WOLFSBURG, GERMANY - MARCH 10: A brand new Volkswagen Passat and Golf 7 car stands stored in a tower at the Volkswagen Autostadt complex near the Volkswagen factory on March 10, 2015 in Wolfsburg, Germany. Volkswagen is Germany's biggest car maker and is scheduled to announce financial results for 2014 later this week. Customers who buy a new Volkswagen in Germany have the option of coming to the Autostadt customer service center in person to pick up their new car. (Photo by Alexander Koerner/Getty Images)
A VW tower complex near its HQ in Wolfsburg © Getty

“I am a young executive. No cuffs than mine are cleaner; I have a Slimline brief-case and I use the firm’s Cortina.” So wrote Sir John Betjeman in his poem “Executive”, in which the company car represented a symbol of success for its self-satisfied subject.

These days, however, executives are more inclined to be seen behind the wheel of a high-end Audi, BMW or Mercedes-Benz as carmakers in the “affordable premium” sector meet the demands of company car drivers.

According to the UK’s Society of Motor Manufacturers and Traders, 1.4m cars were sold to the fleet and business sectors in 2015. This figure was 9.8 per cent higher than the 2014 total — more than three times the rate of sales growth to private owners.

Some of the strongest performers were in the affordable premium sector, says consultancy Fleet Audits, with Audi up 9.75 per cent, Honda 14.5 per cent and Mercedes-Benz 22.9 per cent. BMW recorded the best figures of all with 65,512 corporate sales during the first nine months of last year, a rise of almost 37 per cent.

Stewart Whyte, who runs Fleet Audits and has worked in the business since 1983, says traditional fleet car manufacturers such as Ford, Vauxhall and Volkswagen still lead the way by volume, but higher-end manufacturers are gradually making headway as the company car culture changes.

“The nature of fleet management as a business tasked with running vehicles has changed considerably,” says Mr Whyte. “Typically, fleets were run by people with grease under their fingernails, but now they are often taken care of by human resources departments because the vehicle is seen more and more as part of the gross remuneration package — and that has led to significant growth in the affordable premium sector, particularly for cars such as Audi’s A6 and A8, BMW’s 5 series and the Mercedes-Benz E class.”

It is not simply a case of employers opting to be generous to their staff in providing them with better quality cars. Affordable premium cars often make better financial sense than less expensive models.

For one, they retain resale value better, says Dave Tuckett, BMW’s national corporate sales manager. “A number of factors have played a role in boosting BMW’s corporate sales figures, but one of the most important is probably the strong residual values that premium cars usually maintain,” says Mr Tuckett.

Chart - Premium fleet registrations by marque, 2015

“That, combined with current favourable interest rates, means leasing companies can get a good return on their purchases when contracts come to an end — a BMW X3, for example, has a residual value of 50 per cent of its original price after three years, unlike a ‘sub premium’ brand which would devalue far more sharply.”

Better cars now cost less over their lives too, he says: “Add in the fact that improvements in servicing technology have led to longer service intervals and reduced maintenance costs, and the relative outlay for a premium car is probably not a great deal more than it would have been for a more basic model 15 or 20 years ago.”

Indeed, adds Mr Tuckett, a company car scheme allowance of £300-£400 a month that might previously have paid for a Ford Mondeo or a Vauxhall Vectra can now bring employees within striking distance of something with more kudos — especially if an employee takes advantage of upgrade options which might allow them to add their own money to an existing package in order to secure a more prestigious vehicle.

Environmental awareness has had a surprisingly beneficial impact on the affordable premium fleet sector, since technological developments designed to reduce CO2 emissions have proved especially effective in some larger cars. This can lead to lower road tax and a reduction, in certain cases, of benefit-in-kind taxation to 5 per cent.

Such technological and financial arguments are persuading even the highest-priced manufacturers to enter the corporate car market.

Peter Denton, regional manager for Maserati in northern Europe, says the latest diesel-engined Ghibli and Quattroporte models have given the marque its first opportunity to present an offer to the fleet environment. “We established a fleet structure within the UK Maserati team a little more than two years ago and that required a new approach from within our dealer network that, previously, was used mainly to the retail supply channel,” says Mr Denton.

“We’re still developing the relationship with the fleet environment and will continue to do so over the coming years — but in 2015, 40 per cent of our business was generated through fleet channels.” Sir John’s executive would never have believed it.

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