Fleet Car: Honey, I shrunk the company car

Fuel prices, the environment, taxation - the reasons to swap your jumbo gas-guzzler for a leaner, greener and more modestly proportioned set of wheels have never been more compelling. Choose wisely, says STEVE FOWLER, and you needn't sacrifice much in the way of status, style or comfort, either.

Last Updated: 09 Oct 2013

Could you live with a smaller car? Sharon Pither was rather fond of her Honda CR-V, but when the time came to change it, she found it increasingly difficult to justify her choice of a 4x4 when there was just her, the dog and occasionally her partner on board. With fuel costs unlikely to drop, spending £1.19 on every litre of petrol and getting a miserable 30 miles per gallon prompted the healthcare manager from Buckinghamshire to rethink her choice of car.

'Much as I love my CR-V, I'm heading back to my Honda dealer to get a new Jazz,' says Pither. 'In truth, there's not an awful lot in it in terms of space, and getting 50mpg is incredibly appealing.'

Sharon is not alone. Sales of small cars like the Jazz have been increasing steadily. According to figures from the Society of Motor Manufacturers and Traders, sales of superminis rose 27.4% year-on-year in May. Some analysts reckon that sales of 4x4s fell by a similar amount.

So what's encouraging the switch? Has downsizing become trendy, or has the car buyer caught the bug of environmental awareness?

Research carried out by Dr Jillian Anable of Aberdeen University, Dr Ben Lane of Ecolane and Nick Banks of Sustain on behalf of the Low Carbon Vehicle Partnership shows that carbon emissions and environmental awareness generally have no influence on car choice. Motorists are aware of carbon emissions only in so far as they are linked to tax liability, yet buyers are more concerned with the cost of filling their fuel tank - they struggled even to come to terms with mpg comparisons.

That's certainly the case for private buyers, but if a company car is part of your package, you'll have been alerted to the car-tax benefits of a low-CO2 car a long time ago. And as each year passes, so the company car taxation regulations take a dimmer view of your car's CO2 output. What last year fell into the 20% company car tax bracket will this year cost you 21% of your car's P11D value.

Don't expect the pressure to ease off, either. The 'CO2 effect' on the number of company-sourced cars has been dramatic. There are fewer around as employees choose a cash option instead, while the CO2 count of the average fleet has taken a tumble.

Demand among employees to make cash-saving options and from employers to save money on their fleet is huge. A survey by Hitachi Capital revealed that reducing overall environmental impact was a concern to 85% of organisations questioned.

Meanwhile, a survey for car supermarket Motorpoint revealed that two-thirds of car-buyers are planning to downsize. Respondents confirmed that the main reason for buying a smaller car was to reduce high fuel prices, but slower depreciation was also high on the list. Says Motorpoint managing director David Shelton: 'These figures show a potentially massive shift of about 20 million people into smaller vehicles.'

Given that statistic, it's no surprise that carmakers are falling over themselves to bring smaller, more-fuel-efficient and greener cars to market - especially some premium brands you'd normally associate with considerably larger vehicles.

Mercedes led the way in 1997 when it introduced its innovative A-Class, a car that used clever engineering to allow four people to travel in big-car comfort and safety in a vehicle no longer than a Ford Ka. Audi followed in 2000 with its lightweight and ultra-fuel-efficient, all-aluminium A2. Arguably, this was a car ahead of its time. Audi certainly thought so and ditched it in 2005, choosing that year to preview its new full-size 4x4, the Q7. Oops!

In 2010, Audi returns to the small-car fold with the A1, while sales of its A3 hatchback have also grown steadily in recent years.

BMW's small 1 Series was launched in 2004 and, again, sales continue to grow - especially as it has expanded the range to include a coupe and a convertible, all of which benefit from BMW's award-winning, fuel-saving technology, Efficient Dynamics.

But it's not only customer demand that is making manufacturers downsize their ranges. A very large stick is about to be wielded by the European Commission.

The EC has passed legislation stating that the average CO2 emissions from new cars sold from 2012 should be limited to 130 g/km. It's the responsibility of each manufacturer to ensure that the average emissions from its new passenger cars do not exceed that target. Fine if you're Fiat or Ford and you sell mostly small cars. If you're someone like Land Rover or Porsche and none of your 2008 line-up gets anywhere near to 130 g/km, you'd better get your skates on and start thinking about green technology.

The alternative? Manufacturers can form a pool to help bring their average CO2 down - think of it as a form of carbon trading. Fiat may well become a very popular company. Or the companies with higher-emitting vehicles could take it on the chin and pay a fine.

The calculation is the only bit that's painless: it's excess emissions multiplied by the number of vehicles registered, multiplied by the fine, which for 2012 will be EUR20 per g/km. That rises to EUR95 per g/km in 2015. Ouch.

No surprise, then, that Land Rover has said it will have 4x4s on sale in about 10 years' time that emit less than 100g/km of CO2. At the moment, that's the territory of the greenest (and dullest) of superminis.

Says Land Rover's managing director Phil Popham: 'There are always shifting trends in the marketplace, and all manufacturers must ensure they have a strong product line-up that remains desirable to customers, despite these conditions.

'However, our research suggests that consumer needs are not really changing, but that they do expect manufacturers to provide them with the vehicles they require, while ensuring that they are as sustainable as they can be. If you need to carry seven people now or tow or carry things, this is unlikely to change in the future.

'Land Rover's focus is to improve the emissions of our vehicles while maintaining our USP - breadth of capability. We've already made great strides towards this, improving the fuel economy and reducing emissions of all our current vehicles. We are investing significant resource to continue the improvement of our overall environmental performance and are committed to reducing carbon emissions by over 20% by 2012.

