Renewed interest in a declining fleet market
THE upper-medium market sector, for so long the heartland of company car fleets, is facing something of a mini crisis.
With ever more expansive choice lists, company car drivers are now able to abandon the traditional saloon or hatchback car in favour of something a little different, such as mini people carriers and SUVs to match their lifestyle ambitions.
But despite falling demand, this sector still accounts for a lot of sales, so it’s no surprise that Volkswagen has gone to town with the Passat.
With styling and technical features borrowed from the flagship Phaeton, it brings quality and flair to the market.
But it’s not just Volkswagen which has been busy. Ford has revised the Mondeo with styling tweaks and new technology such as MP3 compatability, while Renault has overhauled the Laguna with a promise of better build quality and fewer electrical gremlins this time around.
Vauxhall has also been busy with a new Vectra, but it won’t be launched for a few months, leaving the current version to face the Passat.
Also facing up to the Passat are the Peugeot 407, a striking French cruiser, and Honda’s stylish and refined Accord saloon.
Ford Mondeo 2.0 TDCi 115 Zetec 4dr (EU IV)
P11D price £18,547
2005 CO2 BIK tax bill (22%/40%) £734/£1,335
2005 VED bill £135
Custom Fleet £395
Honda Accord 2.2 i-CTDi Sport 4dr
P11D price £18,872
2005 CO2 BIK tax bill (22%/40%) £623/£1,132
2005 VED bill £115
Custom Fleet £344
Peugeot 407 2.0 HDi 136 SE Luxury Pack 4dr
P11D price £18,777
2005 CO2 BIK tax bill (22%/40%) £744/£1,352
2005 VED bill £135
Custom Fleet £380
Renault Laguna 1.9 dCi 130 Privilege 5dr
P11D price £19,002
2005 CO2 BIK tax bill (22%/40%) £711/£1,292
2005 VED bill £135
Custom Fleet £334
Vauxhall Vectra 1.9 CDTi 120 Design 4dr
P11D price £18,592
2005 CO2 BIK tax bill (22%/40%) £698/£1,270
2005 VED bill £135
Custom Fleet £381
Volkswagen Passat 2.0 TDI SE 4dr
P11D price £18,232
2005 CO2 BIK tax bill (22%/40%) £722/£1,313
2005 VED bill £135
Custom Fleet £355
Average leasing rates
WITH the joint highest residual value forecast (see below) the Passat leads the way in leasing rates. Next up is the Laguna, reflecting the level of backing Renault gives it (see below right). The 407 and Vectra cost the most.
ALL the cars are Euro IV compliant, so escape the 3% diesel surcharge if bought before January 1, 2006. The Honda leads the way while the Passat has the joint highest emissions and will be taxed at 18%.
THESE cars are at the cutting edge of diesel technology, so all offer high fuel economy. The Accord, with the largest engine here, is the most frugal, with the Vectra close behind. The Passat is the least economical.
THE Honda and Volkswagen are miles ahead of the rest in residual value terms, with both estimated to retain 38% of their cost. Selling in high numbers see the Ford, Peugeot, Renault and Vauxhall lag behind.
Average net price of cars to leasing firms
THERE is a huge amount of manufacturer support for the Laguna, with an average of more than £5,000 off the front-end price. Peugeot and Ford are the next most generous, with Volkswagen offering the least support.
Average maintenance costs
VAUXHALL leads the way in SMR costs, dipping below £1,500 over three years/60,000 miles. The Laguna’s electronic systems see it predicted to cost the most in garage bills over the same period.
What the panel thought
Commercial director, Alphabet (GB)
THESE models and their predecessors have lost almost 40,000 yearly fleet sales to other sectors since 2002. To win back user-choosers and regain confidence this sector needs more consumer appeal and residual values much better than the mid-20%s some are achieving.
On that basis the new Passat has to be top choice. It has received glowing reviews and is being strongly promoted as an upmarket option. Superior RVs also give it the lowest wholelife costs.
Accord sales soared with the diesel model. Highly competent and reliable, it makes a good non-mainstream choice.
The 407 is less cost-effective but offers distinctive styling and Peugeot’s reputation for long distance comfort.
The Mondeo and Vectra out-sell their rivals – but low RVs result from this supply. The Laguna, whose fleet sales have suffered most, has few faults but lots to do to turn users back into choosers.
Pricing risk manager, Lombard
THE traditional volume segment has been in decline as user-choosers either downsize for tax reasons or opt for alternatives such as mini-MPVs as a lifestyle choice. The sector nevertheless offers huge choice.
