THE Spanish fleet market can only move in one direction - growth. At the end of 1999, only 5% of the cars (passenger car and MPV) registered were part of a fleet.

This is due to two factors; first, a lack of tradition among Spanish businesses to offer their employees a company car, and secondly, the unfavourable tax regime.

But the fleet market is expanding, and although its growth last year was just 5% up on 1998, in real terms the expansion was significant because the total new car market was up 18% to 1,450,000 units. Indeed, Spanish fleet experts believe sales into the fleet sector have doubled in the past two years.

This explosion in new car sales has made the Spanish new car market one of the most competitive and most demanding in Europe, because in this country 86% of cars are sold to private owners. Spanish drivers ask for more equipment and better trim in the cars that they buy than any others in the EU.

For years, most of the vehicles sold as 'fleet' were small vans such as the Renault Kangoo or Citroen Berlingo that were driven only by travelling salesmen, courier firms and engineers in public utilities such as the gas and electricity industries. This also explains why 83% of Spanish fleets are managed by companies located in Madrid and the Catalonia region.

But things are changing and last year the best-selling car in the fleet sector was the same as in the total new car market - the Renault Megane, with the Opel Astra coming third, behind the Kangoo.

The explanation lies in a different and more understanding income tax system for drivers of company cars.

The vast majority - nearly 97% - of Spanish fleet vehicles fleets are sold under a leasing contract, a form of vehicle finance that remains unpopular for the wider car market where people prefer to own their car rather than pay for the use of one.

Sergio Piccione is deputy editor - motoring, of Spanish daily newspaper El Mundo. (April 2000)