There are stories circulating of 40% discounts being offered to big fleets. It is as if all the cutbacks of early 2009 never happened and, in a way, that is exactly the problem.

Despite all the talk of cuts, very little permanent capacity has been taken out of the European industry. Even Opel/Vauxhall is still at the stage of negotiating closures, while factory closures in many countries are a political impossibility.

To take just one example: French Prime Minister Sarkozy all but instructed French car companies to repatriate European production to France to keep French factories busy.

The biggest problem is that the situation is only likely to get worse. In 2011, the retail market could be flat on its back after the VAT increase in January. That could leave fleet as the only game in town, which means the car manufacturers will be even more desperate to win in the fleet market.

By Jay Nagley