Driving a harder bargain abroad

So what's a company to do? The choices have never been more bewildering. Buy at your local dealer and pay more? Buy abroad and try your luck with a Dutch salesman? Or wait and hope the problem will go away? The good news for British businesses is that pricing confusion has belatedly forced reluctant UK manufacturers and dealers to offer bigger discounts.

Ironically, there's never been a better time to buy on your doorstep. Since December, talk of cheap foreign imports has slowly brought prices tumbling down. Thousands of pounds have been lopped off by all sorts of companies, from Mitsubishi (up to £3600) and Alfa Romeo (£5000) to Vauxhall (£2900) and even Porsche (£11 000), to lure Brits back to local showrooms. The cheapest model of Britain's best-selling company car, the Ford Focus, has dropped in price from £13 000 to £11 495 in less than 12 months.

The first rule of acquiring new cars or vans is to check the cheapest price available locally. Many manufacturers – even traditionally discount-wary BMW – have increased dealer margins to pep up sales. Make it clear you want to haggle, insist that you may look elsewhere and the price will drop. If you're buying in bulk, speak to the dealer's business sales specialist or, for big orders, a central fleet department, which can negotiate huge volume discounts.

Buying abroad

But the chances are you've heard of the apparent savings available abroad. It's true: businesses chasing the best price can save a small fortune by sourcing vehicles from the Continent. The discrepancies in pricing are largely down to big differences in car tax around Europe; manufacturers effectively subsidise cars in high-tax countries such as Denmark. Currently, you pay a Danish dealer a cheap pre-tax price and, on return to the UK, pay UK duty on that lower price.

Whereas buying at home involves a trip to the nearest dealer, Continental shopping trips tend to involve a ferry crossing at the least. But before you reach for your passport, research the vehicles you're interested in. Import guides available at newsagents and websites will tell you where to buy which vehicles at the cheapest prices. Once you've established the list prices in different countries, phoning Continental dealers will show which are willing to help. More and more foreign garages are cottoning on to Brits wanting to buy abroad, and many in popular regions, such as Calais, will have English-speaking staff on hand who know all the paperwork.

Red tape can threaten to strangle the unwary importer. You will need to pay deposits in the local currency, pick up documents and register on return (see "10 steps to importing a car"). Another problem is making sure you get a car matching UK specifications. If not, it may be difficult to resell in three years' time, warns Mark Norman from used-car-pricing expert CAP. "Buyers should make sure they get the same equipment as on a British car, otherwise it might be worth less when it comes to sell," he says.

There are also hidden costs in importing cars: foreign travel, ferry tickets, hotel stays, insuring the car for the return journey – even those foreign phone calls add up. Import agents advertising in the motoring press may remove much of the hassle, but they will also take a slice of the profits you set out to save in the first place.

Leasing or short-term hire?

Another option when acquiring vehicles, and one growing in popularity, is to not buy at all. More and more companies are leasing or hiring their cars and vans, removing at a stroke much of the pain of running vehicles. The most popular way is to contract hire vehicles over a set period, say three years or 60000 miles for cars, longer for vans. The leasing firm buys the vehicles and the client never owns the vehicle.

Lex Vehicle Leasing runs over 94000 vehicles for UK businesses keen to pay a monthly lease rate in return for not having to worry about depreciation, servicing costs or disposal at the end of the vehicle's life. Competition is fierce and many contract hire firms are merging as compet- ition hots up, driving down lease rates. Be sure to ring around a number of different leasing experts and remember: the more vehicles you lease, the cheaper the rates.

Typical monthly rates for leasing popular models include £240 for a Vauxhall Astra 1.6, £304 for a Ford Mondeo 1.8 and £360 for a panel van like the new Mercedes Sprinter diesel. Monthly rates will vary depending on the length of the lease period, and options such as full maintenance.

For companies with variable transport needs, short-term hire is an increasingly popular option. If you have a seasonal demand for extra vans or cars, it makes little sense to splash out on a huge fleet that may be redundant for half the year.

The Easy group behind budget airline easyJet has recently entered the car hire industry with its online-only service, easyrentacar.com, promising a low-cost service with rates slashed to as low as £9 a day for a Mercedes A-class. It argues that such low costs mean companies can hire cars when they need them and not worry about the complexities of fleet management.

Easy spokesman James Rothnie said: "We think more and more businesses, particularly in big cities, need vehicles only occasionally. Short-term hire – paying for cars only when you use them – will become very popular."

Conclusion

Short-term hire could be the fast food of the vehicle market, but unless you have only very occasional trips, most companies will be better off leasing vehicles. It's affordable, removes much of the risk and doesn't tie up a lot of capital in a fleet. However, many companies still prefer total control over their vehicles – and outright purchase may remain the cheapest way to run vehicles if you run them for long periods and very high mileages.

Substantial discounts may be available abroad, but do your research and remember the biggest savings on the Continent are available on premium models rather than bread-and-butter Fords and Vauxhalls. But in the current climate, UK dealers are increasingly matching Euro levels. Prices are falling and are set to be brought into line further by trade secretary Stephen Byers.

Useful contacts

• British Independent Motor Traders Association (BIMTA) Lever House, 9 Palmyra Square, Warrington WA1 1BL, tel 01925 244120

• Consumers' Association www.carbusters.com, customer services 0870 0133633, sales 0870 0133833 Website set up to help British car buyers find a new car in Europe and import it to the UK

• Customs & Excise www.hmce.gov.uk

• Department of the Environment, Transport and the Regions (DETR) www.detr.gov.uk Look for "How to permanently import your car into Great Britain", document PI-3

• European Commission www.europa.eu.int/comm Look for "Car price differentials within the European Union"