BVRLA News
www.bvrla.co.uk May 2010
The newsletter of the British Vehicle Rental and Leasing Association
Icelandic volcano casts a pall over car rental The BVRLA is working with Leaseurope, the European umbrella body for vehicle rental trade associations, to seek assistance for companies affected by the volcanic ash-induced flight ban. Recent estimates suggest that disruption caused by the ban cost the European car rental industry nearly £60m, with 22% of global car rental bookings cancelled and over 95% of passengers not collecting their rental cars at most European airports. Altogether, more than 100,000 flights were cancelled and over 10 million passengers were unable to travel. An estimated 200,000 Britons were left stranded abroad. Leaseurope has asked the European Commission to include the car rental sector in any compensation scheme for the travel industry. The Commission has temporarily relaxed state-aid rules and allowed member companies to help struggling airlines, but as BVRLA News went to press there was still no further information on what help might be available for other affected sectors. Blue skies thinking: the vehicle rental and leasing sector is looking for an imaginative solution to compensate victims of the flight ban that followed the Eyjafjallajokull eruption and ash cloud
© iStockphoto.com/Icerock
Leaseurope has also sought a temporary relaxation of the laws that prevent hire cars stranded abroad from being rented back to their home countries. Vehicle rental companies saw a big surge in one-way bookings as passengers desperately tried to make their way home during the flight ban. It is thought that up to 10% of rented cars ended up having to be repatriated. The industry has been swift to respond to some complaints of over-inflated costs for one-way rentals. “Rental companies need to recoup the cost of transporting these vehicles back across borders and the loss of days on rental while the car is being brought back home,” said BVRLA chief executive John Lewis. Meanwhile, the BVRLA is supporting members that are looking to get their minimum airport guarantee fees adjusted or waived for the period affected by the no-fly disruption. ■ Your flight-ban experiences, page 5
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In this issue DVLA discusses electronic goals Online delivery of vehicle licensing services may not be far off page 2 Congestion charge draws heavy fire BVRLA members have said just what they think of London’s payment processing system page 2 Van failure data puzzles VOSA The BVRLA has called for clarity on the MOT failure rates of vans page 3 Accountants’ ideas on leases alarm Treasury A change to accounting standards could have major implications for leases and tax law page 4 Out of the ashes… The volcanic ash cloud posed a huge challenge for airlines, travellers and car rental firms alike. How did you cope? page 5 Our ATA award is go! The BVRLA’s Automotive Technician Accreditation scheme begins page 6
— Promoting responsible road transport since 1967 —
Comment DVLA meets members to discuss electronic goals
Finally, we have a government. We are in uncharted territory with a Conservative/LibDem coalition and can only hope that our politicians can deliver the stable government they are promising. Stability is key if we want the economic recovery to continue and business confidence to rise.
The first priority will be to tackle the huge deficit, which means higher taxes and public spending cuts. Transport will be an easy target. We will push the message that cutting road investments and piling more increases on over-taxed road users would be just as damaging to the economy as raising business taxes. Editor Toby Poston, toby@bvrla.co.uk 01494 545700 Production Manager Steven Prizeman, steven@bvrla.co.uk 01494 545710 Advertising Nora Leggett, nora@bvrla.co.uk 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 info@bvrla.co.uk W bvrla.co.uk Honorary Life President Freddie Aldous Chairman Kevin McNally Vice Chairman Nigel Stead Honorary Treasurer Brian Back Chief Executive John Lewis
Progress is at last being seen on the electronic services being developed by the Driver and Vehicle Licensing Agency (DVLA). For many years the BVRLA has been calling on the DVLA to allow its members to accept electronic notifications, such as change of keeper details or vehicle disposals. Being able to communicate with the DVLA electronically would not only reduce administrative costs but would make it easier for members to comply with their legal obligations. Last month, the BVRLA held a workshop with a number of its members and the DVLA to discuss potential solutions and decide priorities. The discussion proved to be very positive, with the DVLA setting out its timescale for a September 2010 move to its new IT platform for fleet relicensing. The DVLA believes the new IT platform would give it scope to provide other electronic services in the future, such as bulk relicensing of cars over three years old, refunding vehicle excise duty and accepting statutory offroad notification (SORN) and notice of vehicle disposals.
