Fleet News

Contract hire survey: premium lower-medium diesels

Civic steps up to take on premium sector rivals

THE bold styling of Honda’s new Civic is matched by equally bold predictions about how it will sell.

Honda sees the striking new model as a threat to the likes of Audi and BMW in the premium lower-medium sector, rather than as a rival to more mainstream offerings from volume makers.

It is promising premium quality at volume prices, but will this be enough to tempt potential buyers away from cars such as the Audi A3 and BMW 1-series, which have the badge, if not the generous levels of standard equipment found in the Civic?

As well as the Audi and BMW, the Honda also faces competition from Alfa Romeo. The 147 offers style and performance, but will the marque’s poor reliability reputation count against it?

Also battling for sales in this sector is the Golf. Like Honda, Volkswagen occupies a position which is neither volume nor premium.However, the Golf remains a leasing industry favourite thanks to its reliability, style and strong residuals. Just look in the car park of any fleet with plenty of user-chooser drivers and you’ll see Golfs galore. Finally, there’s the new Mercedes-Benz A-class – can it improve on its predecessor’s poor image?

Alfa Romeo 147 1.9 JTD Multijet Turismo 5dr

P11D price £17,367
2006 CO2 BIK tax bill (22%/40%) £764/£1,389
2006 VED bill £135
Rental Rates
Lombard £349
Masterlease £361
Custom Fleet £360
Arval £360
Alphabet £340

Audi A3 Sportback 2.0 TDI

P11D price £18,432
2006 CO2 BIK tax bill (22%/40%) £811/£1,475
2006 VED bill £135
Rental Rates
Lombard £333
Masterlease £347
Custom Fleet £343
Arval £338
Alphabet £315

BMW 118d

P11D price £17,737
2006 CO2 BIK tax bill (22%/40%) £780/£1,419
2006 VED bill £115
Rental Rates
Lombard £315
Masterlease £319
Custom Fleet £339
Arval £320
Alphabet £299

Honda Civic 2.2 i-CTDi SE Sat-Nav

P11D price £17,147
2006 CO2 BIK tax bill (22%/40%) £679/£1,235
2006 VED bill £115
Rental Rates
Lombard £346
Masterlease £365
Custom Fleet £341
Arval £352
Alphabet £342

Mercedes-Benz A180 CDI Elegance SE 5dr

P11D price £17,920
2006 CO2 BIK tax bill (22%/40%) £789/£1,434
2006 VED bill £115
Rental Rates
Lombard £368
Masterlease £368
Custom Fleet £371
Arval £393
Alphabet £366

Volkswagen Golf 2.0 GT TDI 5dr

P11D price £17,647
2006 CO2 BIK tax bill (22%/40%) £776/£1,412
2006 VED bill £135
Rental Rates
Lombard £329
Masterlease £330
Custom Fleet £324
Arval £339
Alphabet £302

Richard Schooling
Commercial director, Alphabet (GB)

DRIVERS with a £17,000-plus price limit have plenty of choice these days, so car manufacturers are working hard to win business in this segment.

According to figures from the Society of Motor Manufacturer and Traders, fleet sales of diesel-engined premium lower-medium models rose 70% last year and the new BMW 1-series made a major contribution with its distinctive silhouette, superb chassis and desirability.

The Golf’s popularity and cost-effectiveness are underpinned by its quality and brand strength, while the Audi is a stylish choice for those with a higher allowance.

Very few old Civics bought by fleets are diesels but the new model may well change that.

The A-class also boasts a new look but fleets don’t buy many. Its modest RV means a relatively high rental.

Characterful though it is, the Alfa Romeo doesn’t muster enough fleet virtues to compete here.

Paul Connor
Pricing risk manager, Lombard

PREMIUM offerings have increased the popularity of this sector.

The Alfa has lovely styling and engines, but the brand still suffers from an image of poor quality.

The Audi has much of the Alfa’s emotional appeal but with high quality, great build and materials plus an excellent engine make it a winner. The Volkswagen is very nearly as strong.

The BMW has the lowest rental thanks to a strong RV, but the model here is the base version, although for some user-choosers the badge alone will be sufficient.

The A-class is also difficult to compare – is it mini-MPV or lower-medium? Bad press on quality and dealers has hurt the firm, and the A-class has a high rental and poor residuals.

The Civic scores well, particularly on specification, but it won’t have the kudos of Audi or BMW. However, with sat-nav adding around £40 to a rental, it would win outright if the others were specified to the same level.

John Pout
Head of strategic and international sales, Arval

HONDA has high hopes for the new Civic range and they are fully justified. It has a great diesel engine which gives substance to the drive and it looks brilliant – Honda should be on to a winner.

Although it is now in its fifth incarnation, the Volkswagen Golf remains a car of quality, delivering a great driving experience and the residual values remain firm.