'Our LRX (hybrid) concept shows a clear design intent for the future and the potential movement into a new segment,' concludes Popham, 'and gives us the opportunity to showcase our radical new e-Terrain (fuel economy) technologies, which will be applicable to all our cars in the future.'

So, back to the original question. Could you live with a smaller car? In June, What Car? gave five car-owners something for the weekend, just to see how they'd cope with the reality of downsizing.

The results were mixed. In spite of an average annual saving of £1,275 in running costs, two of the five owners didn't want to downsize.

Retired police office John Johnston from Glasgow tried a Mercede A-Class instead of his C-Class estate. He appreciated the space in the A-Class, but overall declared himself 'impressed, but not converted'.

Investment banker Sarah Pavitt, along with her husband Edd, tried swapping their Nissan Murano 4x4 for a smaller car from the same stable, the Qashqai. Although the Qashqai would save them £826 a year in fuel alone, the Pavitts felt that this alternative 'lacked the quality we're used to'.

However, Lucy Delmont was 'definitely won over' when she tried a Honda Jazz instead of her Ford Mondeo. Her kids enjoyed the view out, while her musician husband was amazed at the space inside - enough for a double bass!

Ophthalmic optician Gaynor Harvey was also impressed when she tried a supermini, Vauxhall's Corsa, instead of her Ford Focus estate: 'The Corsa was a revelation - I fell in love with it,' she said. She liked the looks, space and comfort on the motorway.

Safety is a big issue for anyone about to downsize, especially with a family vehicle. Alan Sherry, MD of a design agency, swapped his Chrysler Grand Voyager for a Volkswagen Golf. He said: 'When our children were younger, my wife Sue and I decided bigger was better, for safety reasons. Until now, I didn't think smaller cars would give me that feeling of protection, but when I was told our Voyager had a two-star passenger NCAP safety rating and the Golf had five, I was surprised.'

It's not only new small cars that are proving a temptation for buyers; estate cars are making a comeback, too. Today's estate is not about squeezing every last inch of space out of a square box tacked onto the back of a family saloon. Instead, makers talk more about clever storage solutions and swoopy style, rather than outright capacity.

The estate car, it seems, has been reinvented for the type of buyer who suffers from what marketing types call a 'lifestyle'. Expect to see images of jet skis and mountain bikes in advertisements for estate cars, just as that same kit was used to promote 4x4s a few years ago.

Meanwhile, some little superminis are receiving a wash-and-brush-up and are being touted as premium minis. The Vauxhall Corsa is the current pick of the bunch. In spite of the badge, interior quality is up there with the big prestige brands, while refinement, comfort and space are more akin to small family cars than a supermini.

Fiat's 500 is another revival that's taken the market by storm. Sure, it's little more than a Fiat Panda underneath, but the combination of chic retro styling, perky performance and tempting prices have sent buyers rushing to Fiat dealers (who are normally worth avoiding).

BMW-owned Mini has been making hay in this era of downsizing. A blink-and-you'll-miss-it refresh of the standard car was followed by an intriguing development, the launch of a Clubman 'estate' version. Further proof that estates are no longer about load space, it's simply a Mini with cute rear doors, a weird side door and a little more room. It's also just about the only example around of a brand launching a new, larger car! Expect further Mini developments soon; these are rumoured to include a Mini 4x4.

While full-size off-roaders are the kiss of death these days, the number of greener small 4x4s is on the up. Greenest of the lot is the new Ford Kuga. As if anyone was ever crying out for a Ford 4x4, we got it anyway. And it's quite good.

Land Rover's Freelander is a top seller, and just as the criticism of the large 4x4 seems as though it might hit sales, along comes a version with fuel-saving stop/start technology. Aware that buyers are shying away from big 4x4s, Range Rover has made a smart move in offering smaller ones with greener engines.

Then there are cars like the Nissan Qashqai that look like 4x4s but aren't. Expect similar models to arrive from Kia and Citroen that pull off the same trick.

Greener engine technology could well be the saviour of the larger car. Land Rover and others are working on hybrid power, mating diesel engines with electric motors to provide power without the penalties. Volkswagen is taking comparable steps: hybrid power should come to the Audi Q7 in a couple of years.

Battery innovations will play a big part in our motoring lives in the coming years, too, as technology allows greater range from shorter charges and smaller, lighter batteries.

Battery-only power will be limited to the smallest of vehicles, although they'll be proper cars rather than quadricycles like the G-Wiz. Lithium-ion batteries will be commonplace in the next generation of hybrids, which will also include plug-in models that can be recharged from the mains, extending the range and efficiency of cars like the Prius.

You could even find yourself powering your plasma from your car - plug-in technology might allow you to take power that's stored in your car at peak times, while the car can take its power from the grid at night when demand (and therefore the cost) is low.

More immediate is the rise of the high-powered small engine. A 1.4-litre engine featuring turbocharging and supercharging is already available in the VW Tiguan 4x4 and Touran MPV, and will soon be seen in the Scirocco sports coupe. Ignore the badge on the back and you'd think you were driving a 2.0-litre car, such is the performance and refinement. Yet the economy and tax bill is more 1.4 than 2.0.

Technology may mean that downsizing is a short-lived phenomenon, as larger cars begin to get more efficient and going large once again becomes popular.

However, as much as the economy, recession and fuel prices have a bearing on how and what we buy, a great deal of the future depends on the legislators' focus. And for that, we'd need a very large crystal ball.


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