The Best Car Finance Blog In The World

Businesses and consumers could be paying almost £150 per month more than their whole life cost calculations suggest for each plug-in hybrid (PHEV) that is not being plugged in.

This isn’t the first time that I’ve reported this when a company invested in a fleet of Mitsubishi Outlander PHEV’s only to find that drivers had no means for charging overnight and they were struggling to get anywhere close to 30mpg if the cars weren’t charged using a mains charger.

The data, revealed by Fleet Logistics UK, shows that the average PHEV returned 37.2mpg and 193g/km of CO2.

Using the popular BMW 330e as an example, the company calculated a monthly whole life cost of £57 if the vehicle is charged regularly, compared to more than £200 if it is not – based on official mpg figures.

Fleet Logistics UK says company car drivers who do not plug in and recharge their PHEVs are not only adding unwanted carbon dioxide into the atmosphere but are racking up unnecessary fuel and whole life costs.

But, PHEVs can be the ideal business tool for company drivers looking to transition between conventional ICE (Internal Combustion Engine) engines and electric vehicles.

For a large fleet running several hundred of these cars, the cost increases are clearly substantial. However, the drivers are not penalised over their driving style in terms of the Benefit-in-Kind taxation they pay, as this can start at £106 per month for a 20% taxpayer and £212 for a 40% taxpayer, regardless of how they drive the vehicle.

“We believe PHEVs have a role to play in helping companies transition between ICE engines and electric vehicles. However, it is important they are used correctly so as not to impact air pollution as well as cost,” said Sue Branston, country head for Fleet Logistics UK and Ireland.

“They do not suffer from range anxiety and therefore can be suitable for even long-distance fleets. However, if they are not recharged regularly and in line with manufacturer guidance, then they become more costly to operate for the business than initially forecast.”

Branston believes PHEVs could play a role within the optimum fleet policy along with RDE2 diesels and petrol models for medium to long-distance drivers, and none should be ruled out without proper analysis.

“From this coming April, RDE2 diesels not only give the range and fuel consumption that many fleets still need for their longer distance drivers, but they also have the advantage of avoiding the 4% diesel surcharge and may attract a 2% reduction in BIK rate,” she said.

Petrol plug-in hybrids regularly get a bad wrap for delivering poor mpg, but Fleet News has been running a Mercedes-Benz E 300 de plug-in hybrid diesel for the last five months and found it is capable of achieving more than 80mpg, even on long journeys, and many trips can be covered using no fuel at all. With more vehicles in the range launching with this powertrain next year, it provides another alternative to ICE with less compromise.

Fleet Logistics UK PHEV wholelife cost analysis:

By Graham Hill thanks to Fleet News

As my regular readers know I receive from one of my dealer contacts information that they receive from a firm of lawyers – well-known for defending dealer clients against consumers who sue for a variety of failings.

In the latest missive they explain what the dealer needs to do to avoid handing back a deposit paid. They used a case as an example whereby the customer had not declared that his part-exchange had not been a write-off and then couldn’t get finance anyway. The customer asked for his deposit back but when his request was declined he sued.

According to the lawyers the dealer did the right thing by taking the deposit THEN checking HPI only to find that at some time the car had been a Category D Write-Off. The invoice from the dealer had a statement that the car to be part exchanged had never been involved in an accident or written off by the insurers.

They admit that the customer probably had no idea that the car had been a repaired write off but by then the dealer had the deposit from the customer. The dealer called the sale off following which the customer heard that his application for finance had been declined.

Following this the customer asked for his deposit back which was refused in total. A court case ensued. The lawyers maintained that the case could not succeed as the cancelled sale  was no fault of the dealer.

The judge found that the dealer was able to recover any loss and expense caused by the cancellation of the deal and therefore entitled to keep the deposit. The lawyers explained that the dealer’s position was helped by the fact that they had followed advice and put into the terms included on the invoice that the deposit was not refundable.

They argued that as the customer had signed the invoice that he was aware that the deposit was not refundable. They even went on to say that had they carried out work on the car at the customer’s request they could have even invoiced for more.

I’ve seen plenty of articles from these solicitors that surreptitiously encourage dealers to act in an underhand way. It’s these areas that the FCA should be concentrating on – not APR’s.

So my advice is, as always, try to avoid a deposit. If you have to pay one to secure a car pay as little as possible – you may not get it back. Before paying the deposit get the dealer to carry out his HPI check to make sure that he isn’t going to use what he finds out later to hold on to the deposit. If the dealer was treating his customer fairly he should have done that before taking a deposit.

