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Decline in company car popularity 'could be reversed'

A new report has argued that businesses need to rethink their strategies in order to reverse the decline in the number of company cars seen over the past three years.

The company car is losing popularity because of cash-based alternative offers, the report from business advisory firm Deloitte argues.

Reforms in company car tax are believed to be behind the trend, but this could be reversed as the impact of health and safety legislation relating to work related driving starts to take effect amongst businesses.

"In the future, the company car will not be confined to the scrapyard," said Alison Chapman, head of automotive tax at Deloitte.

"The Government has made it clear that it wants the company car to remain a key part of the corporate landscape as it steers businesses and drivers towards choosing the most environmentally-friendly vehicles available."

Ms Chapman added that a number of factors were likely to influence the future of the company car, including congestion charging, fuel prices, vehicle taxation and environmental issues.

The costs of adequate fleet insurance will also no doubt be a factor.