The recession, which started in 2008, resulted in many businesses extending fleet replacement cycles into a fourth or even fifth year in a bid to cut operating costs.

However, said Jenner: “Some fleets reported maintenance cost rises and from an HR and business perspective it does not always set the right image for older cars to be driven. Therefore, if the economy picks up in 2011 we may see fleets return to the more traditional three-year replacement cycle - the move is already happening in a small number of cases.”

Meanwhile, as the Government continues to pursue its carbon-cutting agenda and vehicle manufacturers introduce new technology, the drive to encourage fleets to operate electric company cars has started.

Tax incentives are already in place and in January a Government handout of up to £5,000 to help businesses offset the up-front cost of electric cars will be introduced. Meanwhile, a host of manufacturers including Citroen, Mitsubishi, Nissan, Peugeot, Renault and Vauxhall will be launching electric models in 2011.

Jenner said: “Electric vehicles may be suitable for some urban, low mileage fleets, but for the vast majority of businesses they are not viable on a number of counts including operating costs, residual value uncertainty, range and the lack of a viable recharging infrastructure.

“The UK electric vehicle market is in its embryonic stage. Fleets and company car drivers should not get carried away by the carrot of tax incentives, while so much uncertainty exists around key operating issues.

“Businesses need more clarity around fundamental issues before they have the confidence to operate electric vehicles in any significant quantity. Fleet decision-makers also need to then spread their confidence in electric vehicles to company car drivers.”

Finally, the last few weeks of 2010 has seen the first move in what could become a long-expected consolidation of the UK contract hire and leasing sector, while the short-term rental segment is also undergoing a major shake-up.

Masterlease has been acquired by a subsidiary of Investec Bank, while several rental companies have run into financial difficulties.

“ACFO anticipates further consolidation in both sectors as the fall-out continues from the recession with a shortage of credit and, particularly in the leasing sector, banks looking to withdraw from the risks associated with owning a vehicle leasing company,” concluded Jenner.