Kevin Denham, marketing manager of Pendragon Contracts, said: 'The large saloons and hatchbacks that have formed the mainstay of the fleet industry for many years are suffering from worse and worse residual values. They are desired by fewer and fewer second-hand buyers and this is a widely recognised long-term trend.'
Despite the fall in popularity of upper-medium cars, Denham said the vehicles still made sense for fleets, particularly for those covering high mileage. They are also popular with drivers.
And he said although poor residual values were pushing up running costs, the traditional 'repmobile' remained good value for money as business transport.
He said: 'Many companies still want to put their drivers into this kind of car. However, fewer of these businesses are willing to take the residual risk on these cars.
'Smaller businesses especially are getting a shock when they come to dispose of mainstream cars. They may outright purchase vehicles simply because they have always used that method but for them contract hire offers an easy route to protection from residual values.'