Transportation benefit policies like company cars and car allowances have been highly sought after for decades. For some employees, such as salespeople who travel frequently, transportation benefits or allowances are necessary for their day-to-day work. For others, transportation benefits are a status symbol or reward for working their way into a better position.

While what employers are offering may be shifting, transportation benefits aren’t going anywhere anytime soon, but today they do look different. Whereas transportation benefits have traditionally been both a financial and symbolic incentive for employees, the employee’s business need for transportation today is the primary factor in determining whether they’re eligible for transportation benefits.

Need-based transportation policies

The two biggest factors in determining benefit eligibility are the business need and the job level or grade of the employee. In Mercer’s 2025 Transportation Policies and Costs — Canada survey, 88% of Canadian businesses used business need to determine the eligibility and 68% used job level or grade. When determining business need, the necessity of a car to perform the job (e.g., a Sales professional who is on the road) is the most common consideration.

Different roles have different needs

Imagine two employees. One is a brand-new Sales employee working in the field who travels daily, and the other is a long-time manager overseeing a work-from-home team. Which employee will receive a transportation benefit?

The salesperson has a stronger business need for transportation but doesn’t have the tenure of the manager. The manager ranks higher in the company but has little need for transportation. Our survey of Canadian employers shows that both factors are relevant, and the distribution of benefits reflects that. Both employees may be eligible, but each may be eligible for different types of transportation policies. Higher ranking individuals generally receive better incentives than lower ranking employees, but the business needs of Sales and non-Sales professionals also contribute to how benefits are distributed.

Let’s take a look at the most common categories of transportation benefits and how they’re shaped by roles within the company.

Company cars

The company car is the most visible form of transportation benefit and one of the most iconic. A company car has long been considered a status symbol among employees, although this is one of the areas of biggest change.

In 2025, 24% of Canadian companies offered company-owned vehicle benefits, while 51% offered leased vehicles to employees. Interestingly, benefits are distributed differently for company-owned vehicles than for company-leased vehicles.

Professional salespeople and Executives were most likely to be eligible for the company-leased vehicle transportation benefit (74% and 60%, respectively), even more so than management.

Company-owned vehicles were most frequently offered to management and Executives.

Car allowances

Car allowances were by far the most common transportation benefit provided to employees, with 80% of Canadian employers offering the perk. The biggest factors driving the amount of this benefit are market competitiveness and the job level/salary band of the employee, with more than 60% of employers using each.

Car allowances were most commonly offered to Executives (75%) and Heads of the organization (61%), but about half of managers and Sales professionals also received the benefit. Only 19% of non-Sales professionals were eligible for car allowances.

Just over half of Canadian employers (51%) require employees to use their car allowance for the cost of a vehicle, compared to only 40% of employers in America.

Parking subsidies

Even though employers continue to call employees back into the office, the proportion of Canadian employers providing parking subsides went down to 16% in 2025, from approximately 25% the previous year. Parking subsidies help employees offset the cost of parking, which can be especially costly in dense metropolitan areas with limited options.

For those Canadian companies that did provide this benefit, they offered the subsidy to most of their employees, with the exception of Sales roles — only about 50% of Sales professionals were eligible for this benefit.

Public transportation subsidies

On the rise is the provision of transportation subsidies. In 2025, 23% of Canadian employers surveyed offered public transportation benefits, compared with 18% in 2024.

Only 9% of Canadian employers who offered public transportation benefits in 2025 fully covered their employees’ transportation costs, down from 35% in the prior year. Most commonly, public transportation benefits took the form of an allowance that covers or supplements the cost of transit passes, while only 11% of companies paid for the passes directly.

The state of green transportation

Green transportation policies have seen an uptick among Canadian organizations. Almost half of the respondents indicated they have added hybrid and/or electric vehicles to their fleet of company cars.

With the use of electric vehicles increasing both in terms of company cars and employees’ personal cars, 49% of respondents indicated that they have installed electric vehicle charging stations at some or all of their locations.

Are transportation benefits relevant in 2026?

With many employees back to commuting regularly to the office, facing tolls, and juggling high prices for gas, parking, and/or public transportation costs, we’ll expect to see employers continue to provide transportation benefits as part of the total rewards packages. However, cost is a significant consideration given the economic and sociopolitical climate. Figuring out how to provide transportation benefits that provide the most ROI is the key to success.

Transportation benefits are complex and evolving. Mercer’s Transportation Policies and Costs includes an analysis of 12 key topics in 50 markets, including across the US and Canada. This detailed survey of transportation policies provides key insights into the state of the transportation benefit market. To learn more, start with our Transportation Policies and Costs or give us a call at 855-286-5302.

About the author

Rebecca Hall, Principal

Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.