You should also make your finance application before paying a deposit. Again if the dealer was treating his customer fairly he would have done that as a matter of course. Having a statement included in the terms and conditions of sale saying that the deposit is non-refundable is on the edge of being illegal. The legal position, as was stated by the judge, is that the dealer can retain any costs and expenses paid over once you have signed the agreement then subsequently cancel.

By signing you enter into a contract so you are in breach if you cancel. However, the dealer can only recover his costs and expenses. Clearly, without saying so, the lawyers are suggesting that dealers include the term Deposit Non-Refundable as most people don’t know the law and may think that they can’t get their deposit back.

They are a disgrace. By Graham Hill

Please Note: B&C (proof) means that if you are making a personal application you need to be able to prove with a letter that you receive car allowance from your company. You cannot have the rate as a consumer if you don’t receive a car allowance. B&C means that the same rate is available for all businesses and all consumers. The rates shown above are mainly 9 rentals in advance. For more information click the line below.

Defective brakes were the leading cause of road accidents – where a vehicle defect was a contributory factor – for the sixth year running, new figures suggest.

The data, from the Department for Transport (DfT), reveals that defective brakes contributed to a total of 3,894 accidents from 2013 to 2018.

It also revealed the highest number of fatalities due to defective brakes occurred in 2018 with 15 deaths – representing a 67% year-on-year increase compared to 2017, according to analysis by Pagid.

There have been 64 fatalities due to defective brakes since 2013.

Conversely, the overall number of road accidents and casualties, where a contributory factor was identified, have decreased by a fifth (22%) since 2013, with a 9% decrease from 2017 to 2018.

The second leading vehicle defect as a contributory factor, with 11% fewer accidents over the past six years was illegal, defective or underinflated tyres, which contributed to 3,449 accidents.

There have been 5,705 casualties in road accidents where defective brakes were a contributory factor over the last six years; 7% more than in accidents where illegal, defective or under-inflated tyres contributed.

Phil Woodcock, Pagid key account manager, said: “While there could be several reasons why brakes are consistently coming out as the top vehicle defect in road accidents, consumers need to be aware that worn brakes are a big problem and present a serious danger to the public.

“Drivers need to be able to trust their brakes in extreme situations, and although they are checked during the annual MOT, 12 months is a long time, especially if the car has received an ‘advisory notice’ that they are partially worn.

“It is therefore worth getting them checked in-between MOT and service intervals especially if the driver notices any warning signs such as an audible squealing sound or abnormal vibration when the brake is applied.”

Outside of London and the South East which had the highest proportion of reported accidents due to defective brakes, the South West had the most accidents over the past six years (2013-2018) with 442 accidents due to defective brakes.

The North East had the lowest number of accidents due to defective brakes, with 132 over the same period.

As well as defective brakes, the Government data lists five other vehicle defects in this category: illegal, defective or under-inflated tyres; defective lights or indicators; defective steering or suspension; defective or missing mirrors; and overloaded or poorly loaded vehicle or trailer.

There are 78 factors overall which fall into nine categories, these are: road environment contributed; vehicle defects; injudicious action; driver/rider error or reaction; impairment or distraction; behaviour or inexperience; vision affected by external factors; pedestrian only factors (casualty or uninjured); and special codes.

Pagid is an OE-approved braking brand of TMD Friction, which produces over one million-brake friction products across Europe every single day and invests €30m in R&D annually.

Every friction formulation is road tested for 300,000km with its own fleet of test cars, and 1,000 hours on a dynamometer. By Graham Hill With Thanks To Fleet News

GEM Motoring Assist has suggested the current eyesight tests for drivers are ‘long out of date’, with the road safety organisation calling for tests every 10 years.

Neil Worth, GEM’s road safety officer, has said the Government should update laws to ensure a detailed eye examination is part of drivers’ photocard licence renewal process, which takes place every 10 years.

Worth said more than 3,000 fatal and serious injury collisions occur each year because of poor vision.

He added: “We believe it is entirely practical and sensible to require a test of visual acuity and field of view every 10 years, something that would fit in with licence renewal.

“Tests of this kind would not only make our roads safer, saving lives, disability and many millions of pounds through the reduction in the number of crashes, but they would also play a vital role valuable tool in the early diagnosis of many other costly medical conditions, irrespective of driving.”

GEM has worked with Felicity Gill, a community optometrist, who explained that she sees patients daily who are concerned about their own driving, as well astheir friends and family members’ driving experiences.

