Cash for car arrangements appear to be falling out of favour, according to the latest quarterly Company Car Trends research from GE Capital, Fleet Services.

The research, which surveys 300 fleet decision makers, suggests that the percentage of companies offering a cash payment instead of a company car has fallen from 36% to 25% in the last two years.

Gary Killeen, Fleet Services commercial director for GE Capital UK, said: “In the early part of the 2000s, there was a significant move towards cash for car policies but they are now in quite a marked decline.”

He explained that the shift in popularity had been caused by changing attitudes both on the part of employers and employees.

Killeen said: “A key part of the appeal of cash for car for employers was that they believed that it would allow them to potentially relinquish the responsibility of running company vehicles and it would also be cheaper.

“However, the emergence of duty of care legislation regarding company cars meant that they were unable to sidestep managerial responsibility. Added to this, many found that providing the cash option was often more expensive than normal company car provision.”

Employees have also been opting back into company schemes in large numbers in recent years for a variety of reasons, continued Killeen.

He said: “Many found the idea of taking the cash option and buying their own car appealing but actually learned in the process of doing so how much of the day-to-day hassle of running a car is taken away by having a company vehicle.

"We have seen many cash takers return to company cars because they are a very worthwhile benefit in terms of not just the car itself but accompanying factors such service and maintenance, 24 hour driver support and motor insurance cover.

“Also, it should not be underestimated how much taking the cash option is a sign of economic confidence. During the recession, cost factors such as the residual value of cars fluctuated massively, so running your own vehicle potentially became much more of a personal financial risk to the driver as well as a major capital expense. Again, taking a company car removes these worries.”