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When I read the latest changes to the way that leases would be accounted for in the books of large companies, being introduced by the International Accounting Standards Board (IASB), I started to get Deja Vu! You see when I first came across leasing (contract hire) I was General Manager in a PLC with over 700 vehicles in the fleet that we owned outright.

One of the departments that I was responsible for was Transport and the fleet of vehicles. They were costing us a fortune but more than that they were shown as assets on our balance sheet but the outstanding HP finance was shown as a liability. The net effect was negative. OK, technical bit over.

At the time, contract hire was only advantageous to large companies with cars that were covering big mileages. For most businesses, the off-balance sheet recording of contract hire has been an advantage because without the assets and liabilities being recorded it presents a stronger picture. It is also easier to simply record a monthly rental cost than applying the writing down process to owned assets.

Here’s where it gets interesting. After absolutely donkey’s years of negotiating the IASB has ruled that contract hired vehicles should, in future, be recorded ‘on balance-sheet’. BUT this rule will only apply to companies reporting under IASB rules, mainly those companies quoted on the London Stock Exchange.

All other companies operate under the UK Generally Accepted Principles (GAAP) which remains as is so the vast majority of firms will remain unaffected. However, as this situation could affect some of the biggest fleets in the country running thousands of vehicles the daily rental market has pricked its ears up.

Whilst January 2019 will see the new IASB rules on leasing come into force another standard, IAS 16 will come into force relating to rental vehicles where the rental period is up to a year. These will remain off-balance sheet for all companies.

As a result, the daily rental companies have got themselves excited because they receive massive discounts from manufacturers – up to 50% off the recommended On The Road price. Despite this discount, the reason why their rates are not lower than contract hire rates is utilisation – which can be as low as 40%.

This means that cars are sitting around costing money for longer periods than they are actually being hired. This pushes up rentals massively. However, if the cars are rented out on 12-month contracts the utilisation is 100% so they could reduce the monthly cost substantially from their daily rate bringing them closer to contract hire rates.

Clearly, if the rental companies brought out such a product specifically for the large fleets, as happened with contract hire, could we see a new product offered, not only to smaller businesses but also to consumers.

Plenty of discussion going on in the industry, both for and against, but with the uncertainty of Brexit a 12-month contract, priced sensibly, has some merit.  By Graham Hill

A study into the use of mobile speed cameras has found that 20 forces across the UK are now using speed cameras for other purposes. They have found that the quality of the photos taken by the latest equipment is now so good that, even at speed, it can capture the driver and detect whether he or she has a seatbelt on or is holding a mobile phone.

Whilst this is a good move towards safer roads Sarah Sillars, chief executive of IAM RoadSmart, was reported by AutoExpress as saying, ‘What we need are clear and consistent guidelines on what the cameras are being used for.’

I agree that we should be aware that police and local authority cameras can be used to determine whether you are breaking the law. Knowing that local authority town centre cameras can be used to convict those causing criminal damage, or worse, acts as a deterrent. In the same way, knowing that police mobile cameras could be used to catch those not wearing seatbelts or using a mobile phone, would also act as a deterrent as well as provide evidence for prosecutions. The move has to be welcomed given the fact that there are so few police on our roads. By Graham Hill

The AA has carried out a survey amongst drivers and found that two-thirds felt that they could get away with careless driving due to a lack of traffic police. Researchers asked over 19,500 drivers a variety of questions about driving offences. In response to the questions, 65% said that they felt that they were unlikely to be caught or punished for tailgating or hogging the middle lane of a motorway. 55% said they felt they would get away with driving a car in a dangerous or defective condition.

49% felt that they would get away with not wearing a seatbelt and 44% felt that they would escape prosecution for jumping a red light. When asked about visibility of traffic police, 65% felt there was no visible presence on local roads compared to 43% suggesting no visible presence on motorways.

The drivers were next asked if they thought cameras alone could do the job of detecting careless driving instead of physical police. 71% believed that they couldn’t but only 45% believed that greater powers should be given to Highways England traffic officers when it comes to enforcement.

AA President Edmund King commented on their findings by expressing concern that a lack of officers on the roads meant that drivers felt they could get away with careless driving and other serious motoring offences.