The most common ageing change in the eye is cataract (clouding of the lens inside the eye), with conditions such as diabetes/diabetic eye disease, glaucoma and age-related macular degeneration also causing concern.

With drivers staying on the road to their 80s, GEM believes that regular eyesights should be mandatory.

Worth concluded: “There are many benefits for a driver to staying mobile as long as possible. However, safety must remain the number one priority for everyone.

“We also cannot ignore the greater volume of traffic and the general increase in distractions, both inside and outside the vehicle, which further point to the clear need for more regular and detailed eyesight testing.”  By Graham Hill & Fleet News

On the 15^th October the FCA published its report into the way that PCP has been sold by dealers and brokers. Unfortunately, it focused on the way that they uplift interest charges to pay themselves commissions instead of the more important areas of blatant mis-selling.

Here is what I said about the report.

I was disappointed to read the update from the FCA and see that they have made such a major issue over the commission paid for organising finance rather than the plethora of other areas that could result in mis-selling and consumers losing out.

We must first stop treating PCP and Personal Contract Hire as finance agreements. Even HMRC has partially recognised this by introducing two ways of recording PCP agreements. If the agreement is set up with a final payment that is below anticipated value of the car, leaving equity in the car for the customer, it is treated as a finance agreement.

If there is no equity planned the agreement is regarded as a ‘Service Agreement’ and attracts VAT on the monthly payments (as well as VAT adjustments on the purchase of the car and the sale of the used car).

Once it has been agreed that the products are not simple finance agreements we need new laws to cover them as current laws are totally inadequate.

Given the nature of PCP’s you cannot simply extract one part of the equation and target that one item as a way of penalising the providers, i.e. car dealers and independent brokers. The actions proposed will not benefit consumers as dealers will simply move the lost income out of the commissions paid on finance to decreased discounts or reduced manufacturer subsidies.

With dealer groups reporting poor performance and issuing profit warnings they have to get their income from somewhere. APR is simply part of the marketing equation. When a dealer advertises 0% APR or low rate (subsidised) APR it doesn’t mean that he receives nothing in commissions.

The manufacturer will simply pay the dealer out of the discounts or subsidies that the customer no longer receives due to his attraction to either low rate or zero rate APR.

The APR could also reflect the amount of time that the dealer spends explaining and putting the finance in place. This is certainly the case with independent finance brokers. They earn their commission out of the interest charged thereby spreading the cost for the customer rather than charge a fee.

The broker needs to know how and where to place the business using a panel of funders. As we know the higher the risk the higher the interest charged and often increasing the time the broker spends on the case which has to be paid for.

Let’s face it customers are really only interested in what they have to pay upfront and what they pay monthly. The slicing of the cake is of little interest. The downside is that if dealers and brokers lose the ability to set rates and commissions to suit the circumstances we will see wholesale shut downs of dealers and brokers – is that really good for competition?

It will also mean that dealers and in particular brokers will concentrate on the easy cases leaving those with tarnished credit unable to get to work or take their kids to school because they can’t get finance for a car.

Finally, I would say that we need new laws to cover PCP and PCH agreements. APR and monthly payments are both negotiable and walkaways. Tell a dealer or broker that you won’t pay the APR on the quotation it’s up to him if he wants to see you walk out of the door or negotiate a better deal.

It is possible that the dealer is using his finance commission to increase the part exchange allowance. It is a complicated calculation. What we need are laws that cover the selling of ‘add-ons’, excess mileage charges, end of contract condition when the car is handed back, what happens to your agreement if you die or are unable to drive, etc. etc.

We also need clarity over the anti-competition activities of dealers such as Pendragon Group and other dealers when they refuse to invoice finance companies selected by consumers to provide their finance as they are not their own finance providers or on their panel of providers. Some will invoice a 3rd party funder but charge the customer between £250 and £500 for the privilege. Now that needs attention!  By Graham Hill

European Union called on to “ramp up” hydrogen stations in the face of “severely lacking” infrastructure.

Car makers have urged the European Union to “ramp up” investment in hydrogen filling stations, as the current infrastructure is “severely lacking.”

The European Automobile Manufacturers’ Association (ACEA) says “a strategic plan for the pan-European deployment of infrastructure for fuel cell vehicles needs to be put in place”, with the organisation also calling for consideration to be given to the requirements of hydrogen lorries.

The majority of the focus on provision for alternatively fuelled vehicles has been around electric cars and their charging points, with hydrogen vehicles left behind.

