NEARLY 40% of all cars registered this year have been diesel-engined.

Little wonder.

Today’s diesels offer refinement, smooth driving characteristics, and low business car driver benefit-in-kind tax.

As well as the traditional virtue of good fuel economy.

But if your business is considering a new car, do some sums before you choose.

Just because everyone appears to be going diesel, it doesn’t make diesel an automatic business choice.

Diesels usually cost more than their equivalent petrol counterparts. That means additional finance for your purchase or more on the contract hire lease.

The tax position of diesels may also be more expensive, especially as they all attract a 3% diesel surcharge despite their low carbon emissions. And that will also mean higher National Insurance contributions for your business.

Take the recently revised BMW 5-series range.

The fuel economy of the 525i petrol model is 38.2mpg. The diesel 525d is 45.6mpg – only 7.4mpg in it. Yet there’s a £500 difference in the P11D purchase price.

“The news for small businesses is that they don’t need to stretch to the more expensive diesel model,” commented Chris Brownridge, corporate sales operations manager, BMW.

“Bigger companies might have all-diesel policies, but smaller businesses can be more flexible in their approach.”

Here’s a comparison that makes the point.

BMW 525i 3.0 SE 4dr, P11D price £30,345

• Lease £535; NI £71; mpg 38.2; tax band 22%; BiK tax £223

BMW 525d 3.0d SE 4dr, P11D price £30,845

• Lease £552; NI £76; mpg 45.6; tax band 23%; BiK tax £236

Over three years a business would save L792 on the lease cost and National Insurance contributions of the BMW 525i; a 40% tax payer would save £156 in benefit-in-kind just in the first year.

It’s not just big executive saloons where this is true. Petrol hatchbacks can also offer savings to small businesses.

Honda Civic 1.8i VTEC Sport 5dr, P11D price £15,537

• Lease £298; NI £30; mpg 42.8; tax band 18%; BiK tax £93

Honda Civic 2.2 CTDi Sport 5dr, P11D price £16,802

• Lease £319; NI £32; mpg 53.3; tax band 18%; BiK tax £101

Over three years a business would save £828 on the lease cost and National Insurance contributions of the Honda Civic 1.8i; a 40% tax payer would save £96 in benefit-in-kind in the first year alone.

The point here is that, as with any business proposition, it needs planning.

The sums might change of course for businesses covering high mileages where economy would be a factor.

So get your dealer’s business sales manager, your contract hire company’s sales representative, or your car broker, to take you through all the costs before your business decides on its next car.

Further information

• The quotations used for illustration are monthly costs based on a 36-month/30,000 mile contract hire agreement with maintenance, with a driver paying tax at the 40% rate. Source: HSBC DriverQuote.

• Go to the Business Car Manager road test section for the latest road tests by clicking here: www.businessmotoring.co.uk.