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The latest emission figures are measured by attaching equipment to cars and physically driving cars on public roads to simulate real-world driving conditions. This is fine for standard cars but the manufacturers should also assess the emissions when fitted with options and extras.

 

For example if a car has bigger wheels fitted the emissions can increase. But without that information drivers could be exposed to higher Benefit In Kind tax and Road Tax could increase.

 

Businesses should therefore consider reviewing their fleet policies due to a lack of WLTP CO2 data for some cars, says the British Vehicle Rental and Leasing Association.

 

The WLTP CO2 value, derived from the new emissions test, will be used for tax purposes from April, but a shortage of reliable data threatens to disrupt the move to a new VED and company car tax regime, it says.

 

VED and company car tax for newly registered vehicles will use CO2 figures based on the more accurate WLTP standard from April 1 and 6 respectively.

 

However, many vehicle manufacturers are struggling to provide WLTP data for their cars, with the result that BVRLA members currently only have accurate CO2, electric mileage range or RDE2 compliance (latest NOx emissions standard) information for around 80% of base (pre-option) models.

 

With average lead times for cars at around 9-12 weeks from ordering, this data gap is hindering the leasing sector’s ability to provide accurate quotes on many different vehicles and their various configurations and options.

 

“The introduction of WLTP-based motoring taxes is adding yet another layer of complexity and confusion to a fleet sector that is already having to cope with a deluge of new automotive technology and local authority air quality measures,” said BVRLA chief executive, Gerry Keaney.

 

“The BVRLA and its members are working with OEMs and third-party data providers to bridge this gap, but in the meantime, we would recommend customers consult with their lease providers to assess the impact on their fleet policies and procurement.”

 

WLTP CO2 data is available for the entire BMW range at www.bmw.co.uk. Rob East, general manager of Corporate Sales at BMW UK, said: “With the BIK tax liability a key consideration for many company car drivers when choosing a new vehicle, it’s imperative that we provide our customers with this information.

 

“This transparency allows them quickly to make an informed decision as to whether their favoured BMW works for them from a tax point of view. Without WLTP details, they simply have no way of knowing.”

 

He added: “Ensuring the easy availability of these details underlines our drive to make it as straightforward as possible for business customers to purchase a new BMW.

 

“It also reflects the increased level of interest that there is in our key corporate models such as the new 1 Series and new 3 Series.”

 

The BVRLA has contacted the SMMT, which represents vehicle manufacturers, to offer its support in addressing the WLTP data shortage. It is also working with HMRC on its forthcoming WLTP communications plan. By Graham Hill thanks to Fleet News

The future of the plug-in car and van grant is expected to be revealed by the new Chancellor in the Budget in March.

 

The electric car and van subsidy was cut in 2018 by £1,000 and fleets were told it would no longer apply to hybrid cars with a range of less than 70 zero emission miles.

 

The Government said the reduction in funding – from £4,500 to £3,500 – for the cleanest cars, and withdrawing the grant completely for the likes of the Mitsubishi Outlander PHEV and the Toyota Prius Plug-in, was a sign of its success.

 

Talking to delegates at the ICFM’s annual conference last summer, deputy head of the Office for Low Emission Vehicles (OLEV), Phil Killingley, acknowledged that incentives will be of continued importance beyond 2020, but stressed the detail was still being “talked through”.

 

Meanwhile, the Treasury told the Telegraph that “consumers incentives will continue to play a role beyond 2020”.

 

A Whitehall source said: “We have always said we would phase out the subsidies gradually, but there are other ways we can help people to go electric.”

 

BVRLA chief executive, Gerry Keaney, says that the Budget on March 11 will be an opportunity to set the tone for a new decade in which the transition to decarbonised road transport will be won or lost.

 

“Fleets are being asked to invest billions of pounds in new electric vehicle technology and infrastructure, which comes at a hefty price premium to its petrol and diesel alternatives,” he said.

 

“To achieve these goals the Government must provide a clear support package through to at least 2025. It must preserve the Plug in Car and Van Grants, maintain a strong set of tax incentives and tackle the huge and often arbitrary costs associated with fleet charging infrastructure.”  By Graham Hill thanks to Fleet News

As many of my readers know I have written about this in the past because it can be very confusing. My work with the BBC and various motoring journals has highlighted some of the crooked methods to extract large ‘deposits’ from customers then mis-state the law in order to prevent paying money back when the customer decides not to go ahead with a purchase.