Whilst using a mobile phone when driving is one of the most dangerous offences more than half felt they could get away with it without fear of being caught. This is causing concern to both the AA and the Government who are keen to stamp it out.

In summary, the report has revealed that drivers are taking less notice of the law as a result of fewer cops in cars patrolling our roads and motorways. Whilst everyone agrees that cameras can act as deterrents something more needs to be done to prevent accidents and serious or fatal injuries. The only solution – get more cops in cars. By Graham Hill

Following complaints and serious concerns expressed by drivers on Smart Motorways the Highways Agency has had a rethink and decided to place refuge areas, wherever practical, at distances of 1 mile and not 1.5 miles as is the case at the moment.

They will also extend a system, currently in operation, that automatically detects broken down vehicles in live lanes. Highways England will also install more refuge areas in locations  ‘with the highest levels of potential live lane stops’ and paint them orange to increase driver confidence.’ That’ll work then, nothing like a lick of orange paint to increase confidence eh!

Clearly something had to be done following a survey carried out by the AA that found 80% of respondents saying that they felt that smart motorways are more dangerous than traditional motorways. The automated breakdown detection system will be rolled out to all smart motorways across the country following a successful trial on the M25.

Smart motorways are now being accepted more but Highways England have found motorists still using lanes that have been blocked off with a red X signal. Whilst they have not been charging motorists for breaking the rules to date, in future they will incur fines as well as penalty points, due to begin this year – you have been warned. By Graham Hill

On the 20^th May this year new rules come into play. Special attention is being paid to diesel cars and new defect categories will come into force. New categories will be Minor, Major and Dangerous. Major and Dangerous will cause the car to fail the test. Cars with Minor defects will be allowed to pass but the faults will be recorded on the MOT certificate and online MOT record in the same way as ‘advisories’ are at the moment.

The new tighter rules have been put in place to stop those driving older diesel cars with particulate filters from having the casing opened and the filter removed rather than replace it. In future, if a diesel car, fitted with a particulate filter (DPF) emits ‘visible smoke of any colour’, during the metered tests will be given a ‘Major Fault’ and will fail their MOT.

Testers will also need to check the DPF canisters more carefully and if there is evidence of them being opened and re-welded, removed completely or otherwise tampered with the tester must refuse to test the car unless the owner can prove that it was done for ‘legitimate reasons such as filter cleaning.’

The changes have been brought in by the EU with the categories Major, Minor and Dangerous being applied, in future, to all cars across the EU. The wording of MOT certificates will be altered to reflect the changes. Unlike the current scheme if faults are found that could show that the driver is driving a dangerous car or in breach of the Road Traffic Act he could be prosecuted. That should produce a few headlines!

Some believe that the new rules will create even more confusion. For example, if a steering box had a leak it would be regarded as a minor problem and the car would pass its MOT. However, if the leak from the box is enough to be dripping that would lead to the fault being regarded as a major fault and result in a failure – really!!

There are mixed views regarding the new categories. My view is that they are not workable as there will be no consistency between MOT centres as testers take a different view to each fault they find. What may be Minor to one could be dangerous to another. We will see. By Graham Hill

According to Cap HPI, one in 16 cars on our roads has been clocked, i.e. had their mileage adjusted. The number of instances of clocking has increased by 25% over the last 3 years with over 40% of dealers having bought a second-hand car that they later found to be clocked. Cap HPI have estimated that an average family car can increase in value between £2,000 and £4,000 after wiping off 60,000 miles from the mileage reading.

The RAC agreed with the Cap HPI findings saying, ‘Our vehicle check data shows that discrepancies with MOT recorded mileages are on the increase for vehicles more than 3 years old.’ The cost of clocking to buyers has been estimated to be £800 million with an estimated 5 million cars showing incorrect mileages.

Years ago someone would climb underneath the car, attach a drill bit to the speedo cable and run the mileage forward till the desired mileage was reached after starting again from zero. Or someone would remove the speedo and with a screwdriver fiddle about with the counters but that often left telltale scratches on the dial and the counters. Not that I ever did anything like that.

