www.bvrla.co.uk April 2010
The newsletter of the British Vehicle Rental and Leasing Association
Transport ignored as debt dominates Budget by John Lewis More of a pre-election manifesto than a Budget, Chancellor Alistair Darling announced precious little to encourage road users last month. His speech was always likely to be dominated by the subject of the UK’s growing debt mountain and the spending cuts or tax rises that would be used to tackle it. There was no significant change in transport policy, spending or taxation. Judging by the Chancellor’s speech and the reaction it got from the opposition leaders, it is clear that the needs of road users are not high on the agenda of any of the main political parties in the run up to the election. On the positive side, the government has clearly been listening to the BVRLA’s calls for its emissions-based tax regime to be both technology-neutral and well mapped-out. This is a vital requirement for companies that are making major investment and funding decisions that will have implications three, four and five years into the future. Once again, however, there was some evidence of Labour’s penchant for spin in the way the Chancellor made a couple of announcements. Firstly, he suggested something of a reprieve for road users in the form of a staggered Darling: will he still be at the wheel after the general election?
increase in fuel duty over the next 12 months. It wasn’t until later that it emerged that this measure was overshadowed by the loss of the biodiesel differential, which will mean a major increase in fuel costs for the logistics sector. Elsewhere in his statement, Darling proudly declared that he would halve the benefitin-kind tax for ultra-low carbon cars and introduce a vehicle excise duty (VED) rebate for companies buying trucks that meet the Euro VI emissions standard. Unfortunately, there is little chance of a BVRLA member picking up a significant number of vehicles meeting either of these criteria within the next 12 months. Nor, it seems, is there much sign of the government tackling two of the biggest inequalities still remaining in its motoring tax strategy. Despite numerous representations from the BVRLA and other road user bodies, it resolutely refused to tackle the everincreasing grey-fleet use or the 3% diesel company car tax surcharge. Overall, this was a ‘phoney’ Budget containing little bravery or excitement and not much good or bad news. With the economy struggling and public finances in dire straits, a lot more needs to be said and done. But as with the Phoney War which began the Second World War, you get the feeling that the real action is just about to start. n
In this issue Rental ‘must engage with consumers’ The industry needs to improve the way it deals with customers, says the European Commission page 2 Association reviews ‘plug-in car’ options The BVRLA has reviewed how the government’s ‘plug-in car’ grants might work for members page 2 The Budget: all you need to know The impact of the March Budget on vehicle rental and leasing page 3 Who deserves the industry’s vote? We question Labour, the Lib Dems and the Tories on their transport policies page 4 A ‘helicopter view’ of business data How the BVRLA monthly data survey can help you page 6 Forums continue to draw large numbers Members stay informed about Residual Value and Remarketing and Service, Maintenance and Repair page 7
— Promoting responsible road transport since 1967 —
Comment ‘Rental isn’t user-friendly’ concludes EU conference It is always good to have all of the facts in front of you before making a decision. This is one of the reasons why the run-up to the election is so frustrating this year. All the main parties know what should or can be done, but unfortunately the prospect is so depressing that they are refusing to offer any real details until after the election, when it will be too late for voters to make a choice. However, we have managed to get some indication of where Labour, the Conservatives and the Liberal Democrats stand on some of the key issues affecting road users (see pages 4 and 5). There is more difference than you think… Editor Toby Poston, email@example.com 01494 545700 Production Manager Steven Prizeman, firstname.lastname@example.org 01494 545710 Advertising Nora Leggett, email@example.com 01494 545713 © Copyright BVRLA 2010 BVRLA News articles may be used copyright free by members provided that an acknowledgement is given.
BVRLA River Lodge, Badminton Court Amersham Buckinghamshire HP7 0DD T 01494 434747 F 01494 434499 E firstname.lastname@example.org W bvrla.co.uk Honorary Life President Freddie Aldous Chairman Kevin McNally Vice Chairman Nigel Stead Honorary Treasurer Brian Back Chief Executive John Lewis
The car rental industry needs to engage more with consumer organisations, be more transparent in the way it deals with customers and improve its handling of crossborder complaints, the European Commission has said.
A Leaseurope presentation explained how a wide array of customer requirements had led to the development of a very complex car rental business model that had to operate online, over the counter and via third-party brokers.
