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The cost of vehicle repairs has risen by 40% from 2018 to 2022, according to analysis of extended warranty claims paid over five years by Intelligent Motoring. 

The average cost of warranty claims rose 37% between July and December 2022.

Covid-19, followed by soaring energy prices and continuing supply chain issues have continued to challenge the automotive sector.

However, Intelligent Motoring’s study of over 12,000 warranty claims reveals that rising repair costs began accelerating during the economic uncertainty that followed the UK’s Brexit referendum in June 2016.

In the past five years, warranty claims costs increased the most during 2018 to 2019, with the average claim cost rising 19%, while 2020-2021 saw a 10% increase.

Duncan McClure Fisher, CEO of Intelligent Motoring, a provider of automotive warranties, insurance products and aftersales solutions, said, “Without doubt the majority were unprepared for the knock Covid-19 inflicted on the automotive sector.

“But the industry had been facing challenges even before the pandemic hit, meaning Covid-19 was simply another element that deepened those difficulties.

“The resulting financial impact on motorists is significant and has been made worse by wider pressures including rising inflation and the overall increased cost of living.” By Graham Hill thanks to Fleet News

The huge potential of reducing a vehicle’s impact on the climate by going electric is being diminished by a growing trend towards larger and heavier plug-in cars, new research suggests.

Green NCAP’s results, published today (Thursday, March 23), show that vehicle size is “significantly” increasing the negative impact on climate and energy demand, driving not only a rise in fuel and electric energy consumption, but also creating a wider footprint in vehicle and battery production.

It tested the Life Cycle Assessment (LCA) of greenhouse gas emissions and primary energy demand of 34 cars in 2022, with different powertrain types: battery electric, hybrid electric, conventional petrol and diesel, and one vehicle, the Ford Puma, that runs on alternative fuel.

The LCA calculations used Green NCAP’s interactive Life Cycle Assessment tool, with calculations based on the average energy mix of the 27 EU Member States and the UK, and an average mileage of 240,000km (150,000 miles) over 16 years.

Green NCAP says the results show the “current and continuous trend” towards larger and heavier cars “significantly increases” the negative impact on climate and energy demand.

It drives not only a rise in fuel and electric energy consumption, but also creates a wider footprint in vehicle and battery production.

LCA results from the 34 tested cars show that battery electric vehicles (BEVs) are ahead in reducing greenhouse gases with 40‑50% less emissions compared to conventional petrol cars, depending on the model chosen.

In terms of primary energy demand, the differences between electric and conventional cars are less.

The hybrid electric sport utility vehicles (SUVs) that were tested, have higher fuel consumption and, due to increased emissions in the usage phase, have life cycle values in the range of 200‑240g CO2-equivalent/km and an estimated 0.85‑1.0 kWh/km.

These numbers lie between the values of a large electric SUV and a conventional petrol- or diesel-powered counterpart.

In the case of the bio-ethanol (E85) operated Ford Puma, compared to the same car in petrol mode, greenhouse gas emissions reduced to a level closer to the range of battery electric cars.

The processes needed for the bio-fuel production increase the Puma’s life cycle energy demand by 57%, yet given 60% of the total energy needed is renewable, much less fossil fuel is used, said Green NCAP.

The calculations show the considerable differences between each car’s impact on the environment, but also reveal the significant influence of mass on greenhouse gas emissions and primary energy demand.

Green NCAP says that this is clearly seen for all powertrain types even though the correlation might be slightly distorted for some cars due to differences in aerodynamic drag or powertrain efficiency.

Nevertheless, it says, the overlying message is clear – the heavier the vehicle, the more harm it does to the environment and the extra energy required to drive the car.

In general, battery electric vehicles emit significantly less greenhouse gases over their lifetime, but some of the gains are lost due to their increased weight.

Aleksandar Damyanov, Green NCAP’s technical manager, explained: “Electric vehicles and electrification in general offer huge potential in reducing greenhouse gases, but the ever-increasing trend of heavier vehicles diminishes this prospect.

“To counteract this, Green NCAP calls on manufacturers to reduce the mass of their products and calls on consumers to make purchasing decisions that not only consider the powertrain of their new cars, but also consider their weight.”

To better illustrate how mass affects environmental performance, Green NCAP has performed additional numerical simulations based on real-world Green NCAP measurements.