Some 17 new hydrogen stations were opened in Germany last year, bringing the total number in the country to 60; that compares to roughly 25,000 EV chargers. In the UK, there are around 15,000 EV chargers, against just 17 hydrogen stations.

Critics of hydrogen cars point to their expense (the Hyundai Nexo and Toyota Mirai both cost upwards of £60,000) as well as their rarity and complexity. Generating hydrogen fuel, meanwhile, is also problematic, with the majority of the element captured using fossil fuels.

But hydrogen advocates cite the fuel’s advantages, namely that cars running on hydrogen can be refulled as quickly as models with petrol and diesel engines and offer similar range. The cars themselves produce no tailpipe emissions other than water.

Hydrogen generation methods, meanwhile, could in theory move away from fossil fuels in future years, just as electricty generation has, to some extent. Research by Auto Express, meanwhile, found that some organisations were covering higher mileage in hydrogen cars compared to EVs.

The ACEA’s director general, Eric-Mark Huitema, said: “Along with other alternatively-powered vehicles, fuel cell vehicles hold a strong potential to help make the transition to zero-emission mobility.

“But their ability to reach this potential depends on a network of hydrogen refuelling stations being built up right across Europe. Today, there are just 125 hydrogen stations in the EU, so there is much work to be done in the coming years.”

Hydrogen cars will overtake electric cars, expert claims.

Electric power for cars “has its limits” and cars will be hydrogen-powered from 2030, an automotive-industry expert has said.

Dr Felix Gress, head of corporate communications and public affairs at automotive technology firm Continental, told an audience in Germany that electric cars represent poor value for money compared to petrol or diesel alternatives.

“For the customers, it will be difficult to accept such a car in the market – you pay a higher price, you get less of a car, so it will be a tough sell.”

And, while EVs may be grabbing the headlines and industry attention, Gress predicted that focus will be reversed within a decade or so. “The fuel cell is not ready to kick in yet,” Gress added. “By 2030, we’ll see that coming, especially in passenger cars that run long distances, or trucks.”

Gress added that manufacturers need to focus on electric cars in order to lower their fleet emissions and meet upcoming regulations in various markets, many of which have plans to limit or ban the sale of new conventionally powered petrol and diesel cars.

While these motivations may be driving the automotive industry, Gress warned drivers may not actually buy electric cars large numbers, partly due to what he perceives as their inherent limitations. “The battery technology, according to our estimations, has its limits,” he admitted, adding that “it doesn’t generate enough range” for some people’s needs.

Circling back around to the topic of hydrogen vehicles, Gress said this was something Continental is considering. “Fuel cell is not out of reach, I would say. The question is when it would kick in. We are working on that area, too.”  By Graham Hill & AutoExpress

European think tank claims ‘carmakers’ strategy to promote sales of inefficient, higher-emitting SUVs” is making CO2 targets hard to hit.

The popularity of relatively heavy, unaerodynamic SUVs is to blame for the recent rise in new-car carbon dioxide emissions not, as has often been reported, the falling popularity of diesel cars, according to a European think tank.

Industry figures show the average CO2 emissions of a new car rose by 2.9 per cent in 2018. European new-car CO2 emissions have also increased following years of decline, falling by nearly 22g/km between 2010 and 2016, but subsequently increasing by a provisional 2g/km in 2018.

Carmakers and environmental experts have often cited the falling popularity of diesel cars – which emit less CO2 than their petrol equivalents – as key to this bucked trend. But the European Federation for Transport and Environment think tank, more commonly known as Transport and Environment, says “contrary to carmakers’ claims”, the SUV “sales boom” has increased average CO2 emissions by 2.6g/km since 2013, with falling diesel sales responsible for a mere 0.25g/km rise.

The average emissions of the cars produced by manufacturers must be 95g/km by 2021, with penalties of €95 per g/km, per car, for companies not meeting those targets. Potentially huge fines have seen Fiat Chrysler team up with electric car firm Tesla to ‘share’ CO2 emissions.

Transport and Environment warns that “EU carmakers are only halfway to achieving their 2021 CO2 target…This is explained by carmakers’ strategy to promote sales of inefficient, higher-emitting SUVs”. Transport and Environment also claims carmakers have decided to “delay the investments into clean technologies required to meet the car CO2 law (in force since 2009) until the last moment.”

In July last year, the UK Government’s environmental watchdog made similar claims about SUVs, but this latest report puts firm figures on how much of a rise SUVs are reportedly responsible for.

SUVs find favour with buyers for various reasons, including ease of access for those with reduced mobility; convenience for parents who would have to stoop to strap their children into child seats in a conventional car; and the added road presence some motorists feel they have.

