Fleet News

Rise in fleet sales dominates decade

THE inexorable increase in fleet sales was the dominant theme of the new car market throughout the 1990s. Fleets bought increasing volumes of cars in real terms throughout the last decade, and also grew their share of the total new car market substantially.

In 1990 fleet sales accounted for 32% of the new car market - 639,809 units out of a total of 2,008,934 registrations. By 1993 fleet share had begun to creep upwards to 42% of new car sales, and by 1996 it had become 47%. In 1997 fleet sales breached the one million mark for the first time, and they have stayed there since. This seemingly unstoppable growth, however, faces major issues in 2000 from the Competition Commission's New Cars Inquiry and the unveiling of the new company car tax system.

This system will not come into force until April 2002, although company cars bought this year will be taxed under the new regime. As a result, fleet buying patterns may change, with essential users reviewing the type of car they drive to minimise their tax bill, and so-called 'perk' drivers beginning to weigh up the advantages and disadvantages of accepting a company car as part of their remuneration packages.

All the major fleet manufacturers anticipate business demand for cars in 2000 to match 1999 levels, but how these are recorded in the official Society of Motor Manufacturer and Traders' figures remains debatable. The British Vehicle Rental & Leasing Association, for example, estimates that only half the company car market currently leases or contract hires its vehicles, with smaller companies in particular more likely to outright purchase their vehicles. This means that as more small companies - those running fewer than 25 vehicles, the SMMT's arbitrary threshold for fleet qualification - switch to leasing, so will more cars be recorded as fleet rather than retail sales.

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