These studies show that all three powertrain types (BEV, non-rechargeable hybrid HEV and conventional ICE), when their mass increases, have the same relative rise in energy consumption of about 2% per 100kg.

However, their absolute consumption figures are very different.

Furthermore, higher mass is a major factor in the environmental impact of vehicle production.

Based on today’s estimates, a net mass increase of 100kg potentially results in an additional 500‑650kg of greenhouse gas emissions and 1.9‑2.4 MWh of energy demand in vehicle production (without battery, including recycling).

Growing trend towards heavier vehicles

Over the past ten years, the average weight of vehicles sold has increased by about 9% or around 100kg.

Sales of small SUVs have increased five times, becoming the most sold vehicles in 2022 with about four million cars sold across Europe.

Large SUV sales have further increased seven times leading to a total sales number of roughly 700,000 cars.

For a compact family car, the 100kg average increase in weight is responsible for about 1.4 tonnes of additional greenhouse gas emissions and 5.7 MWh of extra energy used.

According to the European Automobile Manufacturers’ Association (ACEA), in 2022, 9.3 million vehicles were sold, out of which 12.2% were battery electric.

This leads to a revealing calculation – assuming eight million vehicles are on average 100kg heavier, the impact of this weight increase on the climate is the equivalent of about 200,000 extra cars on European roads.  By Graham Hill thanks to Fleet News

It is inevitable that if the government is to encourage the move to electric cars they must disincentivise the continued purchase of petrol and diesel cars. Increased fuel duty is of course one thing that can be done, first registration tax is another. Let’s see what the experts have to say.

A planned 5p rise in fuel duty could cause “untold damage” if the Government decides to go ahead with it in the next budget, warns RAC Fuel Watch.

It says drivers face a “pump price shock” in less than two weeks unless the Chancellor decides to keep the 5p duty cut put in place a year ago, and cancel the annual planned hike at the Spring Budget on 15 March.

RAC fuel spokesman Simon Williams said: “All eyes are now on what the Chancellor decides to do with fuel duty at the Budget in just two weeks’ time. While we accept the 5p cut introduced last year can’t last forever, with household finances under even more pressure this Spring than they were a year ago, we don’t think now is the time to be removing it.

“To decide to raise prices by 5p on both fuels would prove punishing to households and businesses struggling to make ends meet, and may have a detrimental effect on both inflation – which the Government is desperate to bring down – and the wider economy. In the case of diesel, it would also mean the UK has the highest fuel duty rate in the whole of Europe.

“We also hope Mr Hunt isn’t about to become the first Chancellor in 12 years not to cancel the annual planned fuel duty rise. If he were to go ahead with it, untold damage could be caused.”

February saw the average price of a litre of unleaded come down another penny (1.26p) to 147.72p, while diesel dropped 3.19p to 167.19p. The falls make the cost of filling a 55-litre family petrol car £81.25 (down £0.69 from £81.94 a month earlier), and the diesel equivalent £91.95 (down from £93.71 at the start of February).

While the reduction in diesel prices is good news, wholesale price data analysed by the RAC shows drivers of the UK’s 12m diesel cars continue to pay a “needlessly high” price every time they fill up. Despite there being just a 6p difference between the wholesale prices of both diesel and petrol throughout all of February, diesel pump prices are currently 20p more than petrol. This means anyone filling a diesel car is, the RAC calculates, paying around £7 more per tank than they should be if diesel was being sold at a fairer price of around 155p a litre.

Last month, the RAC revealed that drivers of diesel vehicles are paying 20p per litre more for diesel than petrol, despite a wholesale cost difference of just 6p.  By Graham Hill thanks to Fleet News

The Tesla new car price reductions announced overnight on January 12 were significant, unexpected and widely publicised.

We may never know exactly what impact they had on used values, but the timing of the action, in the midst of a sharp downturn of used values for battery electric vehicles (BEVs), could not have been worse.

In the case of Tesla Model 3, used values had already decreased to the extent that nearly new used retail values were comfortably away from the revised list prices, but the impact on Model Y was to send used values for all three derivatives above cost new.

Unsurprisingly, there was an immediate impact on used values and we expect further significant reductions on this model.