 

A law firm has given advice to dealers as follows:

 

It has long been thought that if a consumer decides to pull out of a car purchase having paid a deposit, that the car dealer is automatically entitled to retain that deposit.  However, there are several important considerations that need to be met before that is allowable, the first of which is especially relevant.

 

1. The Consumer Rights Act 2015 says that a contract term may be considered unfair (and thus unenforceable) if it is “A term which has the object or effect of permitting the trader to retain sums paid by the consumer where the consumer decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader where the trader is the party cancelling the contract. We are advising that your terms/conditions, order form and any document that makes reference to a non-refundable deposit, be reworded as below, followed (where possible) by the consumer’s signature:

 

“By paying a deposit you are entering into a legally binding contract.  If you change your mind and do not pay the balance due, you will be in breach of contract and we will be entitled to retain the deposit in full and not return it to you.  However, if we are in breach of contract and do not agree to sell you the car upon payment of the balance, we will return your deposit in full and you may be entitled to additional compensation from us up to the full value of the deposit amount”.

 

2. The amount of deposit is the most you can retain. You cannot retain a deposit and then on top of that seek losses such as prep time or having to re-advertise or re-selling at a lower value.  The whole purpose of a deposit is that it gives certainty as to what can be lost in the event of contractual beach – regardless of whether your actual loss is greater or less than the amount of the deposit.  HOWEVER………

 

3. The deposit figure must be proportionate to the value of the vehicle – you cannot simply seek to punish the buyer by making him pay a hugely disproportionate deposit and retaining it if he or she does not pay the balance. The Court of Appeal ruled in 2016 (and gave a new test of what is allowable) and removed the test of “reasonable pre-estimate of loss” and “penalty clauses” and replaced it with this, somewhat wordy conclusion:

 

“The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance.[Emphasis added].”

 

4. Whilst the courts – and only the courts can decide – we think that a deposit that is greater than 10-15% of the value of the car might be seen as difficult to justify except in very rare circumstances. Maybe where something is being built to such an unusual, bespoke and personal specification that the sale to anyone else other than the actual buyer would be compromised substantially or could only be re-sold at a price significantly less than agreed with the intended buyer (who then did not pay the balance after the deposit was made).

 

5. Where a deposit is taken in contemplation that the car will be financed by, say a hire-purchase agreement, the deposit must be refunded if the consumer withdraws from the deal BEFORE all three parties sign the finance agreement – as set out by Section 57 of the Consumer Credit Act 1974 (Withdrawal from a Prospective Agreement). This does NOT form an obligation to fund the purchase of the car by some other means.

 

6. Where the consumer cancels the credit agreement within 14 days of all parties signing the credit agreement, then there IS an obligation to buy the car by some alternative means BUT we will argue that this obligation is between the consumer and the finance company (not the dealer) as the finance company have bought the car from the dealer, has good title in it and the dealer is not in breach of contract. Again, though, some finance companies may, in their terms and conditions have a clause that states that the dealer has to indemnify them in the event that this happens!

 

So, anyone who tells you that the law of refunds of deposits is straight-forward, invite them to read the above!

 

My advice has always been to pay as little deposit as possible if you need to pay a deposit to secure a car. If possible pay with a credit card as this gives you greater rights. Even the suggestion of 10 – 15% is not reasonable in my opinion.

 

You can also get your deposit back if it was paid towards the finance of the car as shown above. So if you are paying a deposit and intend the money to be used to pay towards the HP or PCP agreement you should make sure that you make that clear to the dealer and have it written on the receipt. But beware that when the contract has been executed (all parties have signed it) you cannot cancel the contract without the risk of being in breach. Don’t sign the contract till the last minute.

 

If you have a large deposit to pay towards the finance keep it till the last minute. We only provide contract hire and personal contract hire and we take no money whatsoever until you have received your car. The safest way. The initial rental is taken by direct debit after the car has been delivered and signed for.  By Graham Hill

 

There has been an increase of late in extensions and customers taking out 4 year PCP, PCH and contract hire agreements. This is done mainly to save money on the monthly rental but after allowing for the various costs that come into play after 3 years you may find that it’s a false saving.

 

When I looked to extend the lease on my Mercedes E Class I checked with my local dealer and was quoted nearly £900 for a 1 year extension to the Mercedes warranty. Had I leased my car over 4 years the lease cost would have been just £18 + VAT less per month when compared to the 3 year rate.

 

Then there are other subscriptions such as the Sat Nav which generally come with free updates for 3 years but you have to pay the subscription thereafter. Roadside assistance is also generally included for a minimum of 3 years with all new cars so there’s another extra to pay for. It all adds up.

