Many lifestyle changes have been triggered by the COVID-19 pandemic, including how Australians are using transport. And with many employees now relying on cars even more, it’s important that they have access to a safe and reliable vehicle for a price they can afford.
Car ownership is definitely the norm in Australia, with 92% of households owning at least one car1. Travelling to work by car is also the most popular choice for employees, with Australian Bureau of Statistics (ABS) figures showing that more than two in three Australians used a car for their work commute2 before the pandemic.
With limits introduced on public transport for social distancing, it’s no surprise we’ve been using it far less than normal and become even more reliant on driving to work. One year on from the start of the pandemic, people still haven’t returned to normal usage of buses and trains. In March 2021, just one in seven Australians travelled on public transport compared with nearly a quarter who were using it regularly before March 20203.
The impact of transport trends
A greater number of people working from home could be one factor contributing to this change in transport habits. But even with Australians travelling to work less often, the motor industry is still expecting COVID-19 health and safety concerns to fuel a car buying boom. In one 2020 survey, more than half (58.8%4) of non car owners were more likely to consider buying a car instead of using public transport or rideshare services. In a September 2020 study, McKinsey & Company found “risk of infection” is the number one concern among people considering their commuting and personal travel options. As a result 1 in 35 value access to a private vehicle more than they did before COVID-19 and this is particularly the case for younger consumers.
The migration of city dwellers to live in regional Australia is another trend that could trigger demand for vehicles. In July, August and September 2020, the ABS recorded the greatest quarterly net loss in capital city migration on record. As more Australians opt for a regional lifestyle, they’re also going to rely far more on cars for day-to-day transport needs.
How car ownership is changing
Even before the pandemic, Australia saw a number of structural shifts in how different age groups were using personal transport. In early 2020, Roy Morgan reported a consistent, long-term decline in the number of younger Australians taking to the roads6, due to a whole range of factors. “Changes in public transport, ride-sharing services, urbanisation, economic circumstances and employment all play a part in shifting the demographics of those who drive on our roads,” said Roy Morgan CEO Michele Levine.
At a time when many younger people may be temporarily joining the ranks of Australians driving, they’re likely to need flexible, convenient ways to secure their own vehicle. In fact, ‘car subscription’ services are expected to account for 1.9 million cars on the road by 20257. With providers now offering mini leases lasting from upwards of three months, there are more options available for drivers needing a car for a limited time. As soon as it’s safe to do so, or when their circumstances or needs change, they can return their vehicle and go back to their preferred method of shared or public transport.
An innovative approach to employee novated leasing
A novated lease enables employees to salary package their car providing benefits for both employees and their employers.
Maxxia’s novated leasing program rewards your employees with a new car along with other significant cost savings. Plus, we make it easy for you and your payroll team with simple payments and proactive FBT management. It's why both you and your employees will discover that novated leasing with Maxxia is about so much more than a car.
In response to growing demand from younger employees for a more flexible car ownership solution, Maxxia has developed a short term car leasing product. This option has been taken up by essential workers to reduce their need to take public transport to and from frontline facilities. The pilot has been rolled out to a number of hospitals across Victoria.
A timely offer to employees
As an employer, being able to offer novated leasing is always a welcome value add for employees. And at a time when personal transport is seen as a safer option by many, novated leasing provides employees with a tax effective way to own a car. With current wage growth trends challenging how organisations reward and engage employees, novated leasing can also provide employers with an extra dimension for their benefits program and employee value proposition.
As a premium provider of employees benefits to many organisations across Australia, Maxxia have seen the difference salary packaging can make to the overall financial position of employees. Not only can take up of salary packaging potentially boost net household income for employees, a best-practice program supported by effective communication can also strengthen your employee value proposition as a whole.
Maxxia can offer your organisation a full benefits assessment to measure the effectiveness of your current employee benefits offer. We can also put a dollar figure to the potential savings and efficiencies from running the program and compare overall performance with best practice for your industry.