It was as wrong then as it is now. But not illegal as long as you told the new owner that the mileage has been adjusted – yeah right. The trouble is these days mileages can be adjusted with a laptop and connector within a few minutes. There are companies out there who will ‘adjust your mileage’ for £100. Frankly, it’s a disgrace.

As always the press has turned on those taking out PCP agreements who realise how much the excess mileage bill will be at the end of the agreement and decide that it would be cheaper to adjust the speedo reading. As a result, it has been suggested by the press, that 3-year-old car are being returned to the leasing companies with an adjusted mileage. Of course years ago the only reason why cars were clocked was to increase value. These days it is suggested that it’s because drivers are trying to avoid excess mileage charges.

The fact is that years ago we had no warning lights in the cockpit. We either had the car serviced whenever we reached the service mileage or at the end of the year, whichever came sooner. Or, as was the case with this struggling accountant, we waited till we heard a crunching noise from the brakes, clutch, suspension etc. and got them replaced. So whilst we were being conned out our hard earned money by the clockers they weren’t putting lives at quite so much risk as those clocking these days.

As I’ve mentioned before, many of the safety systems in modern cars are triggered by the mileage on the car when repairs or replacements are necessary. So if a driver has had the mileage changed on a modern car he or she could be putting theirs and other’s lives at risk by throwing out all the safety alert systems that rely on mileage.

So if you are considering clocking – don’t! And if you are buying a used car check the service history for dates and mileages, look carefully at the condition, worn carpets on a low mileage car is always a giveaway. Test drive the car and ask the seller questions if you have concerns. Don’t get caught out by a dealer who puts a caveat into his sales agreement that states that the mileage isn’t verified.

Another trick of the trade is to show one mileage on the car when you test drive then adjust it back to the original true mileage when you collect it so that they can’t be prosecuted for selling you a car showing an incorrect mileage.

The crazy situation is that clocking can put lives at risk. I, like others feel that the Government should make the selling of the equipment that they use to adjust mileages online illegal and the clocking of cars by anyone other than a registered garage, who only does so after a fault is repaired, to be made completely illegal. As usual our laws are not fit for purpose. By Graham Hill

When a used car dealer buys a car he either buys it at auction, takes it in part exchange or buys it from one of many other sources. As a registered trader he simply advises the DVLA that he is now the owner and has the car up for sale. Thus avoiding another owner in the log book (V5C). All good so far.

As a result of this he must keep the car off the road and when driven on the public highway he needs trade plates. The trade plates identify the dealer and also prove that he has Trader Insurance. As a result he can use the car for his own trips but predominantly the trade plates are used when a customer takes the car for a test drive.

A little like having fully comp insurance with the ‘any driver’ clause. But, unlike a domestic policy that generally only covers other drivers for Third Party Only the trader policy covers all drivers fully comp.

Now here’s the thing, a firm of lawyers has found that under the Road Vehicle (Registration & Licencing) Regulations 2002 a dealer who has held a car in stock for more than 3 months i.e. the three months period of grace, he or the company must register the car in their name (PART 4, Regulation 24).

This means, according to the lawyers who picked this up, that the dealer can no longer use the trade plates on the car once registered in their name, they must tax the car and insure it independently. It could also have a more sinister consequence.

Once the car has been owned for more than 3 months as a ‘stock car’ very few dealers are aware that they must buy the car so continue to take potential buyers out on test drives using their trade plates. As the DVLA would consider that the car was illegally on the road, after the 3 months period, unless registered, it could render the traders insurance void.

So you could be on a test drive, have an accident, and either be uninsured, or if you have fully comp on your own car, your own insurance may take over. However, you will only be covered for possibly third party with potentially a massive excess to pay.

Worse still I understand that many fully comp policies no longer include any cover at all when driving any car other than your own unless requested at the time of taking out the policy.

With over 8 million used cars changing hands each year there must be many car dealers carrying stock over 3 months old. Ask the question when you go for a test drive. By Graham Hill

I read an interesting story this week about car dealership Robins and Day who had to pay a fine of £5,000 plus £500 costs and £1,000 compensation to their customer for not declaring that the car was an ex-hire car.