Whilst some of these services were acknowledged as longer-term goals, the DVLA is looking at accepting electronic SORN and disposal notifications by email and file transfer in the near future. A pilot scheme is to be carried out shortly involving BVRLA members. If it proves successful it will be made available to all fleet owners Other topics discussed which will require further work included the removal of the need to issue paper V5 documentation, multi-year vehicle excise duty, and fleet relicensing of heavy goods and passenger service vehicles. BVRLA members also aired concerns about an increase in errors in the registration details of fleet vehicles held by the DVLA. The DVLA has now written to all motor dealers and manufacturers highlighting the importance of ensuring they follow the correct registration procedures. To participate in future discussions with the DVLA, contact legal services executive Amanda Brandon. n Contact: Amanda Brandon, amanda@bvrla.co.uk 01494 545701
TfL takes flak for congestion charge The gloves were off in a very heated meeting between BVRLA members and Transport for London (TfL) last month to discuss the way in which the London congestion charge is currently being operated. The BVRLA members left TfL in no doubt that they regarded the current situation with regard to fines and administration of the fleet scheme as grossly unacceptable. They said that urgent attention was required to help restore their confidence, and that of their customers, in the ability of TfL’s service provider, IBM, to manage the scheme effectively. Members reported that they were owed tens of thousands of pounds in refunds
of fines which had been paid incorrectly. They said their staff were working unsociable hours trying to pay fines on TfL’s website, that fleet schemes were having vehicles removed or added by IBM, and complained of many other issues that were taking up their time, adding to costs and causing frustration. TfL accepted there were problems and agreed to resolve all the issues raised within a yet-to-be agreed timescale. BVRLA members who have encountered problems should contact legal services executive Amanda Brandon. n Contact: Amanda Brandon, amanda@bvrla.co.uk 01494 545701 BVRLA News | May 2010
VOSA admits van failure data is an enigma The Vehicle and Operator Services Agency (VOSA) has responded to the BVRLA’s call to clarify data it issued on the failure rates of vans with gross vehicle weights between 3 and 3.5 tonnes. It has become apparent that this same data was cited by the Retail Motor Industry Federation (RMIF) as evidence that the government should consider ensuring that all vehicles over one year old undergo an annual test. This would be a change as cars and vans that are less than three years old do not currently require MOT tests.
The data which the RMIF used to support its argument shows that the failure rate is 45.6% for vans with gross vehicle weights between 3 and 3.5 tonnes – much higher than cars and other commercial vehicles. However, the BVRLA has looked at the re-test rates for these vehicles and found that over 20% are not re-tested each year. This could mean they are being driven without an MOT and therefore no insurance or tax, but, given the number, this seems improbable. The association believes that a more likely explanation could be that these vehicles are being
scrapped as the cost of repair is outweighing their value. How, asks the BVRLA, will testing newer, better-maintained vans after one year improve the failure rate of older vans? VOSA has responded to the BVRLA by accepting that it is unable to explain why such a high number of vehicles that failed their initial test were not re-tested. VOSA plans to conduct further analysis and agrees that much more work is required before the government would be in a position to consider bringing vans less than three years old into the scope of MOT testing. The BVRLA has also asked VOSA for test data on the failure rates of one-year old commercial vehicles. The BVRLA believes that newer commercial vehicles are so well maintained, due to O-licence inspection requirements and manufacturers’ improvements to commercial vehicle technology, that there is no need to test these vehicles in the first year.
Vans: just why do 20% of 3-3.5 tonne vans that fail their MOTs drop off VOSA’s re-test radar?
If the evidence stacks up then the association will consider presenting a case at European level for a legislative change to reduce the cost burden on its members and their customers and encourage the take-up of new commercial vehicles. n
Act now to save company cars’ 50% VAT rebate HM Revenue and Customs has asked the BVRLA to help it convince the European Commission that UK businesses should continue to reclaim 50% of the value-added tax they pay on lease rentals for company cars. The European Union’s value-added tax (VAT) rules normally prevent member states from allowing businesses to recover VAT for goods or services if there is an element of non-business use – such as an employee driving a company car on a journey unrelated to their work. Since 1995, the UK has applied a flat 50% rate at which VAT can be BVRLA News | May 2010
reclaimed. Without this approach, businesses would have to produce detailed records of the number of business and private miles driven in every company car. HM Revenue and Customs (HMRC) favours this method as it would otherwise be faced with a burdensome increase in its tax administration. In 2008, however, it became necessary for the government to secure the European Commission’s approval for this system to continue. Permission must be renewed every three years, and this year the UK has to re-apply. HMRC is therefore looking for evidence to justify its 50% rate.