Model 3, in particular, has been used across the industry as a comparison vehicle, even where it is not strictly a direct competitor vehicle for certain models.

As a result, the falls in Tesla Model 3 values are at least partially reflected in many other BEV models.

At Cap HPI we have made an additional negative adjustment to our forecasts due to a combination of reasons: an expectation of increased new car volume due to an improved competitive position (residual values and guaranteed future values are unlikely to decrease in pound note terms by as much as the list price reductions) and also the list price reductions potentially signal a move from a niche premium brand to a more mainstream, volume brand.

LEVERS FOR OTHER MANUFACTURERS

There are also other levers that rival manufacturers could pull in an attempt to reduce Tesla’s competitive advantage.

Although most BEV models are subject to limited fleet discounts, some adjustment may be possible.

Many will be looking very closely at their finance offerings to ensure interest rates are as competitive as possible and exploring whether there are any additional elements which can be incorporated into a new car deal, such as free servicing for a fixed period (unlikely to involve a large financial commitment for a new battery electric car).

As far as we are aware, most other OEMs are unlikely to follow suit with reductions to their own list prices.

Some, like Kia, came out very quickly, keen to rule such a move out and distance themselves from Tesla’s behaviour, while others have kept their cards closer to their chest.

It seems more likely that future planned list price increases may be cancelled, rather than making any attempt to match Tesla on the cost new front.

Some manufacturers also have the option of bringing cheaper versions of their existing vehicles to market; either by including smaller batteries which are already available in other markets, or reducing specification deemed to be unessential or adding limited value in the used market. By Graham Hill thanks to Fleet News

Jaguar Land Rover (JLR) has moved its key accounts to a direct sales model as part of a new fleet strategy.

The change is expected to strengthen the carmaker’s relationships with end-user drivers and improve customer service for fleets.

It comes a year before the brand’s retailers fully transition to an agency sales model. Leasing companies will transact with JLR directly, with the vehicle then allocated to the driver’s nearest authorised Fleet and Business Centre for delivery.

A key element of the new process is that all JLR fleet customers will receive a full handover from a retailer.

Andrew Jago (pictured), general manager for fleet and business at JLR, said: “Anybody who drives a Jaguar Land Rover vehicle has made an informed choice to drive that vehicle and I think it’s really important we recognise that in the experience we deliver.

“Having a direct brand relationship with our customers allows us to give a great modern luxury purchase and ownership experience, but also the opportunity to renew it at the end.

“We want to strongly move away from preferred supplier arrangements where you’ve got groups who are taking orders for leasing companies and then delivering cars to customers through third party logistics companies.

“There’s no proper handover, there’s no introduction to the service department and there’s no ultimate relationship with the brand.”

Around a third of the JLR retail network is currently recognised as a Fleet and Business Centre. Jago said this gives sufficient geographical coverage, but will remain under review.

Retailers can opt-in to the scheme and must commit to putting the resource and standards in place to engage with fleet customers.

Jago, who has been responsible for fleet sales at JLR since 2019, added: “Utopia, for me, would be that every retailer can really deeply understand and support the needs of the fleet business user, but I won’t compromise on that just to say we’ve got full coverage.

“We want to make sure we are really putting our arms around those customers and are doing the job properly.”

Smaller fleets and small-to medium enterprises (SMEs) will continue to transact with their local dealer directly until the agency model is adopted in 2024.

OVERCOMING SUPPLY CHALLENGES

Last year saw sales declines for both the Jaguar and Land Rover brands, driven predominantly by a shortage of semiconductors. Jaguar sales were down by 35%, according to Society of Motor Manufacturers and Traders (SMMT) figures, and Land Rover was 19% behind its 2021 sales.

While registrations fell, the brand launched new versions of its flagship Range Rover and Range Rover Sport models. Both achieved record levels of interest.

Order books across JLR’s portfolio consequentially swelled to more than 200,000 units, 50,000 of which are destined for UK customers.

Production of Jaguar’s XE and XF models was halted, while a large number of derivatives across the model lines of both marques were suspended or given lead times of more than 12 months, allowing factories to focus on building the hotly anticipated new models.

JLR’s UK sales director Paddy McGillycuddy has confirmed to Autocar that availability of the affected models is gradually returning.

