News

Political instability leads to rise in vehicle leasing

Written on February 17, 2017

Vehicle rental and personal leasing is enjoying a surge across wide sections of society. This may be due, it has been revealed, to UK residents’ reluctance to commit to big purchases in the current political climate. This has led to a natural preference for monthly payment options for vehicles, houses and other services.

The findings are based on a survey of the nation’s motorists by Leasing Options, working with the British Leasing and Rental Association (BVRLA). Two-fifths (40%) of respondents stated that the “unstable political climate” is a deterrent to buying a new car or house. Furthermore, over half of those surveyed declared monthly payment arrangements for between four and seven services or products.

A preference for leasing vehicles over buying was justified in one of two common ways. They were either: the ability to frequently experience a new car (40%), or only being able to afford monthly options (36%). Asked why they generally prefer to pay monthly for their services or product subscriptions, 52% of respondents answered “to spread out the cost” and a remarkable 50% said “because it makes life easier.”

This has led to the conclusion that, in the uncertainty following the “Brexit” referendum, many new motorists are attracted to the prospect of fixing vehicle costs. Others are enticed primarily by being able to access up-to-date, safe and low-emission car models more frequently and at less cost than a direct purchase.

Findings in BVRLA’s 2015 Car Rental survey showed that rural areas see the highest rates of car ownership – up to 90%. Meanwhile renters in London, major cities and their suburbs were lowest at 52%.

The discovery points toward behavioural similarities in British and American consumers. Experian Automotive’s 2016 State of Automotive Financing report revealed that United States citizens are leasing more vehicles than ever in attempt to control costs.

Launch of FleetCheck’s automated fleet policy writer

Written on February 15, 2017

Policy Manager, a new software which automates fleet policy writing, is to be launched by FleetCheck during this year’s CV Show 2017. The program has been designed to assist companies of all sizes – SMEs in particular – through the creation of compliant and operationally effective legal frameworks for fleets.

Access to Policy Manager will be supplied as a free-to-use portal for existing users of FleetCheck’s fleet management software.

Peter Golding, managing director at FleetCheck, said: “This product has been in development for some time because we wanted to ensure that we made it as watertight and easy-to-use as possible. We believe that it is an industry first and meets a genuine need among a large number of fleets.”

The portal will provide fleet companies with an archive of fully editable templates for documents such as driving policies and driver handbooks. These documents can be easily circulated among relevant parties via the program, after being personalised and edited to include fleet-specific information.

The software keeps track of and organises previous versions, as well as noting when drivers accept their paperwork. To ensure policies remain up-to-date and easily accessed, Policy Manager also generates alerts when a document is due for review.

“In today’s culture of heightened legal awareness, many companies are concerned about their degree of compliance and what would happen if they were faced with an investigation following a road accident,” explained Golding.

“Policy Manager is designed to allay these fears by giving companies straightforward tools, processes and guidance that will create a complete fleet health and safety infrastructure.”

Perhaps for this reason, all of Policy Maker’s templates were co-produced with specialised lawyers from the fields of occupational road safety and health & safety compliance. The program also maintains clear records to allow for full auditing of its processes. Additionally, access is provided to expert advice covering more complex functions in the software.

“We are especially pleased to be launching Policy Manager at CV Show 2017,” added Golding.

“There is always a high level of interest among visitors in ensuring fleet compliance and efficiency.”

Room for improvement in UK fleet technology investment

Written on January 26, 2017

Nexus Vehicle Rental has suggested that failure by fleets to invest in more advanced technology results in significantly increased expenditure on running costs. This follows a recent Trade Union Congress (TUC) study into UK spending in the public and private sectors. The study indicates that Britain ranks among the worst worldwide for investment in new technology.

The findings prompted calls for Chancellor, Philip Hammond to boost investment and build efficient infrastructure while borrowing rates are low, blaming lack of investment for low UK productivity. UK capital investment was 16.6% of GDP in 2014, while the OECD average was 20.8%. Out of 34 total members of the Organisation for Economic Cooperation and Development (OECD), the United Kingdom also ranks lowest for transport equipment spending.

However, Nexus Vehicle Rental advises that responsible fleet operators can do more to boost their businesses. Nexus reports indicate that they make regular savings of 20% through use of improved and digital technologies. IRIS – their online booking and management system – has allowed for gathering of real-time information leading to identification of costly under-utilised vehicles, for instance.