 

On top of that, there is service and maintenance and possibly another pair of tyres. Obviously, as the car gets older it requires more wear and tear parts to ne replaced, brake discs, suspension dampers, filters etc.

 

So this raises the question as to whether it’s worth taking a car over 4 years given the fact that you will need to take out an extended warranty that could represent around half of the down payment on the next car, which of course comes with a new car warranty.

 

There are of course cars that come with 5 and even 7 year warranties but on closer inspection, you will find that a large number of components drop off cover after 3 years as a result of normal wear and tear. So things are not always as they seem. You could, of course, Google the market for a lower-priced warranty than the manufacturer’s own. However, whilst they love to take your money there are some that hate paying it back out.

 

Beware of betterment! As cars get older the warranty companies will try it on. Let’s say in the 4^th year you have a problem with the gearbox. The manufacturer or the warranty company agrees to replace it under the warranty but as the car is, say three and a half years old they have a betterment clause in their warranty that says, if the replacement part puts the car in a better condition than it was before the part went faulty that you should contribute to the replacement.

 

So the replacement gearbox could cost you 2 or even £3,000 towards the cost of the replacement gearbox. It’s a scandal. So if you are going to take out a 4-year contract or extend a 3 year contract, check the true cost of that last year and if you extend the warranty check the betterment clause. Also check out Warranty Direct. They may be a little more expensive than some other 3^rd party warranties but the have some of the best terms and conditions and no betterment charges. By Graham Hill

The ban on the sale of new petrol and diesel cars and vans will be brought forward to 2035 and will now include hybrids.

 

The Government had previously announced they would end the sale of new fossil fuel vehicles from 2040 but would still allow the sale of hybrid vehicles that had a zero-emission capability.

 

However, speaking at the Conservative party conference last October, transport secretary Grant Shapps hinted at bringing the date forward.

 

Launching the next UN climate conference COP26 today (Tuesday February 4), the Prime Minister Boris Johnson will confirm the much tougher, stricter timetable.

 

Shapps said: “This Government’s £1.5 billion strategy to make owning an electric vehicle as easy as possible is working – last year alone, a fully electric car was sold every 15 minutes.

 

“We want to go further than ever before. That’s why we are bringing forward our already ambitious target to end the sale of new petrol and diesel cars to tackle climate change and reduce emissions.”

 

The Government says it will continue to work with all sectors of industry to accelerate the rollout of zero emission vehicles.

 

But, the Society of Motor Manufacturers and Traders (SMMT), which represents car and van makers in the UK, says the Government has set the new target without a plan showing how it intends to get there.

 

Mike Hawes, SMMT chief executive, said: “Manufacturers are fully invested in a zero emissions future, with some 60 plug-in models now on the market and 34 more coming in 2020. However, with current demand for this still expensive technology still just a fraction of sales, it’s clear that accelerating an already very challenging ambition will take more than industry investment.

 

“This is about market transformation, yet we still don’t have clarity on the future of the plug-in car grant – the most significant driver of EV uptake – which ends in just 60 days’ time, while the UK’s charging network is still woefully inadequate.

 

“If the UK is to lead the global zero emissions agenda, we need a competitive marketplace and a competitive business environment to encourage manufacturers to sell and build here.

 

“A date without a plan will merely destroy value today. So we therefore need to hear how government plans to fulfil its ambitions in a sustainable way, one that safeguards industry and jobs, allows people from all income groups and regions to adapt and benefit, and, crucially, does not undermine sales of today’s low emission technologies, including popular hybrids, all of which are essential to deliver air quality and climate change goals now.”

 

Helen Clarkson, CEO of the international non-profit The Climate Group, welcomed the “more ambitious” target from the Government.

 

However, she said: “We believe that this could still be sooner – and that to be a global leader, especially post-Brexit, a 2030 phase-out commitment is required; without this, we risk being out of step with our international peers.

 

“Our business campaign for the 100% adoption of electric vehicles by 2030, EV100, has 62 corporate members, many of which are British, including AstraZeneca, BT, Centrica, Foxtons, Mitie, RBS, SSE and Unilever. Businesses are showing what is possible and The Climate Group would love to see this level of ambition matched.”

 

Through EV100, the UK has the second highest number of corporate fleet vehicles committed to switching to electric, after Germany.

 

Government policy must be strong and consistent to accelerate this transition, and to help the UK become a world leader on electric vehicles, it says.