Visibility from the high driver’s seat of an SUV can also be improved compared to a conventional hatchback or saloon but, with SUVs making up just 7 per cent of the new-car market in 2009, 36 per cent today, and a predicted 40 per cent by 2021, that height advantage is likely to soon diminish as Europe’s pool of vehicles grows in stature.

Toyota is highlighted by the report as being the company best-placed to meet its CO2 target thanks to the fact that 56 per cent of its European sales are petrol-electric hybrids. The Renault Nissan Alliance is also in a strong position, mainly, according to the report “due to an early focus on sales of EVs such as the Nissan Leaf and the Renault Zoe.” Volkswagen, it is said, “could comply through a variety of tools such as improvements to combustion engines (new petrol engine and mild hybridisation of the new Golf) and a big ramp up of EVs through its all-electric ID.3.”

Firms most at risk of struggling with the 95g/km target include Honda and Ford, with Hyundai-Kia also highlighted as a possible concern. Transport and Environment says, however, that Hyundai and Kia have “recently begun a significant ramp-up of its EV and hybrid portfolio and sales.” The authors also consider that “Fiat-Chrysler would likely not be able to meet its target but will now comply thanks to its pooling arrangement with Tesla.”

Julia Poliscanova, Transport and Environment’s director of clean vehicles, criticised car makers for not doing enough to reduce emissions, but predicted: “We are going to see good quality, affordable EVs in the next year or two, not ten, and that’s excellent news for consumers who’ll be saving lots of money at the pump.”  By Graham Hill with the help of Auto Express

Yes they do! It’s all well and good having a car that sweeps you up to 60 miles per hour in 4 seconds but that’s no good if you can’t stop the bloody thing. OK, it may not be that bad but tests carried out by various car magazines have revealed some surprising results.

In the first place an electric car doesn’t have an engine, it has an electric motor but add in the bank of batteries and the weight shoots up making an equivalent EV much heavier that takes longer to stop even with upgraded brakes.

The next factor is the rolling resistance of the tyres. In order to maximise the efficiency of the car it must be fitted with as low rolling resistance tyres as possible. Unfortunately, this means that whilst some low rolling resistance tyres have very good grip they don’t tend to be as good as those fitted as standard to petrol and diesel cars.

Tyre technology improves constantly so the EV car manufacturers are expecting the situation to improve as new tyres developed specifically for just EV’s are launched.

Finally, there is the regenerating braking technology that takes unused energy that would normally be lost and transfers it back to the battery. These systems can be set in such a way as to slow the car down as soon as you take your foot off the accelerator. This can give the feeling of not braking so aggressively when you apply the brake.

However, this should not affect the braking in an emergency braking situation. Clearly, more work needs to be done here! By Graham Hill

Many new cars, without most drivers knowing it have a battery recharging system fitted that operates in a similar way to KERS on an F1 motor racing car. This happens because with so much draw on the battery in a modern car with climate control, audio systems, sat navs and other big users of the electrical system, including firing up the car, more power generation is required than a traditional car generator.

With so much charging and draining going on the batteries must be much more sturdy than the batteries fitted to my early cars so it’s important that you have fitted the correct quality of battery when changing it. A situation understood by an Audi TT driver who bought a used car for use mainly at the weekend.

So he bought a replacement battery from the RAC and got them to fit it. All was fine but after about 18 months and well within the warranty period the battery failed. He called out the RAC, costing him £30 as he wasn’t a member but they said if the battery was faulty they would replace the battery and refund the call-out fee.

However, when the engineer inspected the battery using their test equipment it said the battery was faulty but the diagnostic machine told the engineer not to replace it. RAC Customer Care responded to the driver’s complaint, as explained by Whatcar, in a letter that said the most probable cause of the failure was lack of use which breached their warranty as being poorly maintained.

The driver, knowing that lack of use could still drain the battery and over 18 months he had only driven 2,030 miles he put the battery on trickle charge when the battery was not in use. This was explained to Whatcar who stepped up and contacted the RAC.

In the end the driver was reimbursed the callout and the cost of a new battery but as we expect people to use their cars less and use public transport more surely the manufacturers should look at this situation and make batteries that hold their charge better and ensure that unnecessary systems shut down when the car is parked.

In the meantime, whether it’s a warranty, insurance policy or finance agreement it’s important to read them and understand all the terms and conditions. This is something that I’m campaigning for, better pre-contract information. The driver should have been made aware of this key piece of information before taking the battery.

By Graham Hill