Their customer bought a Peugeot from their dealership in Gateshead in January 2017 for around £10,000 marked up as ‘one previous owner’. Within a few days of purchase he noticed a smell and, having returned the car to the dealer, was told that the clutch needed replacing.

He was then told that he would have to pay the major part of the replacement cost, £650, as they suggested that it was because of his wife’s driving style. You know me, my blood started to boil when I read this. How on earth could a driving style wear out a clutch in a matter of days? Personally I would have rejected the goods.

In the meantime the customer received the V5C (log book) which showed that the previous owner was car hire company, Europcar. The customer took up the case with the local Trading Standards Office who confirmed that the car had indeed been owned by Europcar so had been driven by many drivers with varying driving styles.

Gateshead Council Trading Standards prosecuted Robins and Day under the Consumer Protection from Unfair Trading Regulations 2008. The company pleaded guilty and were ordered to pay as shown above.

But the interesting point here was that in amongst the report they explained that the Advertising Standards Authority (ASA) has ruled that dealers now have to disclose the full history of any car before selling it.

This includes whether the car was leased, hired or used for fleet purposes. In my opinion I feel it is right that you are told if a car was hired out because it would have had many drivers and, as a result of the different driving styles, cause abnormal wear and tear on certain component parts.

However, in my experience, most lease and fleet cars are only driven by one person or possibly the main driver along with another family member. They also have to be maintained to the highest standard to avoid end of lease charges as well as making sure that the car spends as little time off the road awaiting repairs as a result of driver abuse.

So in fact this could work in your favour. Judge the car by its mileage and service history. If you find an ex lease car with relatively low mileage and perfect service history you could still argue with the dealer that as the car was leased ‘and probably abused as most company cars are’, you need more off the price.

Of course the car will be perfectly fit for purpose but the ex-lease or fleet info puts you into a strong negotiating position. By Graham Hill

It is now becoming ridiculous as Government policy on vehicle emissions falls into disrepute. We have Chris Grayling and Mayor of London Khan along with other ‘experts’ destroying the diesel market by demonising diesel cars and forcing new car buyers to consider moving back to petrol.

Fleet operators are now considering moving over to petrol cars under pressure from environmentalists. However, we still judge the environmental friendliness of new cars by the amount of CO2 they emit.

The higher the CO2 output the more customers will pay in first year road fund licences and employees, who drive company cars, pay benefit in kind tax based on CO2 emissions. So those considering changing cars, whether businesses or consumers, are left totally confused.

To add to the confusion we hear from the Department for Transport in a release from Buyacar.co.uk, that CO2 emissions from new cars have risen for the first time in 14 years. 2017 saw an average CO2 emission rise from 120.3 g/km to an anticipated 121.1 g/km.

So the next thing we will see is a change to the ozone layer and fears that holes will be re-appearing. So on the one hand we are being told that diesel cars are out but those eying up the ozone layer are suggesting that we should be moving back to diesels to bring back down CO2 output.

We need clearer direction from the Government as to what cars should be bought or the environment will continue to suffer and customers paying more for their cars than they need to. Graham Hill

Following the VW debacle the EU has introduced fines on manufacturers who’s cars don’t meet EU emission standards.

Each member country is expected to carry out emissions tests and any cars falling below the EU emission standard will cause the manufacturer to be fined 30,000 Euros PER CAR.

The EU has introduced tougher rules to compliment new laboratory and real world emissions tests for new vehicles. It seems that only the manufacturer will be fined and not the driver, which is fair.

Each member country is expected to carry our random inspections and if cars are found to be outside certain emissions limits not only will the manufacturer be fined a Europe wide recall will be imposed so it’s important that the manufacturers don’t fiddle emissions in the first place.

The new rules come into play in 2020. This could result in some massive fines which will result in the cost of new cars increasing. And I feel very uncomfortable with these ‘real life’ tests not being as accurate as many would expect.

I like the idea that we are trying to clean up our act when it comes to the environment but such heavy fines are, I feel, a little over the top.

The UK Government is expected to adopt the new emissions tests and the associated fines, even though we should be out of the EU in 2020. Graham Hill