 

So far, eight countries have already committed to more ambitious phase-out dates than the UK, while Scotland has had a 2032 phase-out date for new petrol and diesel vehicles in place since 2017.

 

The RAC was not surprised by the Government’s plan to bring forward the date to ban the sale of petrol and diesel vehicles.

 

RAC head of policy Nicholas Lyes said: “A more ambitious target should be the catalyst for faster change, but there are clearly many hurdles to cross.

 

“Manufacturers face a great challenge in switching their production from conventional powertrains to cleaner electric technology.

 

“More electric vehicles (EVs) will also require a great deal of investment in charging infrastructure – particularly for those who rely on on-street parking outside their homes.”

 

Lyes also believes that we should not overlook the role plug-in hybrid vehicles could play in bridging the gap to going completely electric.

 

“In the meantime we urge the Government to extend the plug-in car grant for at least another three years to help those that want to go electric, but who are put off by the high initial costs,” he said.

 

“At a local level, authorities should also incentivise their use with cheaper parking rates and lower residents’ parking permit fees.” By Graham Hill thanks to Fleet News

The split between business/fleet funding and private/retail for cars has changed dramatically over the past year.

 

Private/retail now accounts for 18% of the FN50’s car risk fleet, up from 12.8% in 2018, reflecting the increasing popularity of personal contract hire (PCH) products.

 

“There’s nothing new about the ‘cash or car’ conundrum,” says Ben Creswick, managing director of JCT600 VLS.

 

“However, there is no doubt the radical changes to the industry over the past 24 months have made this conversation much more prevalent.”

 

Where a company wishes to support employees by offering an alternative, JCT600 VLS says this has been done through a ‘structured’ PCH offering, where duty of care is tightly controlled and, typically, the financial model is based on a business mileage reimbursement mechanism, rather than pure salary.

 

However, as with all historical fluctuations in the company car market, Creswick says this is not applicable to the entire populace.

 

He explains: “For the majority of our customers’ core fleet requirements, business contract hire remains the most cost-effective for the business and the driver.

 

“While (JCT600) VLS has not seen a material change to PCH, what we have witnessed in the overall marketplace is an aggressive push into ‘affinity’ PCH, as a way of mitigating poor levels of traditional BCH (business contract hire) growth, or to soften the degree of fleet shrinkage within leasing companies.”

 

The impact of OpRA

 

The British Vehicle Rental and Leasing Association (BVRLA) says PCH accounted for 68% of all new leasing broker car contracts in 2018 and, across its membership, personal contracts saw the highest level of growth at 14%, accounting for nearly 1.9 million vehicles.

 

Looking at all the funding methods offered by the top 50 leasing companies, contract hire/operating lease retains its dominant position for financing cars.

 

Out of the 1.26 million cars on the FN50’s risk fleet, 92% are classed as an operating lease, where the leasing company takes the residual value risk. That is up slightly year-on-year from 91% in 2018; contract hire/finance lease also increased, from 2% to 3.1%.

 

Salary sacrifice retained its risk fleet share, with 3.9% of cars funded this way compared with 4% in 2018.

 

Meanwhile, employee car ownership (ECO) schemes (0.4%) and others (0.6%) both saw slight declines.

 

Ashley Barnett, head of consultancy at Lex Autolease, says: “Since the introduction of Optional Remuneration Arrangements (OpRA) in 2017, which saw employees taxed on the greater of the cash allowance foregone or the company car benefit, we saw increased complexity added to employee car ownership schemes and salary sacrifice arrangements.

 

“Many customers using these products exited, and new interest reduced.

 

“This saw contract hire continue to be the funding product of choice for the traditional company car user.

 

“Perk users who have the option to take a cash alternative are showing continued interested in PCH as they move away from traditional company car schemes into the consumer market.

 

“Most are using this option as a means of avoiding restrictions typically associated with company car policies such as emissions caps and restrictions on makes and models that often aren’t monitored in grey fleet.”

 

Arval, like many of the FN50, offers PCH products and other alternatives to the traditional company car.

 

“These have been growing, especially over the last year, because of the long period of uncertainty surrounding company car taxation and WLTP,” it says.

 

The absence of future benefit-in-kind (BIK) rates, and uncertainty over how the tax regime would adapt to the new emissions test – the Worldwide harmonised Light vehicle Test Procedure (WLTP) – had been blamed, in part, for falling company car numbers.

 

BIK statistics, published by HMRC in the summer, showed the number of company car drivers had fallen by 50,000 year-on-year.

