The company reports that, like most lessors in the fleet sector, it is seeing an increase in requests from customers who want to lengthen their leases informally, although stresses that this is different from the last wave of contract renewals that occurred during the credit crunch.

Gary Killeen, Fleet Services Commercial Leader for GE Capital UK, said: ‘This is dissimilar to the contract extensions that occurred during the 2008 recession. Then, companies were battening down the hatches in response to an economic storm. The "renewal apathy" that we are seeing now is a milder form of caution prompted by much milder economic uncertainty.

‘However, this tendency to let a renewal slide in the belief that it will save a few pounds is often a false economy. If you do the maths, a new car is often the more cost effective choice,’ he added.

In support of its argument, GE Capital has released figures comparing a common fleet car – the new BMW320d – against its 2008 equivalent. These show that the new model is typically £150 per year cheaper for an employer and £435 per year for an employee based on a 4 year/80,000 mile cycle. 

Killeen continued: ‘When customers talk to us about potential contract extensions, one of the first things we do is sit down with them together with our Key Solutions consultancy team and conduct comprehensive analysis to look at the optimum solution.  As with the BMW 320d, we find that in many cases opting for a new car is cheaper for both employer and employee.

‘Much of this is due to the impact that new car technology is having when it comes to cutting fuel consumption and reducing CO2. This means that, across most of the company car market, opting for a carefully chosen new vehicle will be the cheaper option in many, many cases,’ he added.

Killeen added that a large part of the trend towards contract extensions appeared to come not from financial reasoning but was often based more on emotional factors.

He said: ‘It’s natural to believe that if you forego something you want you are helping minimise cost. Employers who stop replacing company cars and drivers who stay in their old car for longer feel as though they are making a sacrifice at a point in time when the economic winds feel a little chilly, whatever the underlying finances.’