By Ross Williams
Alpha Contracts Leasing Ltd
A LARGE corporate customer emailed the other day to say they were employing a new Sales Director and asked for the cost of leasing his choice of car. An everyday occurrence at this end. The driver concerned will be doing in excess of 30,000 miles per annum and his choice of car was a petrol engine German marque.
I queried the choice straight away, asking whether he had intended it to be petrol, and not diesel, considering the annual miles travelled. He said he wanted the petrol but we agreed I would calculate the equivalent diesel engine version of the car to show the difference. Of course I was thinking that the diesel would prove to be more effective. You can probably already guess where this is going…
When calculating the leasing cost the diesel engine version has a list price that is more than £3,000 more expensive, which didn’t help my case, and the monthly rental was, accordingly, nearly £50 more expensive per month. I was already feeling the pressure! Never mind I thought, the fuel consumption will save me.
It didn’t, after calculating the fuel cost (and the diesel car had a consumption figure over 20 per cent better than the petrol car) the total cost of leasing, servicing and fuelling the diesel car was less than £200 cheaper than the petrol across three years.
Added to that the personal tax cost to the driver on BIK was about 10 per cent lower for the petrol car than the diesel car. A percentage that will only increase as the government continue to tax the diesel engine even more punitively over the next few years. I was a beaten man, my reputation in tatters!
What did this prove? Well despite 30 years in the business it shows that the constantly shifting sands of technology, combined with the changing political will of successive Chancellors of the Exchequer means that we cannot make assumptions any more. Every deal needs to be measured on its own merits and the customer advised accordingly. Which, as a professional organisation, the team at Alpha Contracts try to do with every client.
I did say that I would talk more about WLTP this month, I changed my mind as you can see. However, there is an indication that, until the situation is clearer, all the data is confirmed and HMG finally decide their BIK tax rates, that increasing numbers of clients are deciding not to change their cars as they cannot make informed decisions, even with good advice as per the example above! Companies are extending current contracts as the costs on those are certain and decisions are being postponed, which isn’t good for the economy, well done HMG.
For advice on all car and van funding options, speak to one of the team at Alpha Contracts Leasing and we can provide advice about your choices, where each type of fuel fits in your fleet and how the Benefit in Kind tax rules affect your choice of vehicle.
Call us on 01604 756620.
Safe motoring and enjoy the summer