 

However, tax officials said initial analysis suggested a new way of reporting company car tax could have skewed the figures.

 

How many company car users are there?

Since 2009-10, the number of company car users had remained relatively stable (at just under a million). But, the latest data indicated a dramatic fall from 940,000 in 2016/17 to 890,000 in 2017/18 – a 5.3% decline.

 

Another company car market indicator, fleet and business sales, shows registrations down by 1.7% last year, according to data from the Society of Motor Manufacturers and Traders (SMMT).

 

However, that could simply be due to employees and companies keeping cars for longer as they awaited BIK clarification, rather than a reduction in company cars.

 

The tax picture was finally clarified last summer, with the Treasury publishing two tax tables, one for cars registered before April 2020, and one for those registered after. BIK rates were also published up to April 2023, and there was a new 0% BIK rate for pure electric vehicles (EVs).

 

Leasing companies report a surge in fleet orders, with company car drivers and businesses eager to take advantage of the tax rates for the cleanest cars.

 

Arval says: “It’s important to recognise the reason people have been moving out of company cars has been the ongoing uncertainty around their personal tax, rather than any structural change in its effectiveness as a business tool or employee benefit. Faced with an unknown cost, they have been using the cash option to fund a PCH, effectively the nearest alternative.”

 

It is a trend reported by many in the FN50. Dominic Graf, head of commercial performance at Alphabet, explains: “We’re not seeing any significant movement in the funding methods being used by businesses to give employees access to cars; what we are seeing is a change in how they gain access to these funding products.”

 

Over the past 12 months, it has seen a 120% increase in its private/retail fleet – albeit from a low base – as employees opting out, or being provided with a cash allowance, look at PCH options.

 

Lex Autolease has also seen an increase in interest from previous company car drivers in PCH products, but Barnett warns: “Many should take care when seeing deals with low mileage, needing to realise that this presents a new restriction compared with the company car environment, and that, along with wear and tear, might lead to additional charges.”

 

LeasePlan created Select and Drive, a members-only, employer-endorsed web platform, to offer cash-taking employees access to cars.

 

Matthew Walters, head of consultancy and customer data services at LeasePlan UK, predicts: “Segmenting your fleet to various populations to ensure the fleet provision is right for the employee and the business will become an important factor in ensuring that the fleet strategy is future-proof for tomorrow.” By Graham Hill thanks to Fleet News

The following report only covers contract hire, not PCP contracts where the cars are returned rather than bought or part exchanged. End of contract (EOC) fair wear and tear damage charges for cars have reduced in the past 12 months, by 2% or £7.50 on average to £314.53 (2018: £322), marking the first reversal for four years, FN50 data suggests.

 

The British Vehicle Rental and Leasing Association (BVRLA) updated its Fair Wear and Tear guide in April after feedback from end-user fleets, its own members, remarketing experts and other fleet stakeholders to help improve clarity on what is often a contentious issue.

 

However, while the absolute figures are in decline, there are clear differences between the charges levied at cars on business contract hire (operating and finance lease) and those funded via salary sacrifice schemes.

 

Leased cars were hit with average fair wear and tear charges of £326, while salary sacrifice cars averaged £271. The FN50 asked leasing companies to split out the figures for the first time.

 

It suggests that either employees take greater care of cars their perceive as their own than they do a company vehicle – certainly this could be the case when comparing job-need cars to sal/sac – or that leasing companies are less willing to charge individuals than they are companies.

 

There were also differences in the percentage of cars charged and the level of the damage waiver.

 

Overall, the average percentage of cars being charged increased from 39% to 40%, while the average damage waiver fell from £167 to £117.

 

However, 43% of leased cars were charged fair wear and tear but only 31% of salary sacrifice cars were hit with charges. Likewise, the damage waiver for leased cars was £112, but sal/sac drivers had a more generous £133.

 

Both were significantly below last year’s overall average. This means there is a much smaller margin for error, increasing the likelihood that charges will be applied when vehicles are returned.

 

Average charges for leased cars covered a wide spread, from a high of £759 to a low of just £45 per car, showing wild variances from leasing company to leasing company.

 

If you isolate the 10 biggest leasing companies that provided figures, the average leased car figure is £319.51, down from £330 last year, so the companies that account for the most volume in the UK leasing industry have charges at a lower level than average.

 

The BVRLA’s aim with its guide is to provide an industry-wide, accepted standard that defines fair wear and tear when vehicles are returned by fleets to their leasing or rental company.