This was the key message of a European Union (EU) consumer summit held in Brussels last month.
“Consumer organisations often call for the industry to be more transparent and up-front with things like prices and additional charges,” said Lewis. “But this is not easy to do when customers want flexible fuel policies, the ability to lower their insurance risk and the possibility of returning vehicles out-of-hours to suit their own travel arrangements.”
Car rental was one of six sectors covered by the annual conference, which looked at the way consumers are treated when buying goods or services across the single European market. BVRLA chief executive John Lewis attended the summit as part of a delegation from Leaseurope, the panEuropean trade body representing the vehicle rental and leasing industry.
The rental industry sees more than 50 million transactions across the EU each year, but customer satisfaction levels are very high.
A car rental ‘workshop’ saw customers, consumer organisations, enforcement agencies and industry representatives discuss some of the most common issues affecting the sector, with a particular focus on credit card charges made after a rental transaction has been closed.
“We do still make some mistakes,” said Lewis. “But we tried to demonstrate that the industry is working hard to improve the way it provides information to consumers, resolves complaints and deals with rental companies that don’t meet its high professional standards.” n
BVRLA reviews ‘plug-in car’ options Following the government’s announcement of its plans for ‘plug-in car’ grants last month, the BVRLA has reviewed how they might work for its members. The grants would be run in much the same way as the scrappage scheme, with up to £5,000 being taken off the purchase price of eligible vehicles. This is expected to encourage more rental companies to offer electric vehicles to their customers at a competitive price. Leasing companies would also be better able to serve businesses that want to try an electric vehicle without the risks associated with ownership and maintenance.
Rental and leasing companies will now be interested to see what manufacturers come up with in terms of their electric vehicle product offering. Citroën recently announced that a conventionally fuelled vehicle will be made available to buyers of its CZero electric car when the C-Zero is unsuitable for the planned journey (ie in excess of its battery range). This sounds to all intents and purposes like a rental vehicle and perhaps provides another role for rental companies as the technology develops. The BVRLA is also working with the Society of Motor Manufacturers and Traders to answer some common questions about electric vehicles and provide a clear, impartial opinion to potential buyers. n BVRLA News | April 2010
The Budget: everything you need to know The government’s final pre-election Budget took place last month and, for the BVRLA, proved to be something of a curate’s egg. Summarised here are the key changes affecting vehicle rental and leasing. The association welcomed Chancellor Alistair Darling’s decision to amend the zero-rated benefit-in-kind tax so that it no longer favours electric vehicles over other low-emission technologies. It was likewise gladdened by the technology-neutral approach to first-year allowances for companies purchasing ultra-low carbon goods vehicles (although it is still awaiting confirmation from HM Treasury that this is applicable to leased ultra-low carbon goods vehicles as well). A range of measures to encourage greener business motoring were also received positively. However, the BVRLA believes that by maintaining approved mileage allowance payments (AMAP) at what it sees as an over-generous rate (40p for the first 10,000 miles and 25p thereafter ) the Chancellor missed an opportunity to incentivise the four million claimants to drive fewer miles. These drivers are typically using cars that are older, more polluting and less safe than the modern vehicles supplied by rental and leasing companies. The BVRLA was disappointed that the Chancellor did not help business users by deferring the rise in fuel duty. It was also unimpressed by the comparatively small increase in spending on roads (other than motorways) of £100m, given that local authorities already have an £800m shortfall in their road maintenance budgets (according to the Annual Local Authority Road Maintenance Survey). The offer of an annual £500 rebate on vehicle excise duty for operators buying Euro VI-compliant vehicles was seen as a damp squib, leaving the BVRLA wondering where people are supposed to buy them. The association said: “This is another green incentive that is great in theory but will deliver little or no real benefit any time soon.” n Further information about the Budget is available on the BVRLA website. www.bvrla.co.uk BVRLA News | April 2010
Business tax Annual investment allowance increases from £50,000 to £100,000 from April 2010 for qualifying expenditure on plant and machinery. Company car and van tax (benefit in kind) There will be no benefit-in-kind charge for company-provided cars and vans which cannot emit more than 0g/km CO2 when driven. This was previously available only to electrically propelled cars and vans. A new ultra-low company car benefitin-kind band of 5% will apply to cars emitting some CO2, up to 75g/km. The company car tax rates for 201213 have been confirmed, with banding changes for the less-polluting cars. First year allowances (goods vehicles) From 6 April 2010, businesses will be able to claim 100% first-year allowance for the purchase of zero-carbon goods vehicles. Fuel duty A planned 2.76p increase in fuel duty will be applied in three stages: 1p per litre on 1 April 2010, 1p more in October 2010 and a further 0.76p in January 2011. There will be a further