David Brennan, Nexus CEO, said: “With the cost of motoring expected to continue to increase against the backdrop of economic uncertainty it’s now more important than ever for businesses to be operating as efficiently as they can, and one way to do this is by reducing fleet costs.

“The differences in costs between businesses that seek tech-enabled fleet solutions and those which don’t are around a fifth of overall spend and many organisations are missing out on the potential to improve operating efficiency.

“As a nation, we rank way behind our neighbours in investment in technology due to a reluctance to increase spend but ultimately accessing innovative technology can make a major contribution to efficiency, using the analysis of trends and usage in turn to become more profitable.”

With the uncertainty of ‘Brexit’ looming over the UK, planning for the future in terms of infrastructure and investment appears to be increasingly vital for British businesses.

Fleets advised to plan for rise of electric vehicles

Written on January 24, 2017

A 2017 fleet market report by Sewells Research & Insight suggests fleet operators are falling behind on making necessary plans to adopt clean electric technology.

The report states that, as a result of proposals by Chancellor Philip Hammond to enforce stricter emissions laws, fleets who do not begin planning for the transition soon risk being left with depreciating diesel vehicles and a reduced capacity to meet rising demand for electric vehicles.

The author of the report, Mark Sutcliffe, said: “At some point before 2020, the majority of fleets – especially those operating vans predominantly in urban environments – will need to formulate an emissions reduction strategy that will see them replace a proportion of their fleet with electric vehicles.

“Fleet managers who buy diesel vans from 2017 onwards may regret that decision when, come 2021, they are faced with offloading four-year-old vans that are restricted from driving in city centres and significantly more expensive to run than their latest electric counterparts.”

Industry experts present a growing consensus that the turning point for electric vehicle adoption will be seen by 2022. The KPMG global automotive executive survey of 2017 has reported 93% of automotive executives in the UK are planning to invest in electric vehicles in the next five years. In the same survey, 90% state that they predict electric vehicles to command the marketplace by 2025. Furthermore, 62% of those executives view diesel as a “thing of the past.”

While battery range continues to increase as manufacturing costs fall, and in addition to more legal disincentives for users of polluting carbon dioxide & nitrogen oxide emitting engines, it is accepted that the mass adoption of EVs will certainly arrive in the next decade.

Yet despite this, the Sewells report indicates that only a small fraction of UK fleets have made the commitment to transitioning from diesel to electric. Contradicting the growing industry consensus, the majority of fleet operators anticipate only a gradual uptake of EVs during the next decade. Shockingly, over half admitted they had little to zero understanding of electric vehicle infrastructure: no knowledge of Government grants, the range of EVs on the market, or the capacity of recharging networks in the UK.

Fleet managers due to defleet vehicles in the next four years should expect many of their vehicles to be replaced with electric alternatives. Fleet managers who are proactive in facing this strategic challenge will be rewarded in the electric-powered future that is projected.

Demand for electric and plug-in vehicles set to rise in 2017

Written on January 19, 2017

The uptake of electric vehicles is set to rise as early as 2017. A combination of factors – including increased choice of vehicles, improvements in technology and low benefit-in-kind tax rates – are contributing to their rising popularity with drivers and fleet operators.

Over the next five years, the number of electric cars and plug-in hybrids available to consumers is set to double as manufacturers invest in ultra-low emissions options. Some are introducing plug-in cars for the first time this year. In 2015 Jaguar announced the I-PACE, their compact all-electric SUV, leading to theories that sister brand Land Rover will launch their own EV production model. The Volkswagen Group have also proclaimed their commitment to a range of 20 cars with electric propulsion in the next few years.

Furthermore, a group of manufacturers consisting of BMW, Daimler, Ford and the VW Group have announced their intention to boost infrastructure for a European network of superfast car chargers. Targeting 400 sites in Europe, the improved network will reduce plug-in car charging time, aiming to enable long-distance EV travel along major routes by 2020. When charging has progressed to be as convenient as refuelling at traditional petrol stations, it’s expected that many companies will jump to capitalise on economies of scale and improved battery & motor technology.

