A further issue facing the SMR industry is ensuring there are enough trained mechanics to work on electric vehicles (EVs) in the future.
At the end of last year, cross-party think-tank Social Market Foundation estimated Britain is facing a critical shortage of qualified technicians, who need specialist training to work on EVs due to the different technologies and potentially lethal high voltages involved.
In its A Vehicle for Change report, the organisation says that, by 2027, there will not be enough qualified mechanics to maintain all of Britain’s EVs, which risks driving up service costs and potentially leaving some drivers unable to have their vehicles maintained properly.
This followed a similar warning from the Institute of the Motoring Industry (IMI), which warned only 11% of technicians in the UK are qualified to work safely on EVs.
According to the IMI, there could be a shortfall of 25,100 qualified technicians by 2027.
“The skilled EV workforce is not keeping up with the sales of BEV, plug-in hybrid and hybrid vehicles,” says Steve Nash, chief executive of the IMI.
“While manufacturers and their franchised dealers are committed to EV training, lack of funding means independents risk being left out in the cold and this risks consumer choice being restricted and EV servicing costs rising.”
The IMI is calling on the Government for £15 million funding to help get more technicians ‘EV ready’. By Graham Hill thanks to Fleet News
While many organisations are electrifying their fleets with the main aim of reducing carbon emissions, cost still matters.
Traditionally, the typically higher purchase or lease rates of a battery electric vehicle (BEV) compared with an internal combustion engine (ICE) model have been mitigated by factors such as lower fuel and/or charging costs.
However, this advantage has been eroded significantly through the soaring cost of electricity.
Another traditional benefit for BEVs has been lower service, maintenance and repair (SMR) outlay.
It has been widely supposed they will deliver uniform SMR benefits over petrol and diesel vehicles because they have fewer mechanical parts, minimising the likelihood of breakdown and requiring less routine maintenance.
But with growing numbers of BEVs on the road giving more data in this area, does this expectation still hold true?
Yes, says Vincent St Claire, managing director of Fleet Assist, which has a network of 5,200 franchised and independent garages, but with a caveat.
“All the indicators are strong that SMR for BEVs will continue to be less than that for ICE vehicles,” he adds.
“However, while we are now in a period after the pandemic where BEVs are in proper real world use and we are seeing vehicles doing higher mileage than they’ve ever done, it is still a small sample and until we get a bigger data set in terms of numbers of BEVs, we can’t say with a high degree of conviction the issue is settled.”
In the first 10 months of last year, Fleet Assist saw the number of BEV SMR jobs on its network increase by 73% compared with the same period in 2021, but they still accounted for just 9% of its overall vehicle parc.
The company’s average cost of BEV SMR in 2022 was £171, 40% lower than all other vehicle types including ICE and hybrid (£243) compared with the previous year.
But the average age of ICE vehicles analysed last year was three-and-a-half years older than the equivalent BEV, which was likely due to the ICE vehicles being retained by fleets due to extended contracts and vehicle availability.
This combination would result in larger jobs and major components being fitted to ICE vehicles so has to be taken into consideration, says St Claire.
The most used components in ICE vehicles were, in order: brake pads, brake discs, bulbs, oil filters and pollen filters.
For BEVs these were pollen filters, bulbs, key fob batteries, wipers and brake fluid.
Rivus reports overall SMR costs for fully electric LCVs are 20% lower than for ICE equivalents, while the service costs are 65% lower.
The company has measured the costs by comparing BEVs seen by its service network with ICE vehicles which are from the same model line-up and registered at the same time.
“Given the LCV learnings we’ve had from our garages so far, the high-level figures do look quite positive,” says Sarah Gray, head of electric vehicles and alternative fuel vehicles at Rivus.
“When you put all the costs together in a bucket to have a look at how these sets of vehicles have performed, we’re looking at about 20% less cost overall at the moment for EVs, which is really positive news.
“What I would say, however, is we’re still in really early days. For example, the e-Vivaro has probably only been out for two-and-a-half years whereas the ICE Vivaro has probably been around for 20 years.
“When they come into our garage over a longer period of time we can start predicting what maintenance they might need, whether we need to make any changes in terms of service intervals etc.
“At the moment with BEVs, they may have just been in for one service and that could be a routine check and nothing is required.
“When we get further down the line and we start servicing vehicles in year three or year four, I don’t expect the savings to be as much as they seem now, but we’ll wait and see how they perform.”