The BVRLA, having consulted its members on the issue, has already been able to show that 70% of the miles driven in a typical company car are business-related. The association believes that this demonstrates that the current 50% VAT-recovery rate should not only be renewed but actually increased to more accurately reflect the business use of company cars. BVRLA members who wish to contribute evidence to pass on to HMRC should contact the association’s head of legal services, Jay Parmar. n Contact: Jay Parmar, jay@bvrla.co.uk 01494 545706
Accountants’ ideas on leases alarm Treasury The BVRLA and the ‘Big Four’ accountancy firms met HM Treasury last month to discuss the implications of the International Accounting Standards Board’s plans to change the way leases feature in company accounts. The IASB wants to standardise references to leases, thereby eliminating the distinction between ‘operating’ and ‘finance’ leases. The Treasury is examining the impact this could have on the way leases are treated for tax purposes. At the 16 April meeting at the Treasury’s London headquarters, departmental officials said that, with more than 117
separate references to leases in UK legislation, there were fears that the IASB’s plan could render large swathes of tax law inoperative. Treasury officials said this would create difficulties for both taxpayers and the Exchequer. In 2005, the Treasury introduced new definitions of leases for tax purposes. The BVRLA was active in promoting the position – which was adopted – that lessors providing a lease of no more than five years duration should be able to claim the capital allowance for the leased asset. These leases were enshrined in tax law as ‘short funding leases’. For leases of longer duration (‘long funding leases’) provisions were introduced so that the lessee would be
eligible to claim the capital allowance for the asset being leased. Following its meeting with the Treasury, the BVRLA has begun an assessment of the likely tax impact on its members of a single definition of a lease for accounting purposes. The Treasury has indicated that it may consider formal consultation after the new government has settled in. Members who wish to comment should contact BVRLA head of legal services Jay Parmar. n Contact: Jay Parmar, jay@bvrla.co.uk 01494 545706
SMMT forecasts Role of Small Business Credit higher 2010 sales Adjudicator under discussion The Society of Motor Manufacturers and Traders (SMMT) has raised its forecast for the 2010 new car and van markets following a better than expected first quarter.
What should be the remit of the Small Business Credit Adjudicator? This is the question being asked by the legal services department at the BVRLA.
It has raised its car forecast by 5.6% to 1,924,000 and its van forecast by 7.7% to 202,000. These figures would represent a 3.6% fall in car registrations compared to 2009 and an 8.6% rise in new van sales.
In the March Budget, Chancellor Alistair Darling announced that the adjudicator position would be created to provide a champion for small and medium-sized enterprises seeking finance from banks. Such businesses often feel disadvantaged.
The SMMT said the industry was “cautiously optimistic” but added that the new government needed to focus on sustaining the economic recovery and improving access to finance for consumers and businesses. n
A task force has now been set up to advise the government on the role of the adjudicator, including the powers the adjudicator might have. As part of this process, the adjudicator is canvassing the views of businesses.
