Research completed by Employee Benefits magazine has shown that the company car tax system launched in 2002 led to 37% of companies that operate cars reducing the size of their fleet during last year.
A spokesman said: 'The results of the 2004 research are not so grim, but the trend is still relentlessly downward. It shows 24% of employers are looking to reduce fleet sizes, with 4% looking to get rid of them altogether.'
An increasing number of companies are opting for car ownership schemes as an alternative to providing company cars, the research claims.
Employee Benefit's Fleet Research 2004 polled 225 companies and found 14 companies had plans to launch employee car ownership schemes this year.
Groups such as the BBC, John Lewis and the Prudential currently offer employees the opportunity to lease new cars and David Rowley, editor of the Employee Benefits research, believes more companies will look at these groups as an example. He said: 'It seems likely that the reason more employers have not already signed up for such schemes is that many were initially nervous of the tax danger.
'They have been waiting to see how early pioneers such as the BBC and the Prudential got on before launching schemes themselves.'
Under such schemes the vehicle is not classed as a company car for tax purposes but Employee Benefits believes the growth of car ownership plans will be restricted to big companies due to their purchasing power.
As reported on Fleet NewsNet last week, Northcliffe Newspapers is launching an employee car ownership plan this month. Its NNGDrive scheme has been designed and administered by multi-marque leasing company Alphabet and offers employees a car from £149 a month.