Real world data from Epyx, however, shows a mixed picture for EV servicing costs compared with their petrol and diesel counterparts, with results heavily dependent on the vehicle model.
“At the outset, it should be underlined that fairly substantial caveats must be applied to this data,” says Charlie Brooks, strategy director at Epyx.
“In terms of the information available on 1link Service Network, there remain relatively few EVs of relevant ages and mileages.
“For the comparisons we’re quoting here, there are only around 170 vehicles in total. However, it shows, perhaps surprisingly, that the emerging picture is more mixed than might be expected.”
Its figures show the average cost of a service for a widely used battery electric hatchback over three years/25-30,000 miles was £164. Over the same cycle, an ICE hatchback was £220. The average repair cost for a fully-electric hatchback was £70, £10 more than its ICE counterpart.
For a large prestige SUV over two years/20-30,000 miles, the average service cost was also £164 for BEV models, and £279 for an ICE. As with the hatchbacks, the cost of repairs for an electric SUV (£81) is slightly more than an ICE SUV (£70).
Analysis of data from Kee Resources, which is used in the Fleet News company car tax calculator, reflects a mixed picture (see table, above).
Over a replacement cycle of four years/80,000 miles, a petrol Volvo XC40 B3 Plus has an SMR cost of 4.29 pence per mile (ppm): exactly the same as its Recharge Plus fully-electric sibling.
It is a similar story for the BMW X3: the fully electric iX3 M Sport will cost 4.77ppm in SMR, with the petrol xDrive20 M Sport at 4.90ppm.
There are still significant savings to be had with some models, however. A Hyundai Kona Electric Premium will cost 2.61ppm in SMR, 42% less than for the petrol 1.6h-GDi Premium.
“Broadly, while workshop costs for some EVs represent substantial savings over their petrol and diesel equivalents, this cannot be assumed,” says Brooks.
“Also, the number of times that EVs visit garages for maintenance or repair and the amount of time they spend unavailable off-road are consistently similar to ICE vehicles – and those servicing factors very much represent a substantial cost to business.”
Epyx data shows the electric hatchback averaged 5.7 visits to service outlets and spent 3.2 days off-road due to SMR issues.
These figures are very similar to the petrol version of the same model, which had 5.0 service visits and 4.5 days off-road.
The electric SUV delivered 4.1 visits compared with its petrol counterpart’s 4.0, but its 3.4 days off-road was superior to the ICE vehicle’s 4.9.
“What the data doesn’t tell us at this stage is why this is the case. There could be good reasons,” says Brooks.
“For example, EVs remain a relatively new technology when operated on a large scale and what we are seeing could be teething problems that may range from workshops being unfamiliar with these types of vehicles through to parts not being readily available.
“However, the bottom line at this stage is that fleet managers should not automatically believe that, in adopting EVs, they are going to see SMR benefits with every model.
“That situation may well change over time, but these comparisons show that we are not there yet.”
Tyres
Conventional wisdom has been that the tyre costs for a BEV would be greater than for an ICE vehicle because their extra weight and high instant torque would lead to higher wear.
This has been supported by data from Rivus, which has found tyre costs are 15% greater for a fully-electric van than its ICE counterpart, but wider evidence is inconclusive.
“If electric cars were fitted with the same tyres as ordinary vehicles, the rates of wear would be great: but they aren’t,” says a Kwik Fit spokesman.
“Electric car tyres are built to withstand the pressure of the increased battery weight and manufacturer improved not only the rubber compound and sidewall strength, but also the tread and groove design for resilience.
“As result, they are more expensive than regular tyres, but due to their strain-absorbing structure, they will wear down less quickly.”
Michelin says conventional tyres on a BEV would probably wear out around 20% faster than an EV-specific tyre.
Kwik Fit adds: “It seems then, that EV tyres do last longer, but this result comes with a caveat.
“Not only are EV tyres more expensive, but the rate of wear has a lot more to do with the driver than the tyre itself.”
Excessive braking, mileage, wheel alignment and tyre monitoring are the biggest influence on tyre lifespan.
Research released in March by Epyx found tyres for electric company cars are on average both bigger and more expensive than those for petrol or diesel equivalents.
The company found the average replacement tyre fitted to an EV is 18.59 inches and costs £207 while, for ICE cars, the corresponding figures are 17.40 inches and £130.