increase of 1p per litre in 2013 and again in 2014. Lending Lloyds Banking Group and The Royal Bank of Scotland have agreed to lend £41bn to small businesses. A Small Business Credit Adjudicator will be created to ensure that small and medium-sized enterprises are treated fairly when applying to their bank for finance. The Adjudicator will be given statutory powers to ensure that its judgements are enforceable. Steps will be taken to help companies diversify their sources of finance to non-bank lending channels. Roads £100m will go to fund the repair of roads damaged by the recent adverse weather. There will also be a £250m investment to expand hard shoulder running on motorways. Vehicle excise duty (HGVs) Reduced Pollution Certificates will be available for vehicles that achieve early compliance with the Euro VI air quality standard, with annual discounts on vehicle excise duty (VED) of up to £500. This will be awarded for five years only. (For VED bands, see below.)
CO2 emissions g/km
First year rate
Up to 100
* In the 2010-11 tax year there will be a £10 discount for all cars powered or part-powered by a fuel other than petrol or diesel.
† Includes cars emitting over 225g/km registered between 1 March 2001 and 23 March 2006.
They want our votes – bu The BVRLA quizzes the main parties on their transport policies We all know that politicians have a lot to answer for – but leaving that aside and concentrating solely on their transport plans, here’s how Labour, the Conservatives and the Liberal Democrats compare.
We asked these parties to set out their views on a number of topics of great interest to all of us in the vehicle rental and leasing sector. Their answers appear, without comment, in their own words.
The extent of our coverage does not represent any BVRLA endorsement of the party or view expressed, merely the length of the information we received or were otherwise able to identify. All have been edited.
they cause. And we would crack down on the private clamping industry to put the cowboy clampers out of business.
long-standing competitive disadvantage for domestic haulage companies.
Conservative No response had been received from the Conservative party at the time of going to press. Here are the party’s most relevant transport policies, as set out on its website. Tackling congestion To make our roads safer, we will stop central government funding for new fixed speed cameras. We will switch to more effective ways to make our roads safer, such as vehicle-activated signs. We want to see our roads managed more efficiently so we get the best use out of limited road space. We would give more flexibility to local councils to pilot schemes to get traffic flowing more smoothly. And we would introduce more transparency and democratic scrutiny over key decisions that affect people’s everyday commutes, for example on how traffic lights are sited and phased. We would make utilities who dig up our roads accountable for the congestion
We will focus on tackling the worst bottlenecks on Britain’s roads. In some cases this will mean making better use of the capacity we have; in others, it may mean building new roads. Providing an improved public transport system, to make it easier for people to make greener transport choices, will be an important element of our strategy to address the twin goals of tackling congestion and reducing pollution and carbon emissions from transport. We will put in place measures to deliver a national recharging network to boost greener driving choices and the switch to electric and plug-in hybrid vehicles. And we will ensure that overseas trucks who use our roads contribute towards the cost of their maintenance, tackling a
Making local transport greener We will scrap Labour’s attempts to bully local councils into introducing local road pricing in return for vital transport funding. We will liberate this money, turning it into a Transport Carbon Reduction Fund, allowing local councils and voluntary groups to apply for funding for the green travel initiatives that work best for their communities, whether those are walking schemes, cycle priority or other measures to make greener transport more attractive. We will reform the way decisions are made on which transport projects to prioritise, so that the benefits of lowcarbon proposals are fully recognised. To improve bus services, we will encourage partnerships between bus operators and local authorities. We will review how roads are managed to ensure the concerns of cyclists are given a higher priority. ■
Labour National road pricing and local congestion charging Despite the success of the London Congestion Charge the introduction of national road pricing is not currently technologically feasible, even if it could secure public approval. That said, we will continue to assess the viability of road pricing measures for the future. In the meantime, more tried and tested means to deliver improved capacity and connectivity are required. Labour is committed to providing the resources, through our new Urban Transport Challenge Fund, for local authorities to pursue demand management measures if they so wish. 4
Fuel duty and vehicle excise duty We announced in the Budget that the increase in fuel duty will be implemented in three stages – rising by 1p per litre in April and October 2010, and 0.76p per litre on 1 January 2011. The Budget also confirmed Labour’s environmental reforms to vehicle excise duty (VED) for post-2001 cars, as announced in the 2009 Pre-Budget Report. This will incentivise the purchase and manufacture of lower-carbon cars by introducing, from 1 April 2010, a change of up to £30 in standard, annual VED rates and the introduction of differential first year rates of VED.