The BVRLA has already asked the task force to look at what can be done when credit is offered at an unreasonably high interest rate. The association believes the vehicle rental and leasing industry is unfairly perceived by some lenders as a high-risk sector. The BVRLA is inviting members to suggest other matters they would like it to raise with the task force. It is particularly interested in hearing the insights of those who have struggled to access funding during the economic crisis. Comments should be submitted by the end of June. n Contact: Amanda Brandon, amanda@bvrla.co.uk 01494 545701
Getting the attention of key decision-makers in rental and leasing businesses isn’t easy – fortunately, advertising in BVRLA News is. With over 5,000 subscribers, it is the best way for suppliers to get their message across to an industry with a combined fleet of 2.5 million cars, vans and trucks. Responsible for buying nearly half of all new vehicles sold in the UK, they spend over £17bn a year on vehicles and £4bn on support services. For further information, contact Nora Leggett: nora@bvrla.co.uk, 01494 545713
BVRLA News | May 2010
Out of the ashes… The eruption of tongue-twisting Icelandic volcano Eyjafjallajokull in April posed a huge challenge for airlines, travellers and car rental firms alike as flights were suspended across Europe. How did BVRLA members and their customers fare? Here’s how… Some car rental businesses shared their customers’ experiences with us
Photo: David Hulme
Europcar Europcar’s Heathrow operation reported 30 customers who returned cars rented from mainland Europe. This helped some of the people waiting at the airport who were offered one-way rentals so they could return home. Europcar hired vehicles from the UK back to France, Germany, Italy, the Czech Republic, Sweden and Spain. To travel back to the UK, one customer reported that he had to purchase a bicycle from a lady in France for 45 euros in order to get a ferry crossing! Another bought a motorbike.
Andrew Strathdee is the managing director of Isle of Man Rent a Car, based at Ronaldsway Airport. “The no-fly period was nothing short of a nightmare for us. We are based on-airport and 99% of our business walks off a flight. Delivery and collection is not a big seller here. We also offer a meet-andgreet service for the ferry crossings but, again, only a minimal number. The sea terminal is not far from the airport, probably a 16-mile round trip. However, we don’t have any official parking facilities there. The best the authorities could offer during the no-fly period was a four-hour window for us to have cars parked without fear of ticketing. So far we have refunded just over £1,800-worth of pre-paid reservations. BVRLA News | May 2010
Being such a small island – the way word gets round – it’s not worth quoting T’s & C’s on refund policies in instances like this. We have suffered approximately 65 cancellations over the entire period. On Monday afternoon I received a call from a teacher at a university in southern England. He had a party of 29 students and four teachers who were supposed to be going to Greece for a field trip. Due to the flight-ban, he had elected to come here, making the journey from just south of Bristol up to Heysham and catching the ferry the same evening. We made arrangements to collect 12 members of the party from the sea terminal at 05:45 to bring to our offices to collect nine vehicles for 10 days. It was quite a challenge to do this at such short notice. All in all I’d have to say that we have coped very well in the circumstances. If nothing else it makes a change!” ■
Hertz received a clutch of messages of gratitude from its customers. These are just some of them: Saturday 17th April I arrived in the port of Dover via the Calais ferry crossing due to the volcanic ash event grounding my flight. Walking to the train station I noticed Hertz was still open at 14:00 when it was supposed to close at 13:00. The duty manager exhibited initiative and a genuine spirit of help by staying open and helping stranded customers. Arriving at the Hertz branch at 14:00 I found myself in a car and homeward bound within half an hour. Marvellous service and many thanks to your guy at Dover! Give him a pay rise, I say. Excellent service, even through the ‘Ash’ crisis. Being able to change vehicle drop-off point to ferry terminal at short notice. The staff in the ferry terminal who had been seconded in from Prestwick Airport on Sat 17th of April were in before official opening time and still helped me get my ferry on time with what was basically out-of-hours service. Please thank the two ladies in question! Due to no flights on Sat 17th April had to drive from Scotland back to Gatwick airport to get my car, staff were very helpful and understanding. GOOD value for money as it landed up as being a one-way drop off. Many thanks. 5