The new Passat is priced very aggressively. It has the cheapest rental but also the highest CO2 and therefore the highest tax.
Honda’s Accord is notable for a standard-setting engine, with the best MPG and CO2, and it has an increasingly strong image.
The 407 offers something different thanks to its styling, but lacks a quality image. Both the Laguna and Mondeo have recently been facelifted, but now lack appeal and will need manufacturer support.
Customers opting for the Vauxhall prefer the hatch rather than the saloon, and this is unlikely to change after the imminent facelift. In many instances customers will opt for the new Astra rather than the ageing Vectra.
Vehicle remarketing manager, ALD Automotive
THESE cars offer great drivability coupled with seriously good economy, and have stolen a march on their petrol-engined cousins.
The new Passat is deceptively large and packs a punch with the tried and tested 2.0 TDi engine. In SE trim it is also competitively priced and offers great value for money.
The Honda is a very good car in every respect. The engine is probably the best here and the Accord also drives well. It’s a very serious challenger for best car here, although it is quite pricey compared to others.
The Mondeo continues to improve and does nothing wrong. I’d prefer the hatchback at disposal time, and the engine does not keep up with some in this group.
The previous Laguna caused some serious headaches with niggling reliability problems, which Renault assures us have been dealt with. But, it is starting to look a little dated when put in this class.
The Peugeot is a good-looking car with plenty of space and a comfortable drive. Finally, the Vectra is another car I would prefer to see with five doors, although the common rail diesel has given it a new lease of life.
Trade services manager, Custom Fleet
THIS sector has become the heart of the fleet market and diesel is still very much the flavour of the month. When a company like Honda, with its racing and petrol-based traditions, produces a stunning diesel engine it’s really symptomatic of the way the market is developing.
Beating off a strong line-up, the Accord blends great comfort and motorway cruising refinement with the highly acclaimed engine to make an unbeatable combination. Add to this strong RVs and competitive maintenance costs, and the Accord is a great choice.
The new Passat is a leap forward size-wise, but disappoints in the quality of its finish, especially the interior trim which does not seem as solid as before. But it has more than enough positive attributes to make it our second choice. The Mondeo claims third by doing nothing badly but nothing exceptional, marginally ahead of the Vectra.
The Laguna suffers from having the highest maintenance costs of the group but is a solid contender nonetheless, while the 407 is considerably better than its predecessor without having quite the presence or appeal of some of its rivals.
Senior pricing analyst, Masterlease
THIS is a sector whose size and importance in the UK is due, primarily, to our strong company car traditions. In the fleet hierarchy it is seen as the classic sales rep’s car and defines their position between the lower-medium hatchback-driving office workers and the 3-series/A4 driving lower management.
It is coming under pressure from all sides, however, with people migrating into MPVs, SUVs and downsizing into the increasingly large offerings in the class below. However, while we continue to define a person’s company status by the car they drive, there will always be a demand for this class of car.
All the cars here are very good offerings, but each focuses on different areas. The Mondeo is the driving benchmark, while the new Passat offers an upmarket, well-specified alternative and the Accord seeks to strike a balance between the two.
The Vectra, an accomplished motorway car, is about to receive a makeover to address the criticism of its driving dynamics. The 407 and Laguna tend towards a more comfort- orientated ride, and offer good value for money.
How the panel voted
IT was a close fight with the Honda Accord, but the new Passat just edges the win. Aggressive pricing, strong RVs and praise for the looks, size and quality seal victory for the new Volkswagen.
2. HONDA ACCORD
MARKETED as a semi-premium option, the Honda impresses with its build, styling and excellent diesel engine. Strong RVs and low emissions will please both drivers and fleet managers.
3. FORD MONDEO
THE Mondeo doesn’t really excel in one area, but then again it doesn’t really do anything wrong either. It’s a safe choice in this sector, but drivers want so much more these days.
4. PEUGEOT 407
FOR long distance comfort and mould-breaking looks, little can touch the Peugeot. The 407 has the joint-highest monthly rental rates though, and there are better cars available for less money.
5. VAUXHALL VECTRA
AN accomplished motorway mile-eater, but the Vauxhall is lacking in flair compared to some here. A new model is on the way with sharper looks and revised chassis, but until then the Vectra loses out.
6. RENAULT LAGUNA
HAVING the lowest RV forecast of the group doesn’t help the Renault’s cause. It’s a stylish and comfortable car, but the legacy of electrical gremlins still looms large.