With the UK economy finally back to pre-recessionary levels, there's some unexpected dynamics developing in the new car market. Private demand for new cars is at its highest level for several years and the fleet market has powered itself out of the downturn, but it's the small business sector which is seeing the fastest rate of growth.

Small businesses, as classified by the Society of Motor Manufacturers and Traders, are those running up to 25 cars and in the first six months of the year sales grew by 21% to 61,500. It might still be by far and away the smallest market sector, with total sales more or less evenly split between private and fleet, but it is a dynamic one increasingly targeted by car manufacturers and their dealers.

It’s easy to see why. Last October the Office of National Statistics published its annual review of the make-up of UK plc and found the SME sector, defined as those employing from 0-249 staff, had grown significantly year-on-year, accounting for 4.9 million firms employing 14.4 million people and with an estimated combined turnover of £1.6bn. Collectively SMEs accounted for over half of all employment in the UK and almost half of all business turnover.

However, the dilemma facing many SMEs, especially those at the smaller end, is they do not see their mobility requirements as a business issue; fleets, after all, are operated by bigger organisations. Consequently many are missing out on favourable and more tax-efficient car financing deals.

This theme is picked up by John Hughes, a director of Mann Island Finance, the specialist broker whose client base is made up of around 2,500 car dealers.

Hughes has urged more dealers to focus on the specific needs of SMEs in their vicinity, pointing out that many are still struggling to raise finance from traditional lenders for big-ticket items such as cars. For many dealers and SMEs there’s a cultural gap, with both sides not knowing how to benefit from an ongoing business relationship.

‘SMEs are often concerned about getting finance and the right finance guidance, there is a wider continuing shortage of SME finance, and dealers who can frequently access finance for their customers frequently do not feel confident in their capacity to offer the full range of finance facilities.

‘Dealers need to bridge this gap and central to this is creating, or bringing in, the right level of expertise and seeing each sale as far more than a single standalone transaction, which is often not the case.’

Hughes pointed out that even though the economy is improving, SMEs are still often struggling to access finance from traditional lenders, a situation he said is exacerbated by media headlines suggesting that finance remains restricted.

‘The supposedly difficult finance perception is supported by the parliamentary Public Accounts Committee’s criticism of the Government’s lack of support for SMEs and campaigning by the Federation of Small Businesses. Initiatives such as the Funding for Lending scheme and the Enterprise Finance Guarantee scheme have commonly proved of little use for vehicle purchasing.’

Consequently some SMEs will buy their vehicles as retail customers and not reap the tax benefits associated with fleet funding. Hughes believes dealers have a role to play here.

‘Dealers need to be far more proactive in promoting the availability of SME finance for new and used cars and LCVs. The SME market is growing with a trend towards smaller fleets of three to 20 vehicles. This is territory that dealers can make their own.’

Elsewhere this month, Mitsubishi Motors has come up with a novel solution to address the age-old issue of how best to tackle user-choosers masquerading as private buyers in order to secure a test drive of their next company car.

The brand has trained members of its national dealer staff to become Company Car Specialists in order to do away with the subterfuge and guide user-choosers enquiring about their next car.

The move was prompted by demand for the new company car tax-friendly Outlander Plug-in Hybrid Electric Vehicle (PHEV). Most of the Mitsubishi dealer network is already signed up to the scheme, with participating outlets identified on its website. Other manufacturers will be quietly kicking themselves for not bringing this scheme to the market first.