Production is still largely centred around plug-in hybrid and electric variants, however. Jago said a number of core fleet derivatives can now be had within a six-month window and that his team is working closely with fleets and leasing companies to communicate any changes to lead times.

Among the cars in the spotlight are the electric I-Pace – Jago said production has been “fiercely protected” – and the recently updated Jaguar F-Pace and Range Rover Velar plug-in hybrids, which now feature a larger battery, giving them sufficient range to slip into the 8% benefit-in-kind (BIK) tax band.

Jaguar has a strategy to become an electric-only carmaker by 2025, but details on how that will be achieved are yet to be revealed. In the meantime, the new Range Rover and Range Rover Sport will have full electric availability from the end of 2024.

The focus remains firmly on the plug-in hybrid variants for now though. Both offer class-leading electric capability with up to 70 miles of zero-emission driving per charge.

Jago added: “The efficiency of the plug-in hybrid models we’re offering with Range Rover and Range Rover Sport has led to a significant shift in the salary sacrifice space, which, predominantly, is driven by battery electric vehicles (BEVs).

“With that 5% positioning on BIK it’s had huge appeal in the salary sacrifice space and we’ve seen people coming out of BEV into plug-in hybrid. There’s definitely more receptiveness to plug-in hybrids.”  By Graham Hill thanks to Fleet News

A new approach to electrified powertrain development, which aims to cut costs by almost a third, has been unveiled by Nissan.

The manufacturer claims the new approach, called X-in-1, will result in a 30% reduction in development and manufacturing costs by 2026, compared to 2019.  

Nissan says that core electric vehicle (EV) and electric powertrain components will be shared and modularized.

The manufacturer has developed a three-in-one powertrain prototype, which modularises the motor, inverter and reducer in EVs.

A five-in-one prototype, which additionally modularises the generator and increaser, is planned for use in its e-Power vehicles.

The X-in-1 approach has been developed to enable EV and e-Power core components to be produced on the same line.

Nissan aims to achieve e-Power price parity with internal combustion engine (ICE) vehicles by around 2026.

Senior vice president at Nissan, Toshihiro Hirai, who leads powertrain and EV engineering powertrain development, said: “We make the most of our expertise and know-how from our more-than-a-decade long development and production of electrified technologies.

“Through our innovations in electrified powertrain development, we’ll continue to create new value for customers and deliver 100% motor-driven vehicles – EVs and e-Power – as widely as possible.”

Under its long-term vision, Nissan Ambition 2030, the company aims to bolster its line-up with 27 new electrified models, including 19 EVs, by 2030.

Nissan says it wants to bring the “unique value” of its electrified vehicles to the broadest range of customers by introducing the most suitable models to each market at the appropriate time.  By Graham Hill thanks to Fleet News

Cars with keyless entry systems are twice as likely to be stolen as those without, according to data from Aviva.

The insurance firm is warning vehicle owners to be on their guard, as dark nights and modern theft methods create a perfect landscape for criminals.

ONS data shows keyless entry was the most common method of access for vehicle thefts in England and Wales in the year ending March 2020, accounting for more than a third (36%) of incidents. This increased from 13% in the previous year.

The data also reveals that three quarters of vehicle-related thefts (76%) occurred during the hours of darkness.

Aviva said the proportion of incidents where vehicles were actually taken in the dark – as opposed to items taken from vehicles – has actually fallen, suggesting thieves are becoming more daring.

Alec Reeder, performance lead at Aviva General Insurance, said: “While vehicle security has developed and improved in many ways, unfortunately criminal activity is evolving too. Over the past two years, we’ve found claims for stolen keyless vehicles are twice as likely as those for non-keyless vehicles.

“While theft claims account for only a small proportion of our vehicle claims overall, we understand that a stolen car can be very distressing for owners. We’d encourage people to take extra precautions, particularly at this time of year, when thieves have the added advantage of reduced daylight.

“Seemingly old-fashioned mechanical devices – such as a steering wheel or foot pedal lock – can be a useful visible deterrent, encouraging thieves to think twice. Other steps include using a signal blocking pouch for keys, or parking in a garage or secure area where possible. Cars really can be gone in 60 seconds, so it’s vital that motorists stay one step ahead of the criminals.” By Graham Hill thanks to Fleet News

Competition in the car market thanks to the increased presence of Chinese manufacturers could drive down the prices of battery electric vehicles (BEVs), according to Grant Thornton.