2016 saw significant changes to the plug-in car grant, reducing available funding based on EV range and total emissions. Additionally, company car drivers with plug-in cars are expected to see steep increases in benefit-in-kind tax payments. Yet customers remain undeterred: drivers of plug-in cars with under 50g/km CO2 emissions will pay benefit-in-kind tax at 9%, which remains a markedly lower rate than for conventional cars.

Fleet operators are set to benefit as well, being able to run plug-in cars at a lower cost than conventionally fuelled cars. Organisations advocating for the benefits of plug-in vehicles suggest they will become much more common among fleets’ choice lists. According to Poppy Welch, head of Go Ultra Low, fleets took up plug-in vehicles at an even faster rate in 2016 than among private consumers. Compared to 2015, the total recorded EV registrations increased by 54%.

Welch said: “Our research shows only 25% of UK businesses offer EVs to employees as company cars – with almost 70% of user-choosers saying they would consider an electric car if the technology was made available to them.

“With recent Government investment in workplace charging initiatives, as well as improving technology from vehicle manufacturers, we expect EVs to be even more popular with businesses and their employees next year and beyond.”

UK fleets warned to prepare for continued rise in fuel price

Written on January 17, 2017

Fleet operatives in the UK are being advised by both Petrolprices.com and the AA to prepare for continued fuel cost increases in 2017. At the time of writing, UK motorists are paying an average of 117p per litre of diesel, with forecasts that the figure could rise to between 120 and 130p by the end of January.

This prediction is based partially on the announcement by OPEC (the Organization of the Petroleum Exporting Countries) of their intention to reverse a global downturn in oil prices by cutting rates of production. Formed of thirteen nations in the Middle East, South America and Africa, OPEC aims to reduce production by 1.2 million barrels daily. Increasing scarcity in the supply will drive price per barrel upwards, having a knock-on effect on prices at the pump.

The RAC is reporting that prices may rise into next year, as happened in 2008, the last time oil production was cut. Luke Bosdet, AA’s fuel spokesman, has warned of biofuel shortages being an additional factor in the rise of diesel prices. He warns there has been a “rubbish harvest” of oil seed this year, which constitutes 4.75% of diesel fuel. Biofuel scarcity could increase prices by a further 1-2p per litre.

Uncertainty surrounding Prime Minister Theresa May’s handling of ‘Brexit’ is cited as another potential factor. Jason Lloyd, managing director of Petrolprices.com, said it is possible prices could fall if markets can be convinced that a “soft Brexit” is forthcoming. However, weakness in the pound follows recent political developments casting doubt on the likelihood of a UK-EU agreement on single market involvement following Article 50’s triggering due in March.

In addition, the recent election and imminent inauguration of America’s impending President Donald Trump is another area prompting reservations. While some fear the outspoken President turning his hand to international relations may affect prices once sworn into office, Trump has also stated his intention to boost American oil production. Perhaps this is why RAC fuel spokesman Simon Williams declined to predict an exact figure, warning instead that fleets “should expect uncertainty” this year.

Eduarda Amaro, principal consultant at Lex Autolease, advises fleet managers to run operations as efficiently as possible based on wholelife costing models, as fuel price fluctuations contribute to 25% of costs. The use of fuel cards to gather data on driver efficiency and behaviour may be another route for businesses to take in order to reduce the impact of the increases.

Mrs Amaro also predicts that fuel duty will remain frozen into 2018 as a result of price rises. She said: “With prices rising at the pumps, hitting drivers with the double whammy of that and an increase in duty would be too much.”

Global oil prices and wholesale costs are affected by many factors. As a result, current short-term forecasts are subject to change.

Changes to car tax and salary sacrifice rules prompt consideration by fleets

Written on January 13, 2017

Parliament is in the process of debating proposed changes to car tax and salary sacrifice rules as part of the 2017 Finance Bill. The changes are to be confirmed at 2017’s spring Budget announcement. The proposals currently recommend significant limits to the tax benefits afforded by salary sacrifice car schemes.

Employees using a salary sacrifice arrangement, or using a company car in place of a cash alternative, will now pay tax connected to their vehicle or cash alternative – whichever has the highest taxable value. These changes will apply to all related contracts entered into on or following April 6th 2017. Those on contracts before April 6th will be exempt from the changes until April of 2021.

Additionally, under the new rules employers will no longer benefit from associated National Insurance savings on many salary sacrifice cars. This has prompted concerns that companies will decrease the selection offered through schemes to employees. There are fears the result may be the removal of such schemes altogether.