 

It also provides advice for best practice in vehicle maintenance and upkeep that will prevent unacceptable wear and tear charges occurring.

 

A BVRLA spokesman said: “With personal contract hire responsible for a growing portion of the BVRLA car fleet, there was extra focus on improving clarity and demonstrating fairness, especially when customers return a vehicle at end of lease.

 

“With many customers new to the concept of vehicle leasing, and possibly unsure of their responsibilities in maintaining the vehicle, members will be providing more help and support during the period of lease or rental.”

 

This might also explain the lower charges levied at salary sacrifice drivers, many of whom will also be facing wear and tear charges for the first time. Their experiences here will go some way to determining whether they stay in the scheme.

 

The guide gives advice to drivers about what they need to do to avoid end of lease charges, where they can get advice on routine maintenance, servicing and appraising the vehicle at the end of the lease and what they can expect the day the vehicle is returned, as well as how to complain if things go wrong.

 

Some leasing companies offer a fixed-cost menu of charges set out at the start of the contract.

 

Others do not repair vehicles before sending them out to auction, so do not charge for the cost to repair the damage.

 

Instead, they charge for the loss of value against the residual value due to the damage.

 

There are other alternatives. Fleet management specialist ARI Fleet UK has moved into the finance lease space, offering funding with no mileage limits or end of contract damage charges.

 

Rory Mackinnon, head of asset funding at ARI Fleet UK, explained: “Fleet managers are looking for support on cost management strategies and we have been working closely with our customers to deliver this.

 

“We identified an opportunity for a specialist finance solution to help drive down fleet costs. For too long, fleet managers have had to contend with excessive leasing fees and we are looking to challenge the status quo and disrupt the market.”

 

Nick Hardy, sales and marketing director at Ogilvie Fleet, Fleet News’ Leasing Company of the Year (up to 20,000 vehicles) and 15th in the FN50, says its fixed-cost menu pricing approach creates a transparent process for customers.

 

“We don’t see EOC as a profit centre,” said Hardy. “We need to cover our costs and, at the moment, we’re still doing that. If we weren’t washing our face we may need to go back to customers and have that conversation, but at the moment I’m glad we don’t need to do that.”

 

Ogilvie isn’t the only leasing company in the UK that uses a menu pricing scheme for EOC, but those using this system are still in the minority.

 

Hardy said: “Everyone should be charging within the BVRLA guidelines, but there’s nothing in there that is going to dictate pricing.

 

“Customers are wise to some leasing companies looking at EOC as a way to claw back some profit, so I would say customers are being more careful about the condition of vehicles, rather than being more careless.”

 

Caroline Sandall, chairman at fleet operators association ACFO, said: “We worked with the BVRLA on developing the new guide in April this year and, generally, the rules have relaxed.

 

“The updated guide should make it much easier and clearer for drivers what is expected. The level of damages is very black and white and prescriptive so there should be less confusion on EOC.”

 

Sandall says areas like dents on the bonnet or alloy damage were particularly contentious elements for fleets on fair wear and tear charges.

 

She added: “There were some small grey areas on the old version, but now it is much more prescriptive around the number of acceptable chips in a given area on the vehicle.

 

“There has been an increase in EOC complaints for the BVRLA due to the increased focus on personal leasing, but they have worked to make the guidelines much clearer to address that.”

 

Salary sacrifice charges

 

The average end of contract charge (EOC) for vehicles on salary sacrifice was £271, according to the FN50 data.

 

This level of charging is 20.3% lower than the leasing average, or £55 less.

 

Salary sacrifice was the second largest market segment for funding type after contract hire in this year’s FN50 figures, representing 3.9% of volumes overall, but is still a small fraction of the market compared with traditional contract hire which accounts for 92% of the market.

 

A smaller number of vehicles on salary sacrifice attracted EOC charges, too, at 31% compared with leased cars at 43%.

 

Both figures suggest leasing companies are more reticent to apply charges to a form of funding that has been under pressure from changes to the taxation rules. Nevertheless, there are big variances in the average charges applied, ranging from £485 to £105. By Graham Hill thanks to Fleet News

According to Fleet News a challenging used car market in 2019 has had a significant negative impact on the optimism of leasing companies for residual values (RVs) in 2020, the Fleet News FN50 survey suggests.

 

With prices achieved for ex-lease cars falling month-on-month for at least the first nine months of last year, leasing companies have seen disposal profits eroded across the board. For end-user fleets, the past 12 months have proved a wise time to have outsourced RV risk.

