Will new company car tax scales lead to more downsizing as executives strive to reduce their tax bills? Or will status considerations ensure continued high demand for the best the motor industry can offer?
Certainly there is no lack of brand-new models. Take, for example, the new Saab 900, a model developed in conjunction with General Motors, which bought Saab a few years ago. With its launch today, Saab is determined to prove that quality can be found at reasonable cost.
As Will Edwyn-Jones, managing director, puts it: 'Our aggressive pricing will combine with lower insurance premiums to nail the myth that running a Saab is any more expensive than many other cars.'
Certainly its price - starting from pounds 15,995 - is well below its most immediate competitors - the BMW 318i, the Audi 80 2.0E and the Mercedes-Benz C180. And thanks largely to a unique low-speed crash protection system which is designed to protect body components from damage in frontal impacts up to 12mph, insurance groups for the 900 are lower than on the old 900 model which it replaces.
Add to this low servicing and repair costs and it is no wonder that Mr Edwyn-Jones is bullish about the 900's prospects in the company car market.
But the competitors are not letting this new challenge go unanswered. BMW, for example, is introducing new intercooled diesel engines for its best-selling 3-Series cars which set new standards in terms of refinement and performance for diesel engines.
Audi has announced a new entry-level 1.6-litre 80SE model, which at pounds 13,456 is nearly pounds 1,300 less than the previous entry-level Audi 80. 'Now we can appeal to even more private customers and company car drivers,' says Kevin Rose, head of Audi Marketing.
But perhaps the biggest shake-up in the executive sector of the marketplace will come from the launch of the new Mercedes-Benz C-class range. The cars, which replace the 190, went on sale in early October - with over 3,000 advance orders from customers who had not even seen them.
For not only is the C-Class astonishingly refined in its performance; not only is its engineering solidity and build quality still perhaps the finest in the world, but it has also been designed and styled to appeal to a broader spectrum of the car-buying public.
Hans Tauscher, MercedesBenz UK managing director, explains: 'We quite clearly did not want a new car that was so radical that it would not appeal to our heartland of very satisfied 190 customers. On the other hand, it had to be different enough to tempt new buyers to whom Mercedes did not have enough youthful or - let me call it - sex appeal.'
The differentiation is largely in trim and specification levels which allow customers to choose from four different versions of one basic design: Classic for traditional Mercedes customers, Elegance for those requiring more luxury still, Sport for performance-biased buyers and finally Esprit - the version specifically aimed at younger buyers through a combination of striking exterior colours and innovative interior trim materials.
Time will tell whether Mercedes will attract the new customers, but Mr Tauscher believes the portents are good - especially because he feels the new company car tax system works in the favour of companies like Mercedes-Benz. 'It will take time for customers to get used to paying more for their cars, but the company car still represents an excellent deal for most people.'
Those looking for a new car in the executive sector of the market and up to around pounds 20,000 are almost spoilt for choice, for apart from these Saab, BMW, Audi and Mercedes-Benz models, there are also the Rover 600 range, Honda Accord (now built in Britain), Mazda Xedos 6, Volvo 850, Renault Safrane, Mitsubishi Galant, and the recently revised Alfa Romeo 164 ranges to consider.
Clearly the motor industry is not too anxious about next year's company car tax hikes.
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