Accident repairs
As with servicing and maintenance, the sample size of BEVs which have been involved in collisions is too small over too short a period to draw definitive conclusions.
However, in its analysis, Rivus has found the cost of repairing a fully-electric car after a collision is around 25% more than for an ICE equivalent, while this figure is around 55% for LCVs.
Its figures show the average accident repair cost of an ICE car is £1,155, a BEV £1,327 and a hybrid £1,733. For LCVs, the costs are £1,545 and £2,394 for ICE and electric models respectively.
Vehicle off-road time is also greater for EVs. Rivus analysis shows the average time off the road for a battery electric car is 10.9 days, hybrid 16 and an ICE car 8.9. For LCVs, this is 17.7 and 9.3 for electric and ICE respectively.
“In many circumstances, EV accident repair is no different from ICE vehicles,” says Adrian Watson, head of engineering at Thatcham Research.
“But under the hood lie everyday essentials, such as safe, cost-effective, timely post-accident repair and the surrounding claims process so critical to putting any new vehicle on the road.
“And nowhere is the difference between EV and ICE more clearly underlined than in the insurance claim chain.”
Watson says because EV batteries are expensive, OEMs rigorously protect them within crash structures which means they will rarely be affected by low-speed impacts.
However, challenges arise when the battery is involved, either directly or indirectly as a result of a collision, or indirectly when the high voltage system becomes associated with the repair.
Thatcham Research is to lead an Innovate UK-funded project focused on EV collision repair and salvage processes and their impact on insurance claims and their associated costs.
Other project partners include vehicle salvage, dismantling and recycling specialist Synetiq and LV= General Insurance.
In the first phase, the five-month project will focus on identifying where the claims workflow is different for EVs, revealing potential pain points.
Following this, Thatcham will use the findings to determine where more detailed work may be required in the future.
SMR industry facing EV skills shortage
A further issue facing the SMR industry is ensuring there are enough trained mechanics to work on electric vehicles (EVs) in the future.
At the end of last year, cross-party think-tank Social Market Foundation estimated Britain is facing a critical shortage of qualified technicians, who need specialist training to work on EVs due to the different technologies and potentially lethal high voltages involved.
In its A Vehicle for Change report, the organisation says that, by 2027, there will not be enough qualified mechanics to maintain all of Britain’s EVs, which risks driving up service costs and potentially leaving some drivers unable to have their vehicles maintained properly.
This followed a similar warning from the Institute of the Motoring Industry (IMI), which warned only 11% of technicians in the UK are qualified to work safely on EVs.
According to the IMI, there could be a shortfall of 25,100 qualified technicians by 2027.
“The skilled EV workforce is not keeping up with the sales of BEV, plug-in hybrid and hybrid vehicles,” says Steve Nash, chief executive of the IMI.
“While manufacturers and their franchised dealers are committed to EV training, lack of funding means independents risk being left out in the cold and this risks consumer choice being restricted and EV servicing costs rising.”
The IMI is calling on the Government for £15 million funding to help get more technicians ‘EV ready’. By Graham Hill thanks to Fleet News
I suspected that this would be the case as we got closer to 2030. On the one hand electric car prices are dropping improving the incentive to buy but the government will need to introduce disincentives to force drivers away from petrol and diesel.
It looks like they are aiming to achieve this through the increased cost of Euro 7. What next? 1st registration tax? Road Fund Licence? Fuel Duty? For those sticking to their petrol and diesel guns expect some swinging cost increases over the next few years. Onto the report:
The cost of implementing Euro 7 proposals for cars, vans and trucks will be four to 10 times higher than those highlighted by the European Commission, new research suggests.
The study by Frontier Economics calculates a per vehicle cost of around €2,000 (£1,740) for cars and vans with an internal combustion engine, and close to €12,000 (£10,450) for diesel trucks and buses.
The Commission estimates in its Euro 7 impact assessment a cost €180-450 (£156-390) for cars and vans, and €2,800 (£2,430) for trucks and buses.
The estimates comprise direct manufacturing costs only, primarily for equipment and investments.
The report says that prices to customers would be higher than the figures cited in the study.
Sigrid de Vries, director general of the European Automobile Manufacturers’ Association (ACEA), said: “The European auto industry is committed to further reducing emissions for the benefit of the climate, environment, and health.
