Fleet News

Contract hire survey: premium versus upper-medium saloons

FOR £400 a month in rental costs, drivers have a serious choice to make – go for an entry-level junior executive car or opt for a fully-specced upper-medium model instead.

This is an age-old dilemma in the company car market. A driver with a budget of about £400 a month to spend on a saloon is faced with the following problem: top-of-the-range mainstream model, or bottom-of-the-range premium marque?

Do you opt for all the kit and less kudos, or barren specification and a posh badge? And for fleet operators, which makes the better bet when it comes to servicing and maintenance, running costs and residual values?

The six cars looked at here are essentially three sets of cousins, all with very similar P11d values, in order to compare more closely the effect of badge engineering and its perceived value.

First up are the Ford Mondeo 2.0i Ghia X and Jaguar X-type 2.0 V6. Although they share many similar underpinnings, the Mondeo is the solid four- cylinder fleet regular, while the X-type is a six-cylinder newcomer with volume aspirations.

The Mondeo is close to the top of the range, while the Jaguar is the first the marque has offered with front-wheel drive and a price tag that places it firmly in the mainstream market.

Next is the Volkswagen Passat 2.3 V5 and the Audi A4 2.0 FSI. The Passat is in an invidious position here, mainly caused by the fact it is such good value for money now. As a result, it comes with a larger five-cylinder 2.3-litre engine, which penalises it on benefit-in-kind tax and fuel consumption compared to the others.

For a driver less bothered about tax bills but wanting good specification, space and solid reliability, the Passat is a good bet.

The A4 uses the most emissions-friendly engine of the six here. The new 150bhp direct injection unit is a fine machine and will eventually be used throughout the VW Group. But don't expect any other goodies, because the cupboard is pretty bare on the equipment front. A driver will be getting a stylish car with a top engine, and that's it.

Finally, the Vauxhall Vectra 2.2i Elite and the Saab 9-3 1.8t Arc, which share a platform, although they differ slightly.

For specification, the Vectra is hard to beat with cruise control, CD and leather seats, but this is a comparison not only of equipment but what a badge and image can do, and in that area it falls down. The Saab is confusingly badged 1.8t, which would suggest it is the smallest- engined here. It's not, because it is a 2.0-litre turbocharged unit with 150bhp. Traditional thinking says Saab is a viable alternative to the premium German makes, and might therefore attract similar rates and residuals.

Vital statistics: how our models compare

Average rental rates (model and monthly rental)

Jaguar X-type £399
Audi A4 £399
Vauxhall Vectra £413
Ford Mondeo £419
VW Passat £421
Saab 9-3 £436

  • Average based on results from our leasing panel

    Average maintenance costs (3years/60,000 miles)

    Ford Mondeo £1,634
    Vauxhall Vectra £1,665
    Audi A4 £1,821
    Saab 9-3 £1,916
    VW Passat £2,021
    Jaguar X-type £2,305

  • Average based on results from our leasing panel

    RV forecasts (3years/60,000 miles )

    Jaguar X-type £7,558/38%
    Audi A4 £6,735/35%>>
    Saab 9-3 £6,637/33%
    VW Passat £5,443/27%
    Ford Mondeo £4,633/24%

  • Average based on results from our leasing panel

    CO2 emissions (g/km and tax band)

    Audi A4 174/16%
    Ford Mondeo 192/20%
    Saab 9-3 199/21%
    Vauxhall Vectra 206/23%
    Jaguar X-type 219/25%
    VW Passat 223/26%

  • Source: Vehicle Certification Agency

    Combined mpg

    Audi A4 39.7
    Ford Mondeo 35.3
    Saab 9-3 34.0
    Vauxhall Vectra 32.8
    Jaguar X-type 30.7
    VW Passat 30.4

  • Source: Vehicle Certification Agency

    The panel

    Michael Beet
    Sales director
    Inchcape Fleet Solutions
    'Should the executive choose a fully-equipped upper-medium car or a basic specification model from a premium brand? The premium badge will look good on the driveway but may have low residuals due to a lack of features. With the upper-medium choice you can enjoy the luxury of selecting your own extras. Yes, the car may look like all the others in the car park, but you can make it your own.'

    Andrew Cope
    Managing director
    Zenith Vehicle Contracts
    'This sector forms the mainstay of the UK company car market. This month sees basic specification luxury marques competing with high- spec models from Ford, Vauxhall and Volkswagen. Although just £945 differentiates the P11d price of these cars at the front end there is a variance of more than £2,000 in the value at the end of three years and 60,000 miles. This clearly demonstrates the value of the prestige brands.'

