The move is part of an austerity drive started by new chairman, Sir Colin Marshall, after the company, the world's largest distributor of motor cars, announced a 36 per cent dive in profits in 1995 to pounds 146m before exceptional items.
The new premises on Cavendish Square, on the upper floors of an office block backing on to the John Lewis department store, will save the company around pounds 400,000 a year. Inchcape said the move reflects the company's new, frugal attitude. "The image of St James's wasn't commensurate with difficult times," said a spokesman.
City observers believe there is more than altruism involved. "If there's a hostile bid for the company, they don't want to get stuck with 'fat cat' label," said one analyst. "They probably remember how Rocco Forte's corporate jet was used against him by Granada."
St James's is home to the Ritz, a royal palace and some of the most exclusive gentlemen's clubs in London, as well as corporate headquarters. The area has suffered from depressed demand in recent years because of average rents of pounds 43 per square foot, a 25 per cent premium on the surrounding area and the availability of larger and newer buildings elsewhere.
In May, Grand Metropolitan vacated its 70,000sq ft headquarters on St James's Square, also in favour of premises north of Oxford Street.
According to Jonathan Evans, West End sales manager for DTZ Debenham Thorpe, the lack of large, modern buildings in the St James's area has discouraged companies looking for head office space. However, he pointed out that the area's 91 per cent occupancy rate is at least as good as that of the City. "The area still has great prestige," he said.
In fact, Inchcape has not had a problem finding another tenant to take over the remaining 10 years of its lease. After GEC flirted with the idea of moving there, the new occupants of 23 King Street will be Kvaerner, the Norwegian engineering conglomerate that took over Trafalgar House earlier this year.
And it looks as if the neighbourhood of the East India Club will still be home to some other corporate giants for a while yet. Other recent arrivals include Orange, the mobile phone company, JP Morgan, the US investment bank, property company MEPC and Granada, which abandoned its corporate pile in Soho for smaller premises off St James's Square.
According to one Inchcape member of staff, it will be sad to leave St James's and no one is looking forward to unpacking the piles of green storage boxes at the company's new home. The staff will take even less comfort from the knowledge that the pounds 1.36m severance package the company paid outgoing chief executive Charles Mackay will soak up any savings from the move for the next three years.