“However, the Euro 7 proposal is simply not the right way to do this, as it would have an extremely low environmental impact at an extremely high cost.
“Greater environmental and health benefits will be achieved by the transition to electrification, while at the same time replacing older vehicles on EU roads with highly efficient Euro 6/VI models.”
In addition to direct costs, the Euro 7 proposal will trigger indirect costs, such as higher fuel consumption, claims the ACEA.
Over a vehicle’s lifetime, it says that this could increase fuel costs by 3.5% – amounting to an extra €20,000 (£17,400) for long-haul trucks and €650 (£560) for cars and vans.
The ACEA says that they would add to the total cost of owning a vehicle, placing additional financial pressures on consumers and businesses at a time of high inflation and rising energy prices. By Graham Hill thanks to Fleet News
Some of the UK’s largest fleet operators, including BT Group, LeasePlan, Openreach and Royal Mail, are calling on the Government to set ambitious sales targets for zero emission vehicles (ZEVs).
The Government published its Zero Emission Vehicle (ZEV) mandate proposals in March, which would force manufacturers to sell a certain proportion of electric vehicles (EVs) in the lead up to 2030.
In 2024, the target would be 22% for cars and 10% for vans, with the proportion of zero emission vehicles increasing year-on-year before reaching 80% and 70%, respectively, by 2030 and 100% by 2035.
The Climate Group, on behalf of the UK Electric Fleets Coalition, a group of 28 UK businesses with some of the largest fleets in the UK, has responded to the Government’s third and final consultation on the ZEV mandate by calling for ministers to implement ambitious sales targets for ZEVs.
Mandating that manufacturers sell more EVs, with stronger interim targets for sales in 2024 and 2027, will boost supply and help businesses go electric faster, the Climate Group said.
Catherine Colloms, managing director of corporate affairs and brand at Openreach, said: “We’re serious about our responsibilities to the planet and the communities we serve. As part of that we’ve pledged to be a net zero business and switch the bulk of our commercial van fleet to zero emissions by 2030.
“We have the second largest commercial fleet in the UK and expect to have around 4,000 electric vans in our fleet by the end of March 2024.
“But like others, we continue to face shortages in the vehicle supply chain especially when it comes to range, functionality and choice – for some vehicle types there is simply no option yet.
“Therefore, it’s imperative that Government pushes ahead with the ZEV mandate so that we can lead the world when it comes to decarbonisation.”
Shortage of supply is most acute in the UK’s commercial van sector, with businesses ready to invest but unable to secure the electric vehicles that meet their specifications in the quantity they need.
Sandra Roling, director of transport at the Climate Group, said: “It’s now up to the UK Government to offer the support businesses and drivers need in the switch to cleaner vehicles.
“The demand is clearly there, and our business members have consistently called for a ZEV mandate to help drive the EV supply – it’s vital to ensure cars and in particular vans are available in the volume and variety that companies need.
“To do this, we need more ambitious interim sales targets, so we’re urging decision makers to push the boundaries.”
She added: “The businesses we work with – like BT Openreach, LeasePlan and Royal Mail – are committed to investing in the technology, and with a simple, UK-wide and ambitious ZEV mandate introduced in 2024, they can help transform the UK’s roads faster. The sooner the mandate comes in, the better.”
The UK’s ZEV mandate, says the Climate Group, should also be simple, consistent across the home nations with limited flexibilities and loopholes. By Graham Hill thanks to Fleet News
Electric vehicle (EV) battery manufacturer Gotion High Tech, which supplies Volkswagen, has revealed the Astroinno L600 with a range of 1,000km (620 miles).
Gotion has spent the past 10 years developing the lithium manganese iron phosphate (LMFP) battery having wanted to improve the energy density of lithium iron phosphate (LFP) batteries.
Dr Qian Cheng, the executive president of Gotion Global, said: “Astroinno L600 LMFP cell achieves 240Wh/kg in gravimetric energy density and 525Wh/L for volumetric energy density.
“It can achieve more than 4,000 cycles at room temperature and 1,800 cycles at high temperature, easily achieves 18 minutes of fast charging, and passes all safety tests.”
He added: “Because of the high energy density of Astroinno battery, we can also achieve a range of 1,000km (620 miles) without relying on NCM (nickel manganese cobalt) material.”
