter European Union emission standards and are encouraged to pick models that yield at least 39 miles per gallon for gas vehicles, or 47 mpg for diesel ones.
But German business executives are hardly fleeing to compact cars with fewer trimmings. Many employees still want something that says status and has a strong resale value. Since last summer, Linde AG, an industrial gases and engineering conglomerate, has been giving executives and sales representatives an extra leasing allowance for cars that emit an average 140 grams of CO2 per kilometer or less. Many are responding but still favor German luxury brands.