Fleet News

Record boost ahead for company car sales

COMPANY car sales are expected to increase rapidly in the next two years to record levels as businesses and employees adjust to the Government's new environmentally-friendly benefit-in-kind tax regime. The claim comes in 'The Lex Vehicle Leasing 2000 Report on Company Motoring' and confounds predictions made previously by fleet industry commentators, including PricewaterhouseCoopers, which believes the tax moves will lead to a contraction of the fleet market.

However, Lex believes the carbon dioxide-based company car tax system to be introduced in April 2002 will see up to 200,000 more company cars on the road - a view shared by the Inland Revenue. Company car sales dropped last year for the first time in nine years but they are on track to break 1998's 1.22 million record this year and Lex Vehicle Leasing managing director Jon Walden said the rise was being fuelled by an increase in non-essential company cars.

'We expect rapid growth in the market in the next two years as companies adjust their fleets to the new environment,' said Walden. 'More encouragement for the company car comes from research among private drivers - 38% of them would take a company car if they were offered one by their employer.'

Part of the optimism comes from the abolition of the 2,500 and 18,000 business mileage thresholds which encourage company car drivers to clock up miles in pursuit of lower tax bills. The new tax system is aimed at benefiting sub-18,000 business miles a year drivers at the wheel of low CO2 emitting cars. 'Employees driving low mileages who have either not had a company car before or given up their company car will be attracted back and those driving high mileages have no choice because they are essential users and must have a company car,' said Walden. 'The market will also benefit from the forecast growth in managerial and professional jobs, particularly in the IT industry. These are jobs where a company car is normally provided as part of the remuneration package. More white collar jobs equals more company cars.'

But Professor Peter Cooke, head of the Centre for Automotive Industries Management, Nottingham Business School, speaking at the seminar, predicted a rise in employees taking the cash for car option due to tax and environmental pressures. Companies, rather than allocating individuals a company car, will have pools of cars which will be used by employees when required. With a greater use of home working, employees will work within the communities in which they live,' he said.

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