In terms of battery design, it has also reduced the number of structural parts by 45% and lowered their weight by nearly a third, while the wiring required has fallen from 303 metres to 80 metres
Gotion expects to start mass production of the L600 battery cell in 2024.
The 620-mile range quoted by Gotion would be a huge increase in terms of what is currently available on the market. Volkswagen’s new electric ID7 upper-medium car, for example, will have a range of up to 438 miles.
An electric concept car from Mercedes-Benz, the Vision EQXX, did manage to cover more than 1,200 km (746 miles) on a single charge, last year.
It travelled the distance in real-world driving conditions from Stuttgart in Germany, to Silverstone in the UK, surpassing the 1,000 km (620 miles) record it had set in April, 2022.
The car uses a 100kWh battery, which is ultra-compact, with a footprint that is 50% smaller and 30% lighter than the 107.8kWh pack used in the Mercedes EQS.
It achieved an average consumption of 8.3kWh/100km, more than double that of the EQS. By Graham Hill thanks to Fleet News
A ’pay-as-you-drive’ tax should be introduced for electric vehicles (EVs) to replace lost revenues from fuel duty and VED.
That’s according to a new report, ‘The Future of Driving’, published by the think tank the Centre for Policy Studies.
It recommends that zero emission vehicles (ZEVs) should be charged a flat rate for every mile they drive, with the aim that they would still be paying significantly less than their petrol and diesel counterparts.
Everyone, the report says, would receive a set allocation of tax-free miles every year, with the allocation higher for those living in remote areas with fewer transport alternatives.
Eventually, as the share of ZEVs on the roads grows, this new per mile charging system could completely replace fuel duty and vehicle excise duty for all vehicles.
Each vehicle would be assigned a per mile rate, based on its weight to reflect wear on the roads, and charges would be collected monthly by direct debit.
“Whatever any new taxation system looks like the most important thing is that it’s simple, transparent and fair to drivers,” Nicholas Lyes, RAC
The Centre for Policy Studies says that there are a variety of technological options that could be used to implement such a scheme, ranging from low-tech (submitting your mileage manually) and mid-tech (an on-board device that transmits mileage automatically) to high-tech (GPS tracking).
However, it acknowledges that any system would need to be sensitive to privacy concerns, and let people pick the option they are most comfortable with.
To reflect the public’s concerns about fairness, drivers would receive a ‘free mileage allowance’ based on their postcode.
Drivers in remote areas with limited or non-existent public transport options would receive a higher allowance than big city drivers well-served by trains and buses.
Concessions could also be granted based on disability, low income, and so on – though such measures would involve a clear trade-off with economic efficiency.
In the long run, the report suggests that the Government may wish to combine clean air, congestion and per mile charges into a single nationwide charging scheme.
In the nearer term, however, it argues that it is better to treat congestion and air quality as the local issues that they are, while letting national Government focus on implementing a simple ‘pay as you drive’ per mile charging system for ZEVs.
The report’s co-author and energy and environment researcher at the Centre for Policy Studies, Dillon Smith, said: “Our recommendations take into account public feeling on a variety of proposals, privacy concerns, and their financial impact, and deliver a solution which can lead to fairer, better, and more efficient taxation while tackling congestion and improving air quality in our big cities.”
Tom Clougherty, research director at the think and co-author, believes that the days of motorists being a cash cow for Government are numbered.
“We shouldn’t replicate the old, punitive tax system, but it is still important that all drivers pay a fair amount for the roads they use,” he added.
“The ‘pay-as-you-drive’ approach our report recommends would meet that objective and could be phased in gradually over the next decade or so – alongside targeted, local initiatives to manage congestion and reduce air pollution.”
The report, supported by the Clean Air Fund, also shows that voters remain concerned about air quality and congestion, with significant numbers believing that Government has not done enough to tackle either.
Polling by BMG Research for the think tank shows strong support for action on both, including among 2019 Conservative voters.
However, the focus groups also made clear that local policymakers need to work harder to convince voters that these are targeted measures to improve air quality and congestion rather than purely a revenue raiser.
The report recommends improved communication strategies and hypothecation as ways to achieve this.
Just as drivers would like to see money from road taxes spent on improving the roads, it says that they also back money from clean air zones (CAZs) being used to improve transport or to help people upgrade to cleaner vehicles.
RAC head of roads policy Nicholas Lyes says it is “inevitable” a new tax system will have to be developed.