Under standard rate changes lowemitting cars will see a tax cut of up to £30 and other cars will see tax increases – also up to a maximum of £30. A majority of post-2001 cars (69%) will either pay less or the same as in 2009, in real terms. Capital allowances With effect from April 2010 there will be a five-year exemption from company car tax (CCT) for all zero-emission cars and vans; a five-year special discount rate of CCT for ultra-low-emission cars (75g/ km CO2 or less) and a 100% first year capital allowance for business purchases of electric vans. BVRLA News | April 2010
ut do they deserve them? Liberal Democrat National road pricing and local congestion charging Congestion charging can have a role to play in reducing congestion in major cities, but we regard this as a matter for local councils. However, we believe that the best way to reduce congestion is through a national road pricing scheme. Our plans encompass two schemes which we will introduce simultaneously:
Capital allowances It is right to give financial incentives to individuals, and companies, to purchase cleaner vehicles. Road transport is currently responsible for the vast majority of carbon emissions from transport (92%). That figure can be reduced partly by encouraging travellers onto cleaner modes of transport, but there is an urgent need to give people real incentives to purchase cleaner cars.
❱ road pricing for motorists on motorways and dual carriageways. The revenue raised will be used to remove vehicle excise duty entirely (or reduce it to the EU minimum in the case of HGVs) and significantly reduce fuel duty.
❱ we also plan to introduce lorry road user charging, also on motorways and dual carriageways, for vehicles over 3.5 tonnes, capturing foreign lorries for the first time. We estimate that this will raise over £1.36bn annually, and the proceeds will go towards public transport improvements such as high-speed rail. Fuel duty and vehicle excise duty As explained above, we would significantly reduce fuel duty and entirely abolish vehicle excise duty (VED) – or reduce it to the EU minimum in the case of HGVs. This will reduce the cost of motoring for many people, particularly those in rural areas.
Approved mileage allowance payments (AMAP) The AMAP rate is intended to cover a range of costs associated with driving business miles in a private car, but not the full cost of motoring. Employees who make business journeys in their private cars can be reimbursed by their employers for their motoring costs. It remains up to employers to pay whatever level of mileage payment they choose. We believe the AMAP rate to be a reasonable reflection of these costs of business motoring. The AMAP rate remains fair. BVRLA News | April 2010
Increasing demand for cleaner cars, at the expense of those that pollute most, will help to reduce emissions. The government allows a 100% capital allowance for cars which emit 110g/km or less, while cars which emit 160g/ km or less qualify for more relief than those which emit more than 160g/km. We broadly support this approach, but the current system is rather black and white: just 6.5% of new cars sold in 2009 met the criteria for the 100% allowance. A more steeply graduated approach, whereby allowances decrease incrementally as emissions rise, would provide more relief for businesses who purchase cars in VED bands C or D, for example, and less for those who purchase the most polluting vehicles. Financial incentives are not the only solution. For example, electric cars are energy efficient, but we recognise
Red tape Regulations are essential to ensure safety, promote security, deliver environmental objectives and protect consumers. At the same time, it is important to ensure that regulations do not impose unacceptable administrative or financial burdens. Through measures such as electronic insurance certificates and digital tachographs Labour has reduced the costs of administrative burdens by approximately 25% between May 2005 and May 2010. We are committed to working with businesses to identify additional simplification measures and on ways to minimise any new burdens, particularly from European legislation.