The Chinese new electric vehicle market has increased by 110% in the past year, while the broader passenger car market increased by 14%, figures from the China Association of Vehicle Manufacturers suggest.

BYD was the strongest-performing Chinese carmaker, selling 1.62 million BEV and hybrid models, an increase of 132% year-on-year.

Such strong BEV sales have driven up BYD’s market value, making it the world’s third-largest automotive company by value after Tesla and Toyota.

Chinese OEMs are set to target the European market to keep their growth trend going, says Philip Nothard, insight and strategy director at Cox Automotive.

“Chinese brands are pricing aggressively in their home market and clearly show more willingness to compete on price than the European and American incumbent OEMs such as BMW, Stellantis, Mercedes Benz, Ford, and Tesla,” he explained.

“Currently, retail prices for Chinese brands are not significantly lower than European and American OEMs. However, they are substantially better equipped with full infotainment and ADAS systems.

“In contrast, the European and American OEMs are falling short in providing this as standard equipment for their vehicles.”

In the latest edition of Cox Automotive’s quarterly digital automotive insight update, AutoFocus, Grant Thornton says that Europe is expected to experience an influx of Chinese brands over the next two years, with cut-price product offerings in the premium and mass market, aiming to gain market share quickly.

This, it argues, could push down BEV and internal combustion engine (ICE) vehicle prices and put European OEMs’ margins under pressure.

Owen Edwards, head of downstream automotive at Grant Thornton UK, said: “During 2022, fewer than 2,000 Jeep vehicles (ICE vehicles) were sold in China, with only one Jeep sold in May 2022.

“This suggests Chinese brands are taking the pricing war not only to BEVs but also to ICE vehicles.

“With China’s advanced battery technology, sourcing of raw materials and more advanced BEV supply chain, Chinese OEMs can manufacture BEVs at €10,000 cheaper than European automakers, representing a significant cost advantage.”

It is unclear whether the EU will react to the influx of Chinese vehicles in the region by imposing further tariffs on imported vehicles to protect their domestic OEMs, says Grant Thornton.

It is clear, however, that Chinese carmakers must consider this possibility when deciding their long-term manufacturing strategies for Europe.

“At present, OEMs’ profitability has remained robust in the face of supply chain disruptions as vehicle shortages meant retail prices for vehicles have remained high, allowing OEMs’ margins in 2021 and early 2022 to hold up well,” continued Edwards.

“However, the rise in raw material prices and further disruptions in the supply chain caused by gas shortages in Europe have meant the profits of many OEMs have started to suffer.

“In 2023, OEMs are likely to stabilise their earnings against a backdrop of lower costs for some raw materials and a less volatile supply and distribution chain.

“As a result, production in US factories is increasing, and production utilisation is heading back to more normalised levels of 76%.”

Nothard says that the growing influence of Chinese brands adds another potential headwind for UK OEMs to counter in 2023.

“It’s also likely that the supply and demand for vehicles could be affected by any trade disruption caused by intensifying protectionism and sanctions,” he added.

“In addition, the UK’s Department of Transport is consulting on its Zero Emissions Vehicle policy. This could mandate automotive manufacturers to register a certain number of zero-emission cars and vans in the UK by 2024, in preparation for a 2030 ban on new pure petrol and diesel vehicles.”

Grant Thornton’s complete analysis can be found in Cox Automotive’s AutoFocus insight update.  By Graham Hill thanks to Fleet News

The way the advisory electricity rate (AER) is calculated has been changed in order to better reflect prices when it is reviewed quarterly, HMRC has confirmed.

Previously, the rate used by many companies to reimburse electric company car drivers for business mileage had been based solely on an annual figure published by the Department for Business, Energy & Industrial Strategy (BEIS), and the electrical energy consumption values for each car model, provided by the Department for Transport (DfT).

HMRC will continue to use the BEIS and DfT data but will now incorporate figures published in the Office for National Statistics (ONS) quarterly index for domestic electricity, a figure which formed part of the Consumer Price Index, when it reviews the AER quarterly.

An HMRC spokesperson told Fleet News: “Using this methodology provides a more up to date guide for employers and employees to calculate what tax needs to be paid for electric car usage.