“Our research suggests drivers broadly support the principle of ‘the more you drive, the more tax you should pay’, with more than a third (36%) saying a ‘pay per mile’ system would be fairer than the current regime – although three-quarters (75%) are concerned the Government might use such a system as a way of increasing the amount they are taxed.”
He concluded: “Whatever any new taxation system looks like the most important thing is that it’s simple, transparent and fair to drivers of both conventional and electric vehicles.
“It’s essential that a new system replaces rather than runs alongside existing taxation regime.
“Ministers should also give serious consideration to ringfencing a sizeable proportion of revenues raised from a new scheme for reinvestment into our road and transport network, not least to finally end the country’s plague of potholes.” By Graham Hill thanks to Fleet News
Potentially dangerous defects are being missed by garages, according to analysis of the Driver and Vehicle Standards Agency’s (DVSA’s) MOT Compliance Survey 2021-2022.
It has revealed that 10.1% of cars passed by MOT testers should have failed.
As part of the compliance survey, a team of DVSA expert vehicle examiners retested a randomly selected sample of 1,732 vehicles.
The aim of the annual study is to understand whether correct testing standards are being applied by the industry.
The DVSA disagreed with the test outcomes in 12.2% of cases, with 2.1% of failures deemed to be worthy of a pass certificate.
In nearly two-thirds of the vehicles retested (65.9%), the DVSA found at least one defect which the MOT test station had missed or incorrectly recorded.
Of the 1,142 vehicles with defects disagreed, more than half (51.6%) had three more defects missed or disagreed.
Tyres were the component area with the highest number of defects disagreed, at 734, followed by brakes (660) and suspension (642).
The 1,732 retests also resulted in 27 disciplinary actions recorded and 164 advisory warning letters sent to garages.
A DVSA spokesperson said: “Our MOT Compliance Survey is an essential tool helping us make our roads among the safest in Europe.
“The vast majority of MOT testers carry out testing to the highest standards. Our survey targets a random selection of vehicles and is designed to identify any problems with MOT testing so that we can put them right.
“We are delighted to see that standards have improved since the last report. This underlines the importance of DVSA taking action on the survey results and supporting testers with new digital tools, as well as demonstrating the hard work of MOT testers.”
In separate research, What Car? conducted a survey of 961 car owners, with 13% admitting they are aware of a local garage that is favourable with passing cars through their MOT.
What Car? editor Steve Huntingford said: “Our investigation highlights the differences between official vehicle roadworthiness standards and those upheld by some in the industry.
“With safety critical components such as tyres and brakes at the top of the list of defects missed there are potentially serious road safety concerns at play here.
“It might seem beneficial for owners to have their vehicle inspected by a favourable garage, but the test is there to provide a minimum standard of vehicle safety.”
The Government published proposals to change the MOT in January, including changing the date at which the first MOT for new light vehicles is required from three to four years and improving the monitoring of emissions to tackle pollution.
Ministers claim the changes are necessary because today’s vehicles are built better and are more resilient to wear and tear, particularly with electric vehicles (EVs) having fewer moving parts.
The Government says pushing the requirement for the first MOT back from three years to four would also save money. By Graham Hill thanks to Fleet News
BP Pulse has announced it will stop selling its electric vehicle (EV) home chargers directly to consumers, instead deciding to focus purely on the fleet market.
It will now concentrate its efforts towards on-the-go, destination and fleet charging, saying it remains “fully committed” to equip the UK with a world-leading network of EV chargers.
This includes plans to increase its rapid and ultra-fast charging network fivefold by 2030, which includes the installation of hundreds of charging hubs.
Akira Kirton, vice president at BP Pulse, said: “BP Pulse is committed to delivering the world-class charging infrastructure the UK needs, but to do so we must ensure we are fully focused on the areas in which we believe we can make the greatest impact.
“By discontinuing our direct-to-consumer offer, we will be able to devote our full attention to providing the best possible EV charging offer for electric vehicle drivers and EV fleets”
The company said it will continue to support consumers who have already purchased BP Pulse home-charging units, including honouring the full, three-year warranty period and completing installations. By Graham Hill thanks to Fleet News
Fuel retailers have increased profit margins, resulting in drivers and fleets having to pay more at the pumps, the Competition and Markets Authority (CMA) has found.