    Tracy McMahon
    Pricing manager
    Lloyds TSB autolease
    'All of these cars are well equipped, well made and good to drive but the aspirational badges tend to win for user-choosers concerned with which car looks best sitting on the drive. The P11d values are similar but Audi's new technology makes it a good choice for those considering the benefit-in-kind tax implications. And if you are in need of space, the upper-medium saloons provide the most practical option.

    Richard Schooling
    General manager, sales operations
    Alphabet
    'User-chooser drivers can't lose in this territory. They can have a top-end volume model with all the toys or a get touch of class from the premium sector's entry-level selection. Common platform engineering among manufacturers has narrowed price gaps, but it is also blurring distinctions, particularly with the Volkswagen Passat and Audi A4. Having the right remarketing strategy will be critical to every manufacturer.'

    David Harnett
    head of LeasePlan Fleetline
    'There is a definite choice to be made here. Are you driven by the badge and the prestige of a premium brand model or are you more interested in the specification and gadgets that are a feature of top-spec models from a more volume-driven manufacturer? There are good reasons to choose either but the real winner will be the vehicle that manages to bridge the gap between the two classes.'

    Audi A4 2.0 FSI
    Cope: 'This is proof that the petrol engine has a future. Build quality on the A4 is unrivalled – this is a car that people want.'
    Schooling: 'Hard to imagine any driver choosing the Passat over the A4. FSI engine gives power boost and cuts CO2. Standard spec is poor but safety levels and image impeccable.'
    Harnett: 'At first glance the Audi looks like the choice – it is a premium brand at a volume price. However, equipment levels are unimpressive - rear electric windows, heated door mirrors and single CD player all come at a cost. Great engine, shame about the specification.'
    Beet: 'The innovative FSI engine is built to be more economical. Very low CO2 emissions combined with a healthy 150bhp produce a low tax bill, underlined by good performance. One of the best cars in the sector.'
    McMahon: 'The ideal option for company car drivers. It has the lowest BIK rate and the highest combined mpg, although it does lack performance and equipment. Beautifully built and an evolution of a previously successful package.'

    Average monthly rental £399
    P11D price £19,400
    Average net price £15,301
    Average maintenance £1,821
    Average RV £6,735/35%

    Rental Rates
    Inchcape £402.18
    Zenith £418.97
    Alphabet £381.40
    Leaseplan £385.89
    Lloyds TSB autolease £408.15

    2002 CO2 BIK tax bill (22%/40%): £683/£1,242
    2002 VED bill £140

    Ford Mondeo 2.0i Ghia X
    Schooling: 'Who'd go home and tell their partner: 'We could have had a Jag but I chose a Mondeo'? Good CO2 means drivers get loads of kit for 30% less benefit-in-kind than the X-type.'
    Harnett: 'The Mondeo is undoubtedly a great car and has really pushed the barrier in the volume brand sector. However, the Ghia X offers little more than an SE X-type with very little differential in price. X-type is the better choice.'
    Beet: 'Suffers slightly from an image problem but it has excellent performance and handling. Value for money as well as being very tax efficient for its class.'
    McMahon: 'The Mondeo makes a sound choice. However the badge means user-choosers may leave it and go for a premium marque. Low CO2 emissions, good acceleration and high mpg compared to the Jaguar and Passat will also make it a popular choice.'
    Cope: 'Whether the Vectra is better than the Mondeo is subjective, and shows just how far ahead of the game the Mondeo was at launch almost two years ago.'

    Average monthly rental £419
    P11D price £19,265
    Average net price £15,371
    Average maintenance £1,634
    Average RV £4,633/24%

    Rental Rates
    Inchcape £408.81
    Zenith £414.11
    Alphabet £409.73
    Leaseplan £438.08
    Lloyds TSB autolease £424.74

    2002 CO2 BIK tax bill (22%/40%): £848/£1,541
    2002 VED bill £155

    Jaguar X-type 2.0 V6
    Harnett: 'The 2.0-litre X-type is a great entry-level vehicle into the premium sector. The Jaguar name brings outstanding residuals and therefore extremely competitive rentals. A definite contender.'
    Beet: 'The Jaguar is quiet and the engine smooth, but performance and handling are adequate rather than exciting. The entry-level model comes with fairly basic trim and is front- wheel drive only. Emissions are on the high side.'
    McMahon: 'A great-looking car that feels special. The interior is small, especially in rear and may not appeal to those with a family. The high CO2 and low combined mpg will not make it the most economical choice.'
    Cope: 'The X-type has found favour with those aspiring to XJ and XK models who want to stand out from the German models in the company car park. The Jag has the strongest residual value of the bunch, too.'
    Schooling: 'Only front-wheel drive, not 4x4, but that doesn't detract as much as you'd think. Any dilution of its perceived exclusivity would hit residual values badly, though.'

