The Nissan Almera is a popular choice among Bank of Ireland employees. The bank provides 830 company cars to its 9,000 retail staff. All senior and middle management are entitled to a car

Many company employees entitled to a car pick the Ford Mondeo. The model is popular with Intel which provides cars for 400 to 500 of its 3,600-strong workforce

Company cars account for more than 40 per cent of those sold in the State every year, according to the Society of the Irish Motor Industry (SIMI). It says that that figure is increasing due to the economic boom.

The organisation estimates that over the last decade there has been at least a 10 per cent rise in company car sales.

A significant number of firms lease company cars, which means the 40 per cent sales figure probably underestimates the true size of the market. "It is a very important part of the motor trade and car dealers are pushing hard to increase their share," says Mr Cyril McHugh, chief executive of SIMI.

Car dealers say that even up to five years ago, a company car was normally provided to upper management only. But in recent years they have become almost standard at middle-management level, particularly in larger firms.

Another trend is that larger firms are outsourcing their company car service to a fleet management company. The latter acts as an intermediary between the company and the car dealer and normally helps to sell the cars later on. It also handles all servicing and repairs.

According to dealers, few employees with salaries below £30,000 are given a company car, unless they are in a job which involves lots of travelling.

When larger firms buy cars they can avail of special commercial discounts. But these can generally only be obtained when more than 10 cars are purchased in a year, according to dealers.

Mr Sean Byrne of Belgard Motors, one of Dublin's largest car dealerships, says most company cars are valued at more than £17,000.

He says companies sometimes restrict more than the price of the car a surprising number will be looking for a car of a particular nationality.

A lot of European companies based in the Republic restrict their employees to cars made in their home country, according to dealers. Companies also commonly reduce costs by limiting the engine size of their fleet.

"The safety issue is now being taken very seriously by corporate clients who often insist that their employees come back with a car with almost every safety feature," says Mr Byrne. Mr Derek Brady, a spokesman for Annesley Motors in Dublin, says corporate clients seem to be increasing the money they give their employees for company cars. "The limits put on employees used to be very strict, but now there seems to be a little more scope," he says.

Mr Frank Kellett, transport manager with AIB, says one of the biggest problems is getting the employee the company car they want and getting it quickly. "A lot of garages have very long waiting lists, so somebody who wants a certain colour or feature will often have to wait a long time," he says.

Mr Kellett says that while AIB deals with several different garages, it looks most favourably upon those it has a "banking relationship with". One of the most crucial issues for anyone choosing to buy a company car is the level of benefit-in-kind (BIK) tax which must be paid. At present the tax represents 30 per cent of the original market value of the car, although the SIMI says it hopes this comes down in the next budget.

The original market value is the cost of the car when purchased new and includes Vehicle Registration Tax. However, certain factors can reduce the BIK bill.

For example, if the employee pays for all fuel, benefit-in-kind comes down by 4.5 per cent; if the employee pays for the insurance it reduces by 3 per cent; if employees pay for servicing and repairs it comes down by 3 per cent; and if the employee pays for all road tax, BIK is reduced by a further 1 per cent.

If a company car user travels more than 15,000 work-related miles per year, the tax is reduced on a sliding scale depending on the level of mileage involved.

There are other means of reducing BIK. If a company car user can prove that 70 per cent or more of working time is spent away from the place of work and more than 5,000 business miles per annum are travelled, a 20 per cent reduction in the tax is allowed.

To avail of this relief, the Revenue Commissioners requires: a daily record of the business the driver used the car for; details of distances travelled; nature of business transacted; and amount of time spent away from their place of work. All of this has to be vouched for by the employer.