The CMA says that, while the evidence shows that the majority of fuel price increases are due to global factors, such as the Russian invasion of Ukraine, indications are that higher pump prices cannot be attributed solely to factors outside the control of the retailers.
Based on evidence gathered as part of its Road Fuel market study, it has concluded that the higher prices drivers are paying at the pumps appear, in part, to reflect some weakening of competition in the road fuel retail market.
Fuel margins have increased across the retail market, it says, particularly for supermarkets over the past four years.
As a result of these increasing margins, average 2022 supermarket pump prices appear to be around 5 pence per litre (ppl) more expensive than they would have been had their average percentage margins remained at 2019 levels.
Although supermarkets still tend to be the cheapest retail suppliers of fuel, evidence from internal documents indicates that at least one supermarket has significantly increased its internal forward-looking margin targets over this period, according to the CMA.
It did not name the supermarket but added that other supermarkets have recognised this change in approach and may have adjusted their pricing behaviour accordingly.
The CMA is also concerned that it may be seeing evidence of weaker competition in diesel, as compared with petrol, since the beginning of 2023.
RAC fuel spokesman Simon Williams said: “We are very pleased to hear that the Competition and Markets Authority has confirmed what we have been saying for a long time about the biggest retailers taking more margin per litre on fuel than they have in the past.
“Currently, the average price of diesel is more than 20p a litre overpriced simply because they refuse to cut their prices.
“The wholesale price of diesel is actually 4p lower than petrol, yet across the country it is being sold for 9p a litre more – 154.31p compared to 144.95p for unleaded.
“Something badly needs to change to give drivers who depend on their vehicles every day a fair deal at the pumps. We hope even better news will be forthcoming later this summer.”
The CMA says that, while some degree of variation in diesel retail margin is to be expected given the high levels of volatility in diesel wholesale prices, the high margins in 2023 appear to have gone on longer than would be expected.
It said it needed to understand whether weaker competition is part of the explanation for this.
The CMA added: “While the level of engagement with the study has varied across supermarkets, we are not satisfied that they have all been sufficiently forthcoming with the evidence they have provided.
“In particular, important information has only been received late in the day and after several rounds of information gathering.
“Given the concerns we have about a market of such importance to millions of drivers it is vital we get to the bottom of what is going on.”
The CMA will now conduct formal interviews with the supermarkets’ senior management in order to get to the heart of the issues.
Gordon Balmer, executive director of the Petrol Retailers Association, said: “The CMA have made supermarkets the focus of their update, noting only that non-supermarket retailers are traditionally price followers in the market.
“As noted by the CMA, petrol and diesel prices are still volatile due to the ongoing war in Ukraine. The market is very dynamic and independent forecourts are in many cases undercutting supermarkets on price. Our advice to motorists remains to shop around.
“We have cooperated with all of the CMA’s requests for information and will continue to do so as they prepare their final report to be released.”
The CMA will issue its final report no later than July 7, covering the full range of issues it has considered in this market and setting out any further action that we think is needed. By Graham Hill thanks to Fleet News
Stellantis has warned the UK Government that its commitment to build electric vehicles (EVs) in the UK is at risk, unless Brexit trade rules are re-negotiated.
The car maker, which owns 16 car brands, including Vauxhall, said: “If the cost of electric vehicle manufacturing in the UK becomes uncompetitive and unsustainable, operations will close.”
In 2021, Stellantis announced it was investing £100 million in Vauxhall’s Ellesmere Port manufacturing plant to create a new electric vehicle (EV) factory. The plant produces commercial and passenger versions of the Vauxhall and Opel Combo-e, Citroen e-Berlingo and Peugeot e-Partner.
In a submission to a Commons inquiry into EV production, Stellantis outlined that its UK investments were centred on meeting the strict terms of the post-Brexit free trade deal.
Until January 1, 2024, the rules stipulate that at least 40% of the content of EVs and 30% of batteries must originate from the EU or the UK.
From 2024 until January 1, 2027, this increases to 45% of the vehicle and 50-60% of batteries. If this is exceeded, carmakers will have to pay a tariff of 10%.
Stellantis said it was “now unable to meet these rules of origin” as a result of the surge in raw materials costs and energy prices.
As a result, the car maker is calling for the Government to reach a new agreement with the EU to keep the current rules as they are until 2027. It also wants arrangements for manufacturing parts in Serbia and Morocco to be reviewed. By Graham Hill thanks to Fleet News