A natural threat to the Golf is the BMW 1-series and it is growing in popularity. It may not be everyone’s cup of tea to look at but, at the end of the day, BMW quality shines through.

Audi still offers a class-leading interior, although the exterior look is becoming a little dated. The responsive engine pulls well and comes into its own on the motorway.

Alfa Romeo’s reputation goes before it and the 147 subsequently struggles to get on to many fleet choice lists, but there is an offbeat following from those who dare to be different.

Mercedes-Benz continues to grow into this sector but the revised A-class will never give you the drive of your life – the company is much better on the familiar territory of large prestige cars.

Nick Auld
Trade services manager, Custom Fleet

THIS area of the market is one of the most competitive and crowded. It is dominated by diesels and even carmakers with a leaning towards petrol, like Honda now having a very respectable entry.

The Golf still sets the benchmark with good all-round performance, value for money and strong residuals. Its position is reinforced by comparing it with base models from BMW and Audi which make the Golf seem even better value.

Although we have placed the BMW and Audi second and third, we do not encourage drivers to choose these base models and treat them accordingly in residual terms as they are a headache at disposal time.

We placed the new Civic fourth and would have gone higher if only it had the badge appeal of the cars above it. It’s a great looking car but, despite having a superb engine, high spec and representing far better value, it still lacks the brand desirability.

The A-class is better than the previous model but still doesn’t compete on equal terms in this company, while the Alfa, despite having a good engine and being a real driver’s car, is let down by a lack of aspirational appeal.

Robert Redman
Senior pricing analyst, Masterlease

THE new Civic is another of Honda’s brave moves from bland to bold. Traditionally associated with the more mature part of the market, the Civic should appeal to a much wider, and younger, audience.

The latest evolution of the Golf remains the benchmark for the sector, with badge appeal second only to BMW. It may not be the best in every criteria, but the legendary Volkswagen build quality and reliability help to ensure it maintains a strong following.

The BMW is unique in this sector by offering rear-wheel drive, but it trades interior space for handling prowess. Whether this is a problem depends on buyers’ priorities, but the lure of the badge will prove irresistible to many.

The A3 is the most expensive car here, but represents the ideal combination of space, style, ride and handling.

While not having the status of some of its German rivals, the 147 is a typically Italian driver-focused alternative, and the recent facelift has refreshed its appeal.

The A-class is a noticeable improvement over its predecessor. More stylish, and with higher quality, it is now a more credible competitor.

Average leasing rates

RESIDUALS are king when it comes to rental rates, and the BMW proves this by having the highest RV forecast allied to the lowest monthly rental. The A-class also proves the point, with a high rental and low RV figure.

CO2 emissions

THE Honda has the largest engine at 2.2 litres but it is the cleanest, emitting just 135g/km of CO2. It falls into the 18% benefit-in-kind tax band, compared with the 20% for the Golf, which has the highest CO2 emissions.

Fuel economy

ANOTHER strong performance from the Honda, which is the most economical, returning a claimed 55.4mpg on the combined cycle. The Alfa is the least efficient, although it still returns a strong 48.7mpg.

Residual value forecasts

THE BMW tops the residual value charts, with an average RV prediction of 44%, closely followed by the Audi and Volkswagen on 42%. The Civic can’t match the German trio, but beats the Mercedes-Benz and Alfa 147.

Average price of cars to leasing firms

HONDA offers the least support, with an average of £2,702 off the new Civic. The German models attract discounts of around £3,000, while the Alfa 147 is well supported, with more than £4,000 off.

Average maintenance costs

THE Alfa is the odd one out here, topping the £2,000 barrier for likely SMR bills. It is not helped by the marque’s reputation for reliability and build quality. Elsewhere, the other five cars are very evenly matched.

How the panel voted

1. VOLKSWAGEN GOLF

THE Golf has got it all – strong brand value, good build quality, a decent engine and resulting RVs which belie its volume-selling status. The Volkswagen remains the car to beat in this sector at this price.

2. AUDI A3 SPORTBACK

A STYLISH, roomy car which scores highly for its performance and badge appeal. However, equipment levels are sparse in this entry-level version, which is the priciest model featured.

3. HONDA CIVIC

THE Civic puts up a strong showing with praise for its looks, engine, build and generous level of equipment. However, badge-conscious drivers will find it hard to leave their Audis and BMWs.

4. BMW 1-series

STRONG residuals make the 1-series a fleet favourite, although the challenging looks and lack of standard kit see it lose marks. Rear-wheel drive chassis means it is the choice for enthusiastic drivers.

5. MERCEDES-BENZ A180

THE new A-class is a much better car than the model it replaces, but it can’t compete in this sector in terms of residuals and desirability. Not great to drive, but roomy cabin will appeal to families.

6. ALFA ROMEO 147

THE 147’s challenge is blunted by the marque’s reputation. Praised for its looks and driving experience, the Alfa simply cannot muster the on-paper performance to make it a serious rival.

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