that there will be no incentive to purchase cleaner cars unless there is an infrastructure which properly supports them. For that reason, we will extend the government’s plans to introduce charging points, increasing incentives for companies to purchase such vehicles. Approved mileage allowance payments (AMAP) We would like to transfer some journeys from private cars to public transport but we believe it is better to give people a viable alternative, in the form of better public transport, than to penalise people by removing AMAP. Red tape Last year, the Transport Select Committee recommended that the Vehicle and Operator Services Agency (VOSA) overhaul the way in which it manages data, so that it is updated more regularly. That means better informationsharing agreements and investment in better technology. Road infrastructure The road network is the backbone of our transport system. While we will not reduce the budget for maintenance, we will redirect 90% of the major roads budget towards public transport improvements, to give people a viable alternative and reduce congestion. ■
Road infrastructure In the recent Budget the Chancellor announced an extra £100m – ringfenced – for local authorities to repair pothole damage as a result of this winter’s severe weather, further demonstrating our commitment to ensuring that our roads are in the best possible condition. On the strategic road network, motorway widening and the innovative use of hard shoulder running at peak times on the M42 near Birmingham, together with improved real-time information for motorists, offer sizeable capacity and reliability benefits. ■ 5
‘Helicopter view’ Pension reform plans promise of business data lower earners a softer NEST The monthly BVRLA data survey takes residual value forecasts and estimated service, maintenance and repair (SMR) budgets from 20 of the association’s key leasing members to produce league tables and historical trend reports. Available to BVRLA members by subscription, subscribers can not only study specific vehicle makes and models but also contract length and contracted mileage. Members can see how their residual values, SMR forecasts and rental fees compare with those of other businesses. Strategically minded senior managers can take a ‘helicopter view’ of what’s happening in the market place and operations managers can feed their mathematical modelling tools by exporting data on specific vehicles, vehicle ranges, and sectors. Subscribers can even take the industry mean value (the arithmetical average for all derivatives across all age/mileage profiles) as a direct feed from the data survey. But it’s not just residual value strategists and analysts who should be interested in the data – sales and account managers can also benefit from the ability to compare data when customers are interested in competing models. For example, according to Business Car magazine the Ford Focus was the topselling fleet car in 2009: 67,714 vehicles in total, with 74.9% going to fleets. This represents a huge chunk of members’ residual value (RV) risk. What trends do the survey data reveal about this vehicle’s RV performance over the last 12 months? For a four-year, 100,000mile contract the survey plots a positive trend in incremental growth for the diesel Focus (+£128.26) and a spectacular one for the petrol Focus (+£461.39). n Details of the data survey subscription package are available upon request. Contact: Nora Leggett, email@example.com 01494 545713
The government is reforming workplace pension provision from 2012, placing a duty on employers to automatically enrol eligible workers into a pension scheme. Staff can expect to make a minimum pension contribution of 8% of their total salary, including the employer’s contribution (at least 3%) and tax relief. Contributions will be phased in, starting at 2% (1% from the employer and 1% from the individual), increasing gradually to the minimum level to help employers and workers adjust to the cost. The National Employment Savings Trust (NEST) will be one of the options available to employers and is being designed with low-to-moderate earners in mind. Employers will be able to choose how to meet their new obligations. This may mean using existing schemes, setting up a new one, using NEST or choosing a combination of options. NEST, for example, could be the sole scheme for employers with no current provision, or used for certain types of workers alongside other schemes. NEST belongs to the individual employee, which means it can go with them if they
move jobs – useful for companies with high staff turnover and for employees on short contracts. It will be an online pension but will have the flexibility to provide offline services. By using this approach the scheme aims to minimise employers’ administrative burden and be easy to use. Although the details of how employers should comply with their responsibilities are still being finalised, government policy on pension reform has won the support of Parliament and industry, employer and consumer representatives. The proposed pension reform will allow millions more people to take some responsibility for providing for a more comfortable older age, building on the basic foundation the state will provide. NEST will launch in April 2011 on a voluntary basis, giving employers the chance to use the scheme before the new pension regime begins in 2012. n Further information can be found on the website of the Personal Accounts Delivery Authority. www.padeliveryauthority.org.uk Contact: David Lunt, firstname.lastname@example.org 07825 933053 or 020 7940 8544
