Business Car Manager: Editor’s Blog

THE emergency budget is on June 22. And we’re being given a fairly good softening up process by the coalition government as to how bad it will be to get the nation out of the smelly stuff in which it is deeply mired.

It’s going to hurt. Badly, in all probability.

So after the trauma of the recession which affected so many small businesses, there’s more struggle, greater challenges ahead. As, indeed, there will be for the public sector, too.

I was musing on this while driving down to the New Forest yesterday. What, for instance, would the effect of 20% VAT have? Say on fuel, for example, already highly expensive?

Clearly, costs will go up, placing even greater emphasis on fuel efficient business car choices: the combination of tightening CO2 company car taxes and increasing fuel prices is pushing choices only one way.

It will also put a higher value on efficient driving. On the way to the New Forest I averaged 54.3mpg – above my Audi’s official average. I think that’s highly impressive for a large executive saloon, and demonstrates what can be achieved with clever engineering and, I hope, some efficient driving techniques I’ve garnered from the excellent Energy Saving Trust programme – available to businesses for just £15 per head.

My overall average in the Audi A6 TDIe, by the way, remains at 42.1mpg.

I was on my way to drive the new Porsche Cayenne. Porsche and SUV: two words that hardly conjure up images of fuel efficiency; and yet here we have a new Porsche Cayenne that’s also available as a hybrid, the first Porsche production car with such a drivetrain.

I asked Porsche boss Andy Goss what effect a 20% VAT rate would have on his customers. “To be honest, I just wish they’d get it over and done with,” Andy explained. “Give us the bad news, and let us get on with life. In fact, given the careful management of the bad news messages as we head towards the emergency budget, I suspect most of the population won’t be surprised at what they hear.”

And what about 20% VAT on fuel, I wondered? Andy again: “I don’t think it will make much difference. Fuel is sold in litres yet we think in miles per gallon, so the two don’t compute in most peoples’ minds. I doubt if the majority of people know how much a gallon of fuel costs today. So I think it will wash through.”

I think that’s a fairly shrewd summary of any VAT increase. We might wince at the cost of filling up, but it will be accepted. Nevertheless for businesses, controlling these costs is going to be paramount.

Creeping expenses erode profitability.

And for car makers, the effect of increasing fuel prices – driven by a reducing resource – means introducing more fuel efficient models. Like the new Porsche Cayenne hybrid.

Later that evening I had dinner with Wayne Darley, Porsche’s communications and product manager. I’ve known Wayne for many years, from his time at Hyundai, then BMW, and latterly at Porsche where he has been working for the last 10 years.

Wayne’s clearly pleased with the new Cayenne, its new styling and far better quality interior. In fact, Wayne explained, the Porsche Cayenne has been the most successful car in Porsche’s history: 280,000 cars sold worldwide.

Cayenne Mk1 was launched back in 2003. It was specifically designed to keep Porsche buyers within the brand. “I remember looking at the customer retention data before we launched the original Cayenne,” explained Wayne.

“We had two distinct groups: 25-35 year olds, usually in a Boxster; and 55 and above, usually in a 911. Cayenne bridges that gap when our buyers have a family. There is tremendous loyalty to the Porsche brand, but before Cayenne these people were having to disappear to another brand because we had nothing for them.”

The Cayenne has plenty of business appeal too. It’s premium, prestigious, and comes with a dose of practicality. “We’ve already had 1100 orders for the Cayenne,” Wayne continued. “And 25% of these are definite business sales; and although the rest are classified as retail, I suspect that many will be bought with company money.”

I suspect so, too. In fact, I wondered, how many were going for the new hybrid Porsche? “It’s certainly for the early adopters,” explained Wayne, “those that like the idea of green technology. But reaction has been good. It gives you V8 performance with V6 economy. While the diesel model is clearly the best for business users, we’ve had 15% of the orders for the hybrid. It’s proving the second most popular after the diesel.”

It’s an interesting car the hybrid Cayenne. It has a Jeckyll and Hyde character. Drive it gently and you can experience battery only motivation with zero emissions; but drive it more aggressively, and allied to Porsche’s PASM optional suspension system, the car turns into a sports car with a barking V6 and surprising levels of precision.

Wayne also suggested we will see the hybrid drivetrain in the Panamera four-door sports car, which with its light weight, will deliver economy the like of which we have not seen from Porsche before. And likely to have huge appeal to business owners and entrepreneurs.

That’s for later, though. Back to the Cayenne hybrid, which is the cleanest of the new models, with CO2 emissions of 193g/km compared to the diesel’s 195g/km. However, the diesel beats it on average mpg with economy of 38.2, compared to the hybrid’s 34.4mpg. But there again, here we are talking about a large SUV that does nearly 40mpg. A Porsche at that. How things move on.

The new Porsche Cayenne should do well – and with a waiting time of four months already, looks a likely success – 20% VAT or not.