Toyota values prove robust, but Ford’s a puzzle Following the press coverage of Toyota’s recalls and Ford’s surprising move to cut list prices on selected models, the BVRLA was interested to see if its members identified any immediate impact on future residual values in the association’s Data Survey. In February, Toyota recalled the Aygo, iQ, Yaris, Auris, Verso and Avensis models due to faulty accelerator pedals. For the age profile (36 months/60,000 miles), the industry mean value (IMV) calculated from member data in March and April did not reveal any significant changes in members’ forecasts. In fact, Auris, Aygo and Avensis values have all seen slight improvements. The Yaris suffered only a 0.77% decline and the iQ 1.79%. Changes to CAP data are only marginal, although fellow industry guide Eurotax Glass’s has cut back
Glass Trade prices on all ’59 plate Toyota models in the April edition of Glass’s Guide, some by as much as £425. As evidenced in the BVRLA Data Survey, the recent Toyota recalls have had very little impact on future residuals as far as the association’s members are concerned, although it is still too early to say if this will continue. Following Ford’s announcement of a 10-12% cut in the list price of its Galaxy, S-Max and Mondeo models in March, BVRLA members have yet to report any impact on future residuals. Analysis of their March and April data indicates no drastic differences in their forecasts for any of the five age profiles for these models in the survey. Mondeos did see a 4% reduction in April’s data across the age/mileage profiles, but this was not the case for the
Galaxy, nor the S-Max, which actually improved by 10%. CAP benchmark figures showed similar increases. In contrast, Glass’s Guide has made downward adjustments to the Galaxy, cutting up to £225 from the trade price. All in all, it appears to be too soon to assess the impact of Ford’s new pricing structure, but the BVRLA will be keeping its eye on residual prices over the coming months. Meanwhile, the IMVs for all light commercial vehicles (LCVs) in the April data survey are showing steady improvement on March, particularly diesel models, which grew by 6%. In comparison, CAP figures for diesel LCVs have been fluctuating over the past 12 months, peaking in March but falling again in April. CAP values are, however, still 12% higher than the industry mean value calculated from members’ data. n
Motor industry welcomes new ATA award The BVRLA has announced the launch of its Automotive Technician Accreditation (ATA) scheme after a successful pilot programme earlier this year. Now, people who work within the rental and leasing industry in a maintenance controller or technical services role can apply to have their competence assessed against a national benchmark qualification developed by the BVRLA and IMI Awards (the awarding body of the Institute of the Motor Industry). It represents the culmination of two years’ effort by an expert working group from the rental and leasing industry led by Nora Leggett, the BVRLA’s head of member services. “As well as giving a boost to individual careers, employers will benefit from being able to boast that they employ ATA-registered technicians,” she said. “Customers will know that they are in good hands when they see the ATA logo in tender documents and other marketing materials.”
Ian Gillgrass, accreditation manager at the IMI said: “Following a successful pilot involving six of the major organisations in this sector and together working with the BVRLA, we are delighted to announce the launch of this new ATA route. Many of the individuals working in this sector have never had their skills recognised and so this is the first opportunity for many to gain that recognition.” The three-month pilot programme saw a dozen candidates gain their accreditation. They were Steve Cowell and Jon Parsons of Masterlease UK, Gemma Smith and Mark Watters of Hitachi Capital Fleet, Andy Pooran and Graham Parker of Arval, Phil Ainsworth and Simon Martin of ING Car Lease, Susan Lord, John Cracknell and Chris Pidgeon of Lex Autolease and Kevin Pyecroft of ALD Automotive. The ATA assessment programme measures individual performance against a set of key industry skills, providing proof of competence and a desire to work to a high professional standard and code of conduct. It is regulated by the Institute of the Motor Industry, which is the
professional association and Sector Skills Council for the automotive retail industry. Anyone who wishes to gain the accreditation and has two years’ experience as a technical customer services advisor or maintenance controller should ask their manager to nominate them to the BVRLA. Assessment takes place at the candidate’s own business premises. To be accredited, candidates must satisfy a range of performance measures critical to their job which are examined in six competence tests. The tests comprise two role-plays (one with a customer, one with a dealership), a professional discussion, an in-tray exercise, a written exercise and a 30-minute online multiple choice test. Accreditation lasts for five years and costs £295 plus VAT per candidate. For more information and to apply for assessment, contact Nora Leggett. n Contact: Nora Leggett, nora@bvrla.co.uk 01494 545713 BVRLA News | May 2010
Upsurge in walk-up frauds
News in brief
Recent weeks have seen a marked escalation in walk-up frauds targeting car rental companies, apparently by organised gangs. Up to 30 vehicles belonging to BVRLA members have been stolen by criminals using false or stolen IDs.