 

In several cases, defleeted cars have failed to achieve the residual value forecast for them back in 2015 and 2016, and the majority of FN50 leasing companies have little faith that the situation will change this year.

 

More than half (52%) think RVs will fall in 2020, and only 15% forecast a rise.

 

This outlook is significantly gloomier than forecasts made this time last year for 2019, when 36% predicted residual values would fall, but it is more positive than the 12-month outlooks in both 2016 and 2017, when leasing companies were gripped by a doomsday scenario for the UK’s EU exit.

 

Brexit continues to blight the automotive sector, with the Society of Motor Manufacturers and Traders (SMMT) attributing the decline in both new and used car sales in 2019 to consumer confidence being “undermined by political and economic uncertainty”. The result is a temporary loss of appetite for big ticket purchases, it says, with vehicle owners holding onto their cars for longer.

 

Under normal circumstances, a decline in new car sales and a steady rise in new car prices should prompt an uplift in used car sales as buyers switch to secondhand models. But this tipping point in the supply-demand balance of the used car market has failed to materialise.

 

Cap HPI reports that franchised dealer groups have focused on their new car sales to qualify for quarterly manufacturer bonuses, at the expense of the used cars on their forecourts, and any shortfall in stock from fewer part-exchanges has been more than offset by the availability of used stock returning to the market after the record new cars sales of 2015 and 2016.

 

The result is FN50 leasing companies anticipating an average decline of 2.2% in RVs over the next 12 months. Among the 52% of leasing companies who predict a decrease, the average drop is 5.6%, a greater reduction than the 4.4% forecast a year earlier.

 

Even the most optimistic leasing companies are less bullish than previous years, with those forecasting an increase average a rise of 4.9%, compared with 3.6% in 2018 and 3% in 2017.

 

However, pricing experts are less bearish about the next 12 months.

 

“Things are not going to be as bad as they appeared over the first half of this year,” said Andrew Mee, Cap HPI head of forecast. “It’s our view that the market correction is pretty much over now.”

 

The far steeper than normal month-on-month drops in used car values in the second quarter of 2019 have come to an end, adds Mee, who says the “market is now behaving much more normally. Values will not increase, but they are not falling like they did earlier this year”.

 

Moreover, ‘peak diesel’ may have already occurred, with the sharp falls in the sale of new diesel cars in 2017 and 2018 potentially leading to an undersupply of used vehicles in 2020 and 2021. “And that will be good news,” said Mee.

 

But uncertainty remains. As one leasing director asked, will the rapidly evaporating demand for new diesel cars, down 20.3% year-on-year in 2019, and 30% lower in 2018 than 2017, be mirrored in the used car market, or will lower supply create a shortage that drives up prices?

 

Similar uncertainty is starting to bedevil the forecasting of residual values for electric and hybrid company cars. Company car drivers keen to minimise their benefit-in-kind (BIK) tax bills are fuelling double, and even triple digit, growth in the sales of some alternative fuel vehicles, but will this demand be matched in the used car sector where the tax advantages are far more limited?

 

In the short term at least, Mee sees a windfall heading the way of leasing companies with electric and hybrid cars on their fleets. Electric cars are worth significantly more now than they were a year ago, he says.

 

“Leasing companies will have been cautious in their RV forecasts, so they are in for a nice surprise, especially for smaller battery electric models like the Nissan Leaf, Renault Zoe and Citroën C-Zero,” said Mee. “Hybrid cars have not been such a strong story, but their values have not fallen in line with petrol and diesel prices because they are around in smaller volumes and are seen as green alternatives to petrol and diesel.”

 

The critical figures for leasing companies, of course, are not book values, but the differentials between the RV forecasts made at the start of leases and the disposal prices achieved at the end.

 

Grosvenor Contracts Leasing is one of the few FN50 members with a positive outlook for residual values in 2020, having returned better defleet figures this year than last. The company’s commitment to preparing vehicles to the highest standards prior to auction – “dealers don’t want to be buying work,” said Shaun Barritt, CEO, Grosvenor Group – has underpinned the prices it achieves and maintained high first-time conversion rates.

 

Above all, the company’s success lies in

envisaging ideal forecourts in three or four years’ time, says Barritt, ensuring a broad mix of cars.

 

“Problems arise when you are bulk buying and bulk supplying, but seldom do we have very high volumes of one make or model,” he said.

 

This issue is repeatedly raised by smaller leasing companies, who compare their broad model mix and ability to be nimble when remarketing with the lack of flexibility of the largest FN50 companies that have to remarket scores and even hundreds of similar vehicles into a soft used car market.