VOSA agrees to better data access The Vehicle and Operator Services Agency (VOSA) and the BVRLA hosted a workshop last month to discuss how members can access annual test data. “The meeting was a great success,” said the BVRLA’s head of legal services, Jay Parmar. “Members were able to provide VOSA with a strong business case for being able to use this data, particularly given the improvements which could be made in managing, monitoring and auditing the level of road safety compliance for commercial vehicles.” Members present at the meeting provided VOSA with an overview of the
data they required, including whether a vehicle had passed or failed its annual test and details of any items that were close to failing. This would allow members to manage the maintenance of their vehicles and also help increase their oversight of third-party providers who take vehicles to test on their behalf. VOSA agreed that anyone with a legitimate interest in the data should be able to access it, including rental and leasing companies. It now intends to assess how this data can be made available and in what format. The BVRLA anticipates that a pilot data access scheme will be up and running by early 2011. n BVRLA News | April 2010
Forums prove a big draw News in brief The BVRLA’s Residual Value and Remarketing (RVR) and Service, Maintenance and Repair (SMR) forums are continuing to attract large numbers of members who want to learn about the latest trends affecting these vital aspects of their businesses. The first SMR Forum of 2010 was held on 11 March, kindly hosted by BMW UK. Vehicle recall dominated the topics under discussion, as might be expected following the Toyota recall in February, with BMW explaining how it handles recalls. BVRLA head of legal services Jay Parmar and SMR committee chairman Tim Bowden also updated the forum on how they are helping to develop an electronic database to alert members when their vehicles are affected by a recall. Michelin provided an overview of how tyres with lower rolling resistance can reduce CO2 emissions, especially as 20% of fuel consumption is attributable to tyres – more when they are underinflated. The RVR Forum a week later, sponsored by Manheim Auctions, looked at
alternative routes for remarketing vehicles. Emma Parfitt of Marshall Motor Group, a former eBay account manager, reviewed the benefits of selling vehicles online. There was also an overview of the economic climate from Mark Cowling of Motoring Economics. He said there were signs of a slowly improving situation in general and that residual values could recover more quickly than the economy as a whole.
Glass’s Guide and Manheim also presented data on the used vehicle market and its short and medium-term prospects. Generally, the mood was very positive for used vehicle sales as demand for them is strong. However, vehicles that have had longer working lives and higher mileage are starting to enter the market and it will be interesting to see what impact this has on values. Members can hear the latest on this at the next RVR Forum, on 7 July. Road safety and duty of care will be the main topics of the next SMR Forum, scheduled for 30 June. n Contact: Steph Czaplinska, email@example.com 01494 545702
20 May (agm)
Commercial Vehicle Committee
Leasing & Fleet Management Committee
SMR Forum Committee
Leasing Broker Committee Rental Committee RVR Forum Committee Risk Management & Security Committee
Training programme 2010 Certificate in Fleet Consultancy
Service, Maintenance and Repair (SMR) Forum
Residual Value and Remarketing (RVR) Forum
30 June 7 July
For further information about all BVRLA courses, contact Nora Leggett: firstname.lastname@example.org, 01494 545713
BVRLA News | April 2010
The BVRLA’s fair wear and tear standard for cars is now available to corporate members electronically as an interactive PDF. Members who purchase the guide can have it personalised with a corporate logo on the front page and a full page advert on the second. They can distribute the guide by email or make it available on their website. www.bvrla.co.uk/Publications/ Electronic_BVRLA_FWT_Guide_Cars. aspx Contact: Steph Czaplinska, email@example.com 01494 545702
eSafety Challenge Millbrook, 13 July
Registration has begun for the next eSafety Challenge. The Challenge aims to highlight the life-saving potential of innovative vehicle safety technologies, including electronic stability control, blind spot monitoring, lane support systems, emergency braking systems and adaptive headlights. You can register for this invitation-only event by using the code ‘UK group’ at the eSafety Challenge website. www.esafetychallenge.eu
New associate member
Committee meetings 2010 Committee of Management
Electronic fair wear and tear standard for cars
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