    Average monthly rental £399
    P11D price £19,815
    Average net price £16,102
    Average maintenance £2,305
    Average RV £7,558/38%

    Rental Rates
    Inchcape £403.21
    Zenith £422.42
    Alphabet £391.84
    Leaseplan £375.52
    Lloyds TSB autolease £402.49

    2002 CO2 BIK tax bill (22%/40%): £1,090/£1,982
    2002 VED bill £155

    Saab 9-3 1.8t Arc
    Beet: 'The 9-3 is popular among aspiring young executives. Saab has retained originality through unique engines and in doing so has remained close to its heritage and given the cars a healthy turn of speed.'
    McMahon: 'More mainstream than previous Saabs, proving a popular choice for user-choosers. A distinctive car with a quality feel made more appealing by good CO2 and good acceleration. Slightly cramped accommodation for rear passengers lets it down.'
    Cope: 'People will choose this car for what it is not, rather than what it is, eschewing the more traditional choice of Audi A4 or BMW 3-series. A good-looking car with more performance per pound.'
    Schooling: 'Well received as a sports saloon although decision to badge a 2.0-litre as a 1.8 smacks of quirkiness. High sales target calls for careful residual value management.'
    Harnett: 'The 9-3 is and always has been a well-built alternative to its class-leading German rivals. It is a much more attractive option than the Vectra but because of limited appeal is let down by poor residuals. An outside choice.'

    Vauxhall Vectra 2.2 Elite
    Cope: 'The Vectra is a considerably better car than its predecessor. The build quality borders on the Germanic, and the car is spacious, comfortable and ideally suited to living its life on the UK's motorway network. C02 emissions are higher than average for this class though.'
    Schooling: 'The Vectra runs the Saab closer than the Mondeo does the Jaguar. It's smooth and roomy, with newness on its side. But fleet and driver pay more in depreciation and BIK.'
    Harnett: 'It has a generous level of specification and is a great improvement on its predecessor but unfortunately the rentals are uncompetitive and there are better choices elsewhere.'
    Beet: 'The 2.2 engine is a disadvantage for cars in this sector as the extra capacity does not give a marked improvement in performance or CO2 emissions. The revamp has made a huge difference to the Vectra's look but heavy discounting has already had an effect on residual values.'
    McMahon: 'A significant step forward for Vauxhall. It handles well with a predicatble, safe feel. Equipment levels are high but it is let down by a higher CO2 level than Mondeo.'

    Average monthly rental £413
    P11D price £19,170
    Average net price £15,293
    Average maintenance £1,665
    Average RV £4,885/25%

    Rental Rates
    Inchcape £404.99
    Zenith £413.45
    Alphabet £405.30
    Leaseplan £423.18
    Lloyds TSB autolease £417.05

    2002 CO2 BIK tax bill (22%/40%): £970/£1,764
    2002 VED bill £155

    Volkswagen Passat 2.3 V5
    McMahon: 'This car established the upper- medium sector but now looks a little dated. A well-made, big car but from a user-chooser perspective, may not compete with premium marques.'
    Cope: 'With more cabin space than the other cars here, a rock-solid image and bullet proof build quality, the Passat makes a good case. The V5 engine gives the car real character, although emissions will put some off.'
    Schooling: 'Like the Mondeo and Vectra, the Volkswagen suffers by comparison rather than any shortcomings of its own. Superbly finished and utterly competent but it won't get you noticed.'
    Harnett: 'Despite being essentially a five-year-old car, the Passat is still extremely strong. The V5 engine is great for motorway cruising but not as friendly for urban driving.'
    Beet: 'A runaway success over the past few years, although starting to show its age now, the ride and build quality are still excellent. The V5 is smooth and sporty and with 180bhp it won't disappoint although it is firmly placed in the higher tax arena.'

    Average monthly rental £421
    P11D price £19,825
    Average net price £15,310
    Average maintenance £2,021
    Average RV £5,443/27%

    Rental Rates
    Inchcape £432.91
    Zenith £438.87
    Alphabet £412.00
    Leaseplan £404.30
    Lloyds TSB autolease £418.86

    2002 CO2 BIK tax bill (22%/40%): £1,003/£1,824 2002 VED bill £155

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