 

In Northern Ireland, Donnelly Fleet sells virtually all of its passenger cars via nine used car centres run by the Donnelly Group dealer network.

 

“We are not dealing with big scales, so we’re not going to flood our forecourts with 30 or 40 identical vehicles,” said Tony Magee, general manager, Donnelly Fleet.

 

“The market here is smaller and a sizeable deal could see six-to-15 vehicles coming back, so I can put one into each of our centres. With these volumes we can be more optimistic about RVs.”

 

Even so, Donnelly Fleet is putting in contingencies across all fuel types, rather than writing residual value forecasts at 100% of Cap Monitor, adopting a position shared by many FN50 firms.

 

The turbulence in the used car market, which saw book values tumble by about 15% between January and August, last year, has cost leasing companies about £800 per car at disposal.

 

“You would have to go back 15 years to find drops like that,” said Nick Hardy, sales and marketing director of Ogilvie Fleet.

 

He adds that after years of relative stability, the leasing industry had become accustomed to relatively low levels of depreciation, making the drop in values such a bombshell last year.

 

Previously, market falls of the magnitude experienced in the first nine months of 2019 would have seen leasing companies encourage their clients into contract extensions, but such protection appears to have been absent this year.

 

Figures provided for the FN50 show that the proportion of cars returned late has actually fallen by seven percentage points to 32% in 2019, compared with 2018. Interestingly, the two companies with the most bullish forecasts for 2020 have very few late returned cars.

 

“Nothing should stop us being optimistic. I am cautiously optimistic that the worst is over. People will still want to change their cars,” said Hardy. By Graham Hill thanks to Fleet News

UK drivers are risking their licences by breaking the speed limit when overtaking, shocking government figures have shown.

 

According to official stats, in 2017 almost 8,000 vehicles were involved in collisions when overtaking – and over half (55%) of these were cars.

 

Safety chiefs are now urging motorists to watch their speed when overtaking to avoid putting themselves and other road users at risk – and avoid getting hit with heavy fines or even losing their licence.

 

The Royal Society for the Prevention of Accidents (RoSPA) is keen to set aside myths that speeding is acceptable when overtaking another vehicle.

 

“The common-sense message is do not overtake unless you are sure you can complete the manoeuvre safely and without causing risk or inconvenience to another road user,” warns an RoSPA spokesman.

 

“Although you should complete an overtaking manoeuvre quickly, never exceed the speed limit for the road.”

 

As rule 125 of the Highway Code states, the speed limit is the absolute maximum you should drive on any particular road. This does not exclude overtaking.

 

Exceeding the speed limit for any reason is dangerous as well as illegal and could see you hit with penalty points, a hefty fine, or even being banned from the roads entirely.

 

While overtaking is, of course, legal, there are strict rules about how and when it is safe to overtake – the most fundamental being that you should only overtake ‘when it is safe and legal to do so’.

 

If you’re caught speeding while overtaking, you could collect a fine up to £2,500 and six points on your licence, depending on your speed and the road you’re caught on.

 

Should you get 12 penalty points or more in any three-year period, you’ll have your licence revoked. By Graham Hill thanks to the RAC

Mitsubishi has come under investigation in Germany amid reports that some of its models are fitted with an emissions cheating device.

 

German police raided 10 sites in several locations including Frankfurt, Hanover and Regensburg as part of the investigation. Among the companies being investigated is parts supplier Denso, producer of diesel injectors and pumps for Mitsubishi models, which is said to be co-operating with investigators.

 

Three properties searched belong to manufacturing group Continental AG, which is reported to be listed as a witness in the case.

 

An official statement from German prosecutors said: “There is a suspicion that the engines are equipped with a so-called shutdown device.” A similar component identified on 11 million Volkswagen Group models in 2014 sparked the notorious Dieselgate scandal.

 

A Mitsubishi spokesman in Germany confirmed to motoring magazine Automobilwoche that the company was under investigation but emphasised that Mitsubishi Europe, as an importer, isn’t involved in development or production of new cars.

 

An official statement said: “Mitsubishi Motors will of course collaborate and contribute to this investigation.”

 

The engines in question are 1.6-litre and 2.2-litre four-cylinder diesel units that were sold as conforming to Euro 5 and Euro 6 emissions requirements. German police have asked anyone who has acquired a car with either motor since 2014 to contact them. By Graham Hill thanks to Autocar