However, the changes come with an important caveat regarding low emission vehicles: the limitations will apply only to cars which emit more than 75g/km of CO2. While many worry about increased costs and reduced choice, fleet representative body AFCO has warned employers against reflexively rejecting salary sacrifice car schemes.

Caroline Sanders, Deputy Chairman, said: “Businesses must consider the impact of the change, taking into consideration employer position on CO2 limits and available cars.

“There are many cars that are largely unaffected, others will perhaps become more attractive, such as ultra-low emission vehicles, and others will become less attractive. But that doesn’t mean the destruction of choice lists; it just requires careful consideration of the impact on available vehicles.”

Across the industry, reactions have been mixed. While many employers await clarity from Government and internal review processes before announcing changes to their staff, others have already highlighted the proposals and their probable implications. Rolls-Royce has announced its intention to close its salary sacrifice car scheme. On the other hand, it has been reported that many private and public companies – from the NHS, to Morgan Sindall and the Unipart Group – are favouring the “wait and see” approach.

While the new rules may make salary sacrifice car schemes more expensive for employers, companies must consult their tax advisers and HR representatives to analyse the unique impact on their business and review the options available. It is advisable that employers begin to analyse the immediate impact on both existing vehicle orders and their drivers, offering renewed choices where necessary.

Dan Rees, associate director of Deloitte Car and Mobility Consulting, has indicated that ultra-low emission vehicles will become “more and more attractive” as we approach the 2020/21 tax year, when new benefit-in-kind tax incentives for the cleanest cars – from 16% down to 2% – come into action. With ultra-low emission cars exempted from the proposed changes, it is likely that salary sacrifice car schemes will remain an attractive option for a large number of employers.

Impending cold snap raises fleet safety questions

Written on January 12, 2017

The Met Office has forecasted a dramatic drop in temperatures across the UK starting this week.

Cold air originating in Canada is set to spread southwards today, bringing sub-zero conditions to some parts of the country. Yellow warnings for Severe Weather have been issued in anticipation of increased wind and snow.

Places inland are likely to see only rare snow showers. However, more frequent and disruptive snow showers are expected in northern/western Scotland, Northern Ireland and Irish Sea coastal areas. Eastern coasts will also be affected to a lesser extent around Friday and Saturday. Where snow settles, there is a chance temperatures may hit negative double digits at -8 to -10C.

Overnight frosts, hail and snow showers are predicted, bringing 2-5 centimetres of snow at low ground and 10-30cm on ground beyond 200-300 metres. Some major publications are also reporting on the likelihood of ‘thundersnow’ events, when rain showers and stormy weather combine with snowfall to create blizzard-like conditions.

Even a small amount of snowfall can cause disruption in the UK. Motorists are therefore advised to be cautious on the road during the cold snap. Fleet managers, too, are encouraged to be vigilant with vehicle maintenance. Some things to watch if you’re managing the upkeep and leasing of vehicles this week include:

Cooling System
Frosty weather threatens damage to your vehicle’s engine block when coolant freezes and expands. Refer to the vehicle owner’s manual for recommended coolants designed for winter weather. Check for leaks and repair them if possible. If it’s been a while, you should also ensure the cooling system has been flushed and the coolant refreshed. All of the above should prevent the system’s critical failure.

Fuel Tank
In cold conditions, best practice is to keep your fuel tank above the halfway line. Letting your tank run low risks allowing water vapour to collect in the fuel line, which can freeze and prevent your vehicle from starting. A half-full tank prevents the collection of condensation and reduces the possibility of freezing.

Windscreen Wipers
It is all too easy for windscreen wipers to degrade before the vehicle owner realises, or it’s too late. With rain, frost and snow likely to hit motorists this week, it’s important to check that they are functional before planning any journeys by road. If possible, consider upgrading to heavy duty wipers which withstand ice and snow for only a small cost increase.

Lights
Ensuring all lights on your vehicles are operational is standard practice for most responsible motorists. However, with ice on the roads and increased braking times to be expected, it’s best to ensure your brake lights and indicators are working. Check them manually as the warning lights on your dashboard may not be accurate.

Battery
A vehicle regularly exposed to freezing temperatures risks draining the charge from the battery and preventing it from starting. If you have the capacity to keep your vehicles in a garage, the extra warmth will help the batteries to hold their charge.

