Company cars are bad for business : MOTORING
Saturday 04 February 1995
Company cars are even bad for Britain's motor industry, though the reason the Government perpetuates them is supposedly to help Rover, Ford, Vauxhall, etc. We are the only country in the world where half of all car sales go to companies. Such an artificial market makes for odd cars; it is one of the reasons why mainstream British-made cars are still poor sellers outside the UK. Even the Japanese who have set up shop here - Nissan, Toyota and Honda - are failing to crack Europe.
European buyers simply do not want Primeras or Carina Es or Accords. They may be the right size for British companies, but they are too big for private buyers. It is the same reason why Mondeos, Cavaliers and Rover 600s are much more popular here than elsewhere in Europe. Europeans (and, for that matter, private British buyers) prefer Fiesta or Escort-sized cars. They are smaller, cheaper and more energy-efficient.
Our company car culture has bred cars that are too big, too thirsty and too full of useless high-specification fripperies that appeal to fleet reps spending all day plying the motorways or to MDs too lazy to adjust their seats manually, but are a wasteful nonsense for pragmatic private buyers.
A few years ago, even the Government got the message. The company car was targeted in a succession of budgets. But as the recent recession started to bite and the motor industry started to bleat about falling sales and the prospect of job losses, so the Government loosened the noose and the company car started to make a recovery.
Nowadays the proportion of new cars bought by fleet buyers, as opposed to private buyers, has never been higher. Last year, 45 per cent of all new cars sold in Britain went to companies which run 25 cars or more. Back in 1990, it was 36 per cent.
The British motor industry, which has never been very good at thinking beyond next August's registration change and the sales uplift, is continuing to apply pressure on the Chancellor to keep his hands off the venerated company car. It is winning. But resistance is getting stronger. Even the car industry's own dealers are starting to revolt.
The National Franchised Dealers' Association, which represents most of the new car dealers in Britain, reckons it is not lack of consumer confidence that is preventing private buyers from coming into showrooms. It is simply that cars are too expensive. The massive discounts handed out to company car buyers have to be subsidised by private buyers. The NFDA says some car prices could be cut by as much as £2,000 if makers abandoned two-tier pricing.
Cars are also getting pricier in real terms. The industry will tell you that, compared with three years ago, cars are only about 4 per cent more expensive. But Sewells International, the trade and industry intelligence group, points out that over the past three years, the 10 per cent Special Car Tax has been abolished and dealer margins are down from a typical 17.5 per cent to under 10 per cent. In other words, even taking inflation into account, cars today should be about 13 per cent cheaper than threeyears ago. They are not. The difference is going to the car makers.
Still, the car makers are getting their just desserts. Private buyers, who traditionally give the car makers most of their profits, are snubbing new cars and buying used. They are being particularly attracted by nearly-new used cars, such as those offered through Vauxhall's Network Q or the Ford Direct scheme. These cars are usually barely run in (often as company cars) and are offered with as-new warranties to give buyers peace of mind.
Unless you are obsessed by that new registration prefix (another absurd British car quirk that should end forthwith), you are always better off to buy near-new - as more one-time new car buyers are discovering. Car makers need to stop pandering to company car buyers. Otherwise, they may find themselves with no private new car buyers left. Instead of coming into the showroom, they will be looking at the used cars, saving themselves lots of money.
It is fairly well known that four-wheel drive off-roaders tend to be less stable than conventional saloons. It is hardly surprising: their height makes for a higher centre of gravity, and a greater propensity to flip over. Yet a recent crash test in Australia highlighted another 4x4 safety worry: they tend to be more dangerous when hitting stationary objects, such as trees or crash barriers, than conventional saloons.
Recent tests done by the Royal Automobile Club of Victoria, using both full-frontal and offset crashes, showed that the off-roaders - which included the Land Rover Discovery, Britain's best selling 4x4 - fared worse than family saloons. The RACV partly blamed the rigid, truck-like chassis of the vehicles, which do not have the crumple zones used in saloons.
The Discovery did worse in driver protection than the other 4x4s tested: the Mitsubishi Shogun, Nissan Patrol, Suzuki Vitara or Toyota Landcruiser. The Vitara was worst for the front-seat passenger. The Landcruiser was judged to be the safest.
The conclusion was emphatic: if you are buying an off-roader to protect your family - one of the main reasons cited by British buyers - you are probably fooling yourself.
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