Fleet News

Treasury urged to act on petrol-diesel tax imbalance

THE Government should bring company car tax bills for petrol models in line with those for their diesel counterparts, a leading UK contract hire and leasing company claims.

ALD Automotive executives are concerned at the rise in the popularity of corporate diesel sales which they describe as ‘frightening’.

They have voiced concerns that diesel ex-company cars will flood the market and hit residual values.

In June, ALD Automotive saw monthly diesel orders top 75% of forward demand for the first time.

In the past three months diesel models have accounted for an average of almost 68% of all orders.

This figure is backed up by research carried out by Arval PHH that shows fleets are continuing to opt for diesel over petrol, with more than two-thirds of company cars now diesel.

The number of fleets choosing diesel has increased from 51% in March 2002 to 67% in March 2004.

ALD Automotive deputy managing director Nigel Fletcher said: ‘Currently the Government’s fiscal policy appears to favour diesel cars over petrol from a company car perspective. This strategy means that the corporate car leasing market has a growing diesel book.

‘We don’t believe the future demand for used diesel cars will match the number of new ones going out to company car drivers.

‘To retain used car market stability and match vehicle availability with buyer demand, the Government must look to improve the benefit-in-kind position of petrol-engined models in comparison with their diesel counterparts.’

The diesel-petrol analysis is produced as part of ALD Automotive’s second quarter Trend Tracker report high-lighting fleet industry issues.

Bosses say it reveals that virtually every key fleet financial indicator at present – benefit-in-kind tax, fuel costs, maintenance costs and monthly rentals – plays to the financial appeal of diesel.

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