Certificate in Fleet Consultancy Module One: 14 – 15 September Module Two: 16 – 17 November Amersham
customers matching this profile failing their qualification procedures at Aberdeen Airport and in Salisbury. What can rental companies do legally to protect themselves? The BVRLA considers the sharing of accurate, upto-date information to be vital. BVRLA members can do this through the association’s RISC Online database. RISC ensures compliance with data protection legislation, unlike many companies’ informal and in-house efforts – such as emails containing personal renter data.
The fraudsters are generally smartly dressed men in their late 30s using Lithuanian, Czech, Hungarian, Slovak and Romanian passports and driving licences. They usually provide UK addresses. Initially they targeted airports, especially Stansted and Gatwick, then the cities of London and Birmingham, but now appear to be operating much farther afield. They typically give contact numbers for mobile phones, but these cease to be answered after initial assurances that the rented vehicles will be returned.
For further information on RISC, or to arrange a free trial of the database, contact BVRLA head of member services Nora Leggett. n Contact: Nora Leggett, nora@bvrla.co.uk 01494 545713
Early in May, two major rental companies reported separate instances of walk-up
Committee meetings 2010 Committee of Management
20 May (agm)
19 Aug
18 Nov
Chairman’s Committee
21 July
28 Oct
Commercial Vehicle Committee
19 May
7 Sept
30 Nov
Leasing & Fleet Management Committee
29 June
21 Sept
7 Dec
22 June
19 Oct
Rental Committee
6 July
5 Oct
20 July
23 Nov
9 June
16 Sept
9 Dec
SMR Forum Committee
14 July
25 Nov
Leasing Broker Committee RVR Forum Committee Risk Management & Security Committee
Training programme 2010 Certificate in Fleet Consultancy
Amersham
14-15 Sept
(module one)
Service, Maintenance and Repair (SMR) Forum
Reading
Residual Value and Remarketing (RVR) Forum
Stratford-upon-Avon
Certificate in Fleet Consultancy
Amersham
30 June 7 July 16-17 Nov
(module two)
For further information about all BVRLA courses, contact Nora Leggett: nora@bvrla.co.uk, 01494 545713
New corporate members Athol Car Hire Brighton Vehicle Rentals Drive UK (Preston) Let Cars Star Car and Van Rental BVRLA News | May 2010
Tata Motors European Technical Centre Vehicle Contracts West Wallasey Fleethire Services Wicked Campers
The BVRLA’s Certificate in Fleet Consultancy is designed to align the rental/leasing sales function much more closely with the role, responsibilities and requirements of a typical fleet manager. It is an accredited training programme for account managers and covers the principles of fleet management, policies and procedures, providing innovative and detailed solutions to fleet delivery requirements. It is delivered from the clients’ perspective, and, by calling on the training expertise of the Institute of Car Fleet Management, enables participants to benefit from that organisation’s knowledge of fleet operators. By gaining that perspective, staff will be best placed to give advice on the most appropriate acquisition methods and other services. Participants will demonstrate this learning through written assessments. Contact: Nora Leggett, nora@bvrla.co.uk 01494 545713
City & Guilds Vehicle Rental Operator Accreditation 12 October
This nationally recognised certificate is awarded for knowledge of vehicle operations and best industry practice. The BVRLA administers the accreditation in conjunction with the City & Guilds awarding body, with written examinations held annually at test centres up and down the country. There are five papers in multiplechoice format, each designed to test candidates’ knowledge of different areas of vehicle rental operations according to rental best practice. Aimed at all rental agents and managers in daily rental and light commercial vehicle rental locations, this qualification provides an industry benchmark of quality that transcends corporate-branded training. Careerminded individuals will want to add this certificate to their CVs. Contact: Nora Leggett, nora@bvrla.co.uk 01494 545713 7
Crime never sleeps. Fortunately, nor does the RISC Online database. Accessible at any time of day or night, this valuable resource, operated by the BVRLA, lists more than 6,200 individuals and companies who have caused problems for vehicle rental and leasing companies. With nearly 2,000 vehicle thefts from BVRLA members in 2009, the size of the problem speaks for itself. Sign up for a free month-long trial of RISC and help protect your business and staff from: ❱ Customer fraud ❱ Theft ❱ Unauthorised extensions ❱ Late payments ❱ Abusive behaviour
Contact Steph Czaplinska steph@bvrla.co.uk 01494 545702