Automatic gearboxes might have been a pricey luxury that slashed economy and hindered a car’s acceleration in the past, but they now make a wise fleet choice for many models – even cutting whole-life costs for some premium and performance models – often with the prospect of stronger residual values and better-than-manual fuel economy.

“The automatic gearbox presents a different proposition to the buyer today than it did 20 years ago,” states Tim Bearder, editor of Cap Black Book, which provides used car valuations. “Any stereotypical association with poor fuel consumption and sluggish gear changes have become a mark of the past,” he continues.

This means that many upmarket automatic models are also likely to sell more quickly and for a substantially higher amount than a manual version come defleeting time, potentially negating the initial price premium for the automatic gearbox.

Reflecting the proliferation of automatic gearboxes in the UK, 30.7% of new cars sold in 2015 featured a self-shifter, compared with 18.8% in 2006, according to the SMMT. Throw in the growth in the car market over the past decade and the number of new autos sold has jumped from 441,479 in 2006 to 808,342 last year (although figures from Cap show a steady 26-27% presence of automatics up to two, five and 10 years old on the used market).

Meanwhile, Autorola sales director Jon Mitchell reports a noticeable jump in the proportion of automatics coming up for sale in 2015 alone from around 17-19% at the start of the year to a peak of 23% in December. Contributing to their increased presence is the rising number of hybrid and plug-in vehicles – including the Toyota Prius – which feature standard-fit automatic gearboxes because these are better equipped to juggle power from a petrol or diesel engine and an electric motor, states Daren Wiseman, valuation services manager at auction firm Manheim.

The popularity of auto gearboxes in many fleet-friendly models can be seen in the fact that Mercedes E-class buyers, for instance, don’t even have the option of a manual gearbox. And even where drivers have the choice to change their own gears, many are now choosing to shell out extra for an auto ‘box; 65% of BMWs now come with an automatic gearbox according to Matt Bristow, the brand’s general manager, corporate sales. Following on from this, Bearder comments: “It’s not unusual for a prestige brand to run at 80-85% automatics”, although mainstream brands could see a figure of 10-15%.
Used BMW buyers seem to share the same appetite, with the eight-speed auto version of the fleet-favourite 520d SE chalking up a residual value that is more than 2% higher than manual, while being more economical (68.9mpg versus 65.7mpg), slotting into a lower benefit-in-kind band (19% compared with 20%) warranting lower monthly BIK costs – albeit by £1 – and even accelerating faster. While the automatic does cost slightly more overall – at 69.1p per mile compared with 68.6ppm – it’s a small enough hike to mean that the auto costs just £328 extra over three years.

Setting out the initial premium, Bearder says: “Typically you should expect to pay around £1450 when new for an automatic transmission and around £600 to £800 at three years old.” However, luxury vehicles could see a greater residual value increase than the cost in the first place, he adds. Supporting this, Alex Wright, managing director of Shoreham Vehicle Auctions, says that larger fleet models sell better when kitted out with an automatic gearbox  – often to the tune of £1000.

Autorola’s Mitchell goes a step further, saying that the differential between manual and automatic models sold by the company at the end of 2015 stood at around £3000, with optional automatics often costing £2000-£3000: “The figures suggest that an automatic gearbox doesn’t depreciate.” He claims that not only can automatic models secure higher used prices, but they can also be quicker to sell at auction, with autos on its books selling two to five days quicker than manuals between April and December.

Judging the level of the market where an automatic gearbox becomes a residual asset rather than just an extra cost is more difficult, however. Wright states: “For a vehicle similar in size to a BMW 3-series, buyers are still angling towards automatic gearboxes over manuals, but only slightly.”

Similarly, Rupert Pontin, head of valuations at Glass’s, sets out BMW’s mid-size executive model as being a key candidate for an automatic –  “certain cars almost need to have an auto ‘box from a resale perspective, such as the BMW 5-series” – along with other premium models such as the BMW 3-series, Mercedes C-class, Audi A6 and premium 4×4/SUV models, with the automatic premium for some upper medium cars standing at around 20% compared with a premium as low as 5% for a small car.

