Fleet News

Lease firms clash over company car future

LEASING companies are at the centre of the cash or car debate, but have widely differing views on what the future holds for fleets. ARVAL PHH has predicted that up to a third of businesses could drop some of their company cars in favour of cash-for-car schemes.

But LeasePlan, the largest leasing operator in the country, according to last year's FN50, the in-depth guide to the leasing industry, disagrees with ARVAL PHH's predictions. LeasePlan says that in its fleet, most company car drivers will see a reduction in tax which, in turn, will mean a reduction in the Class 1A national insurance contribution for the company and encourage more staff to move into company cars.

Jianni Geras, group head of marketing, said: 'Our analysis shows that on average, company car drivers who currently travel less than 18,000 business miles per annum will be up to £30 a month better off. However, drivers who travel in excess of 18,000 business miles will, in many cases, be faced with a significant increase in their tax bills.

These drivers will need to carefully consider their choice of company vehicle in future. Geras said: 'With the changes to the Authorised Mileage Rates which apply from 2002, companies wishing to keep their employees in a cash neutral position will need to significantly increase the cash option offered to many drivers in vehicles of more than 2.0 litres'.

In contrast, Andrew Cope, managing director for Zenith Vehicle Contracts, estimates that in a decade, the company car will not be in the dominant position it currently enjoys, adding that drivers who would opt out may have to wait years for their current lease arrangements to end. But currently, the effect on the number of company cars is 'insignificant'. He added: 'Of our new business, about 20% is personal motoring schemes and structured personal leasing schemes. But if you go for stand-alone PCP it can be a minefield for the driver because they are taking the risk on accidents and maintenance.'

Companies are starting to realise that a move in haste to cash for car schemes does not lead to less administration and can damage staff relations. David Mercer, director of service centre operations UK for Ford Credit, which includes Ford Business Partner, said: 'One of our customers is in the process of moving back from a cash for car scheme to traditional company cars. We actually expect growth in both sides of the business. It is definitely not a one-way street, but fleets must offer their staff a selection of options to choose from.'

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