THE CO2 impact of company cars can dramatically reduce business car costs. But how far should you go in pursuing a green agenda? Business Car Manager motor finance writer Brian Rogerson files this special report. TOYOTA, along with EDF Energy, is embarking on a ground-breaking three-year lease programme that will bring ultra-low emissions plug-in hybrid vehicle technology to London and a number of company car fleets.

The aim is to demonstrate the fuel efficiency, low emissions, cost savings and the everyday practicality that re-chargeable hybrid power systems can deliver.

So what, you might say?

True, for many small businesses, this is future tech that can wait until it’s proven. By other people. It’s a pragmatic approach that’s worked well for small businesses in the past.

The news of this low-CO2 technology event, however, coincides with two conflicting pieces of research. The first from GE Capital says small businesses are largely ignoring the benefits of using ‘green’ vehicles and are now less focused on reducing their carbon emissions than they were prior to the recession.

Is this surprising? Perhaps not, as John Jenkins, chief executive of GE Capital, notes: “There is no doubt that the recession has had a major impact on small businesses’ attitudes and strategies towards green investments. Many firms may have chosen to defer or halt any further outlay into energy and CO2 efficient equipment, preferring to consolidate their financial positions instead.”

It’s a theme we see picked up in the second report, from lease and fuel card company Arval, that suggests greener business cars are on the wishlist of small businesses – such as electric cars and plug-in hybrids – even if they are not the stuff of the immediate future. Nevertheless, there will be a 13% increase of SMEs in hybrid models by 2013, the report notes.

Here’s Arval’s Mike Waters on the subject: “Small businesses want to follow a greener agenda in the future. There is however more work that needs to be done to provide effective communication to SMEs regarding the viability and operational effectiveness of alternative engine and fuel technology.”

Mr Waters, the company’s director of market insight, goes on to add with some insight: “With favourable taxation for sub 120g/km vehicles, this is not a renaissance of interest in green issues because the issue has never gone away, despite the recession.”

Green and cost are two sides of the same coin

With small companies under pressure to find ways to cut costs, how can businesses reconcile their company car operations with such demands in the slow climb out of recession? And before some of this ultra-low CO2 emission car technology arrives?

Company cars are directly exposed to fossil fuel prices and carbon taxes so, to that extent, ‘cost’ and ‘green’ are two sides of the same coin.

There is ample evidence that, for small businesses, bringing down their company cars’ CO2 emissions can limit their firms’ exposure to tax increases and the volatility in fuel prices.

The days are fast disappearing when the best criteria to acquiring a company car consisted of achieving the keenest price reduction at the dealer’s showroom – or the cheapest leasing monthly rental.

Getting a specialist funding source, or local dealer business adviser, to provide a wholelife cycle ‘mobility’ cost, tailored to your company’s needs, is increasingly becoming the 21st century way of acquiring company cars.

Fleet Alliance comment on company car acquisition

Martin Brown, managing director of business car solutions provider, Fleet Alliance, comments: “The article highlights a fundamental flaw that still exists in the vehicle purchasing decisions for some small businesses – namely going to a dealer and getting a ‘deal’ or surfing the web for an offer.

“As is becoming increasingly apparent for businesses – rental/purchase price are not everything, and indeed analysing the total cost of ownership (or whole life cost) is absolutely essential.

“A smart purchase would involve dialogue with a modern fleet solutions business who will assess the following:

• Rental cost
• Fuel economy
• Insurance
• National Insurance
• Expensive vehicle lease rental restriction
• CO2 level

“These will give the whole life cost required. Avoid the deals and think long term!”