The fleet market will decline in the coming years as managers enforce stricter policies to reduce annual mileages and ultimately acquire fewer cars, according to the operations manager of Lloyds TSB Autolease.

David Kershaw told Fleet News that the European Commission’s decision, which will ultimately force carmakers to cut average CO2 emissions to 130g/km within four years, will result in at least another 5% being added to the cost of a new car.

“As always, it will be the customer who will pick up the bill,” he said.

This additional cost, coupled to rising fuel bills and growing pressure to reduce carbon emissions, will force fleet managers to reassess downwards the size of their vehicle fleets.

“There will be a decline in the fleet sector,” he said.

“Companies are now taking seriously the need to adopt technologies such as teleconferencing and cut unnecessary car journeys.”

Companies will reduce business mileages and therefore will need fewer cars.”

In addition, it is going to be increasingly difficult to confidently predict residual values of models as they adopt different solutions to reduce emissions.

This means fleets could be caught out if they favour one technology, such as biofuels, over another before they have proven themselves in the market.

“We are not convinced about biofuels,” said Mr Kershaw, whose company has more than 130,000 vehicles under its management.

“Biofuel is like LPG – it is not a long-term solution.”

The new rules will also have an impact on fleets that opt for diesel-only vehicles.

Most carmakers agree that diesel engine technology has been developed as far as is practical, with any further developments being too costly.

Therefore, fleets should expect the popularity of newer, cleaner petrol engines to take hold.