Wright continues: “For a medium-size vehicle in the Ford Focus segment, roughly seven out of 10 buyers still look for a vehicle with a manual gearbox,” although for small cars a manual gearbox is very desirable. Pontin, meanwhile, describes automatics on city cars as “neither important nor cost-effective”. However, he does point out that interest could be increasing slowly, “as younger drivers come to the market and have less desire to drive a manual”, adding that auto gearboxes on smaller cars now offer a much more refined driving experience than in the past. Despite this, Glass’s data states that current values for automatic small cars could even drop below manual equivalents, with the market for a used automatic Fiesta or Polo, for instance, being very small.

Not all automatic gearboxes are equally valuable to used buyers, claims Jason King, director of valuation services at KeeResources, with unconventional ‘CVT’ models (which typically hold the engine at one speed and vary the length of the gear, rather than revving the engine through distinct gears) being “often perceived less positively than ‘full auto'”, and clutchless manual and semi-automatic offerings potentially being worth less than a manual after three years. However, supporting the greater importance of automatics as the car size increases, he states that “premium brand models with manual gearboxes usually see a sharper reduction in value”.

According to Cap’s Bearder, “One example where the automatic has seen great success over the manual is Porsche’s PDK gearbox, which not only offers a distinct increase in comfort but has improved acceleration over the manual and better fuel consumption.” More than this, the automatic also makes more financial sense, he continues.

Fleet drivers lucky enough to be considering the new turbocharged Porsche 911 can save 1.7p per mile by opting for the PDK version, with the £2388 P11D penalty offset by £943 in fuel savings (over 60,000 miles), £1285 in lower National Insurance costs, and £315 in reduced tax. It’s a similar story for the Jaguar F-type 3.0 automatic, which costs 2.1ppm less than its manual sibling.

Despite automatic gearboxes typically carrying a substantial price premium over manual counterparts, models from the upper medium BMW 3-series to premium 4x4s and sports cars such as the Porsche 911 may gain a much higher price when fitted with a self-shifter, often with lower running costs along the way. Even if they do not always save fleets money, automatics could be a wise choice on larger models, typically selling faster than manual versions.

Though Jason King states that “it is unlikely that the UK will mimic the USA in automatic versions becoming the norm”, Bearder from Cap expects the ratio of automatic models on the used market to increase, with a greater used value uplift.

Tailor your gearbox to your driving

Whether an automatic gearbox makes financial sense for a company car depends completely on the car class and its intended use, according to Simon Henstock, BCA’s UK chief operating officer, remarketing. The more expensive and well-equipped a model is, the better the specification is expect to be, says the remarketing boss.

“If your fleet mainly consists of small city cars working in urban conditions – a city estate agent, for example – then an auto gearbox might be considered an unnecessary extravagance”, he states. “However, this makes small automatics quite scarce in the wholesale arena and therefore desirable for trade buyers as there will be a steady demand for those few models that do reach the marketplace.”

Similarly, managers overseeing a fleet of larger cars may want to encourage drivers to opt for automatic models rather than going for a manual equivalent that could have lower P11D and associated benefit-in-kind costs. “If the fleet consists primarily of upper-medium and executive models doing lots of motorway miles then – as a fleet manager – you want to keep your drivers comfortable and alert on long journeys, and an automatic gearbox would be a good choice as part of an overall higher specification package,” claims Henstock.

Justifying opting for automatic models that could cost more in BIK and National Insurance costs – partly thanks to the higher purchase price – is that an auto gearbox can help significantly at resale time, selling for a higher figure, Henstock continues, with lower-specification executive models proving less popular than automatic equivalents.

This means that not only can much of the additional cost of the automatic be repaid in the higher resale price, but the car might also be quicker to sell in the first place, freeing up cash sooner and avoiding any unexpected costs incurred by it failing to sell first time.