“HMRC keeps the AER rate under regular review and will be publishing further details on how it calculates the AER rate in due course.”

HMRC announced in November that the AER would increase from 5ppm to 8ppm from December 1, and the reimbursement rate would also be reviewed quarterly in line with advisory fuel rates (AFRs).

In 2017, the average cost of standard electricity in the UK was 14.4p per kWh and was used to calculate the first AER, which was introduced in September 2018.

The average per kWh price for electricity was 34p at the end of last year.

Just one in eight drivers (12.2%) thinks that the current 5ppm reimbursement rate reflects the true cost of charging an EV, according to a Fleet News poll.

Almost three-quarters (73.5%) of respondents believe it should be 10ppm or more, while one in five (20.2%) say it should be three times the current rate, with drivers receiving 15ppm to cover their charging costs. By Graham Hill thanks to Fleet News

Charging an electric car on a pay-as-you-go, non-subscription basis at a rapid charger has increased by 21% since September, new research suggests.

Analysis by the RAC’s new Charge Watch initiative and the FairCharge campaign shows that the per kilowatt hour (kWh) price has risen by 7.81p, from 36.74p to 44.55p. 

It means that the average cost to complete an 80% rapid charge of a typical family-sized electric car with a 64kWh battery has increased by £4 in the past eight months, from £18.81 to £22.81.

In stark contrast, the cost of filling a 55-litre family car from empty to 80% with petrol has increased by £14.54 to £74.21 – a 24% increase.

The RAC’s analysis shows that it now costs on average 10p per mile to charge at a rapid charger, up from 8p per mile (ppm) last September.

This is nearly half the cost per mile compared to filling a petrol-powered family car, the cost of which has risen from 15ppm since the end of last September to 19ppm now. The cost per mile for a similarly sized diesel-powered car is even higher at nearly 21p.

Meanwhile, the average price of charging at the quickest ultra-rapid chargers – which have a power output of 100kW-plus and can deliver a charge to a compatible vehicle in as little as 20 minutes – has increased by 16.76p per kWh, from 34.21p per kWh in September to 50.97p in May. This means the cost to charge a vehicle to 80% has risen from £17.51 to £26.10.

The price increases facing drivers of electric cars using publicly accessible chargers can be explained by the rises in the wholesale cost of electricity, which itself is driven by hikes in the cost of gas.

Ofgem figures show that the wholesale cost of gas doubled between the end of September 2021 and the end of March this year, with wholesale electricity prices rising by around 65% over the same period.

RAC electric vehicle spokesperson Simon Williams said: “Our analysis shows that the quickest places to charge are also the most expensive with ultra-rapid chargers costing on average 14% more to use than rapid chargers.

“For drivers in a hurry though, or travelling a long distance, paying this premium might well be worth it with the very fastest chargers capable of almost completely replenishing an electric car’s battery in a matter of minutes.

“Having said that, the most affordable way of charging an electric car isn’t at a public charger – it’s from home, where overnight electricity rates can be much lower than their public charger counterparts.

“Our own RAC Recharge tariff, for instance, costs just 12p per kWh overnight. But for people who have no option of charging up at home, there is no opportunity to benefit from these sorts of savings.”

The other reason home charging can be so much cheaper is because of the way that electricity is taxed.

“VAT on electricity from a public charger is levied at a rate four-times that which applies to domestic electricity which makes it far more expensive to charge on-the-go than it should be,” explained Williams.

The FairCharge campaign is therefore calling for the 20% VAT rate currently charged on electricity at public chargers to be cut to match the 5% levied on domestic electricity.

Williams said: “We are right behind the FairCharge campaign in thinking this is totally unfair and flies in the face of the Government’s ambition for many more drivers to opt for an electric vehicle.

“We understand conversations have been had within Government over this ‘no driveway premium’, but it’s time there was an acceptance that a VAT rate that’s more favourable to drivers who have their own off-street parking risks putting other drivers off making the switch.

“Given the cost-of-living crisis, it’s surely only fair that everyone pays the same level of VAT no matter where they buy their electricity from.”

The RAC has launched Charge Watch to give greater clarity to drivers about what they can expect to pay to charge on public networks.  By Graham Hill thanks to Fleet News.