If you’re unsure whether you will be affected, check your local weather forecast. The Met Office has issued Severe Weather warnings for most of the UK.

Young men targeted in Christmas drink-drive campaign

Written on December 22, 2016

This year’s drink-drive campaign has just been launched by the government, specifically targeting young male drivers who – according to the latest figures – account for almost two thirds of the drink-drivers killed on the roads.

Various social networks will be used to target the demographic, with advertising to be sent out on Facebook, Twitter and Spotify as well as others. 5.4 million British males aged between 25 and 34 use the networks, and represent the highest single user demographic.

Road Safety minister Andrew Jones said: “Drink-driving destroys families and ruins lives, yet some reckless drivers continue to take the risk and get behind the wheel after drinking – particularly young men who account for almost two thirds of drink drivers killed on our roads.

“We have some of the safest roads in the world and deaths from drink driving have fallen significantly over the last 30 years, but it is still responsible for the deaths of five people every week.

“This Christmas we are specifically targeting the biggest perpetrators of this devastating crime – young men, but our message to everyone remains the same: don’t drink and drive.”

A new advert will be placed on Twitter or Facebook every day throughout December, all of them focusing on the idea of FOMO – the ‘fear of missing out’, and that young men have plenty to live for the following day: a day they may not see if they choose to drink and drive.

Department for Transport research found that 20 per cent of young men have had two or more drinks before driving, and a further 11 per cent had considered it. A third of adult respondents, meanwhile, claimed that doing so would not impact their driving skills.

Research from the National Institute for Health and Care Excellence (NICE), however, demonstrated that a second drink doubles a driver’s chances of being involved in a fatal crash.

Chief Constable Suzette Davenport, said: “Police officers on patrols over the Christmas and New Year period will be specifically targeting people driving under the influence of drugs or alcohol and we will also be doing roadside testing, so we can make instant arrests.

“Our message is very simple and very clear – you are breaking the law, you are risking your life and the lives of those around you and the consequences of doing so will plague you for the rest of your life.”

IAM RoadSmart chief executive Sarah Sillars noted: “Younger drivers and especially young males are at the highest risk on the road in general and it is worrying to see just how high this proportion is in drink drive deaths and serious injuries.

“Through the work we do with offenders, the most common feedback we receive is “I simply didn’t realise”, particularly when it comes to the risk of still being over the limit the next day.

“This clearly demonstrates the need for education, especially for high-risk groups. Our advice is always make it none for the road this Christmas, but if you’re going to have a drink, know your limits.”

Vehicle rental and leasing sector records more growth

Written on December 20, 2016

The number of vehicles operated by the BVRLA has brought membership levels to more than 4.7 million, a figure boosted by a 40 per cent rise in the leasing broker sector.

The BVRLA this week hosted its annual industry conference in the West Midlands, and reported a 16 per cent overall rise in membership during 2016, with the total number of members reaching 908 – 128 more than at the end of 2015.

Chief executive Gerry Keaney said: “The association has now welcomed its 900th member, and we are fast approaching a combined fleet size of five million vehicles, which has never happened before.

“In the past three years, both membership and fleet size have grown by more than 30%, which corresponds with the growing strength of the industry which is now more influential than ever.”

The leasing broker sector was responsible for a great deal of the new memberships, with 308 of the members operating within the group. The number of vehicles that members are responsible for has also grown, reaching 4.7 million, with more than 3.8 million of those vehicles being cars.

Cars and van use within the business leasing sector (contract hire and finance lease) also grew year-on-year, increasing by 5.2 per cent. The car fleet numbers grew by 2.2 per cent, and the corresponding van figure up by 13 per cent.

There was a 10 per cent year-on-year increase in the overall size of the BVRLA car leasing fleet, with personal contract hire accounting for nearly 60 per cent of this: a key discussion topic during the BVRLA’s conference.

A number of other topics were also covered, including Brexit, business car taxation, the economy, emissions, future mobility models, the grey fleet and residual values.
Over 150 executives attended the conference, which was sponsored by a number of companies including Jaguar Land over, Cap HPI and Black Horse.

Delegates were presented with a copy of the BVRLA’s Annual Review, which highlighted the performance of the association through the year as well as detailing plans for the year ahead, in which the association will celebrate its golden anniversary.