BVRLA News, November 2010

BVRLA News

www.bvrla.co.uk November 2010

The newsletter of the British Vehicle Rental and Leasing Association

Spending Review: the devil is in the detail

by John Lewis

For example:

The Comprehensive Spending Review has given us the ‘big picture’ for transport over the course of the next Parliament.

❱ VOSA could concentrate more resources

The Department for Transport (DfT) had its budget cut by 21%, with 30% reductions for the Vehicle and Operator Services Agency (VOSA) and the Driver and Vehicle Licensing Agency (DVLA). More than £10bn will be invested in maintenance and improvements on the local and national road network.

Elsewhere, the government plans to save £100m a year by adopting new travel policies and devolving more transport decisionmaking to local authorities.

As usual the devil will be in the detail and it is only in the weeks and months to come that our industry will be able to fully assess the impact of these decisions. However, there are a number of observations that can be made after examining the plans unveiled in recent weeks.

VOSA and the DVLA clearly face some tough decisions over the next few years and it is hard to believe that they will be able to absorb these budget cuts without some reduction in headcount and services. The BVRLA is already in discussions with both these agencies and the DfT about ways they can save money while also reducing red tape for our industry.

Member details form: completion deadline draws near

on enforcement by allowing the accredited, private sector testing of commercial vehicles, similar to the current car and van MOT regime

❱ The DVLA could save millions of pounds by

removing the need to distribute and display a tax disc and eliminating the paper version of the V5C registration document for fleets.

The £10bn allocated to capital expenditure on road infrastructure shows that the government has realised the economic value of maintaining and improving the road network. The money ring-fenced for these road schemes will, hopefully, relieve some congestion black spots and tackle the evergrowing backlog of road repairs.

Of more concern is devolution of local transport planning and spending. There is a real risk that councils could use their new powers to introduce workplace parking levies or congestion charges to boost revenues.

The worst-case scenario would be a range of disjointed regional strategies causing big headaches and extra cost for business motorists and fleets.

On a more positive note, the announcement of a £1.4bn regional growth fund has potential for car rental members, who could work with local authorities in promoting more sustainable transport initiatives. n

The BVRLA relies on accurate data about its member organisations for effective communications and to set subscription fees. Inaccurate data about a fleet might result in a member paying a higher subscription fee than necessary. To help avoid this, please provide us with up-to-date details about your business.

To make the process easier, you can now do this online – just click here to open our member details form in your browser. This must be completed by 19 November in order to be factored into your 2011 subscription fee.

If you have any difficulty completing the form, contact member services administrator June Dyer: june@bvrla.co.uk, 01494 545714.

bvrla.co.uk

In this issue Commission praises consumer care moves Initiatives from the BVRLA and Leaseurope to help rental customers are welcomed by the European Commission page 2 Digital tachograph specs are reviewed Improved security and data download speeds may become part of the design specification page 2 V5C admin victory saves members £3.7m BVRLA lobbying has saved its members millions by persuading the DVLA not to require rental and leasing firms to replace existing V5Cs page 3 Accreditation begins for leasing brokers A pilot scheme for the BVRLA’s standardsraising Leasing Broker Accreditation programme has begun page 3 Registrations show industry needs leasing The role of the leasing industry in supporting the new car market has been highlighted by the BVRLA page 5

— Promoting responsible road transport since 1967 —

Commission welcomes Comment consumer care measures In some ways the UK vehicle rental and leasing industry is small. Its trade association, the BVRLA, has fewer than 700 corporate members, employing less than 50,000 staff. But from most perspectives this industry is massive. It owns and operates more than 2.5 million cars, vans and trucks, spending an estimated £20bn a year on vehicles and ancillary services. It provides cost-efficient and sustainable road transport to millions of corporate users and consumers.

UK transport policy is undergoing some major changes and it is vital to get this message across. Our recent consultation response (see page 5) is one example. We hope members will help us push this message directly at our upcoming industry conference on 2 December, where we will be welcoming transport minister Mike Penning and senior executives from the DVLA and VOSA. 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 Neil Cunningham Honorary Treasurer Brian Back Chief Executive John Lewis

The European Commission has expressed its satisfaction with the developments made

by Leaseurope following the Commission’s car rental ‘summit’ in February (see BVRLA News, April 2010).

Key Facts About Your Rental tells customers where they stand on such issues as fuel, mileage, insurance, damage, late returns and traffic fines.

The one-page guide also explains what customers should expect from the rental company they use.

Since the summit the BVRLA has worked closely with Leaseurope, the umbrella body for European car rental and leasing associations. The two organisations met with the Commission and the European Consumer Centre in October to discuss progress in addressing the Commission’s desire for car rental to be more ‘user-friendly’.

“The Commission and the European Consumer Centre fully supported the work Leaseurope has been doing to ensure transparency for customers,” said the BVRLA’s head of legal services, Jay Parmar, who also manages the ECRCS.

Developed and administered by the BVRLA on behalf of Leaseurope, the European Car Rental Conciliation Service (ECRCS), is being piloted at the moment. The BVRLA and Leaseurope have also produced a ‘key facts’ document to explain car rental to the public.

The ECRCS is accessible to car rental customers who are dissatisfied with their experience in any European Union country and have exhausted the rental company’s complaints procedure, providing an alternative to court action.

It is being piloted by Avis, Europcar, Hertz and Sixt. n Key Facts About Your Rental can be downloaded here.

Tachograph specs are under review Improving the security of digital tachographs and the time taken to download data from them are two objectives of the European Commission as it reviews the design specification for the device.

The Commission has set out 20 measures which it is considering as part of its review, due to be published in the early part of 2011.

The Department for Transport (DfT) is taking part in discussions about which measures should be taken forward.

It met with the BVRLA last month to discuss the proposals, together with representatives of the Road Haulage Association, the Freight Transport Association and the Confederation of Passenger Transport.

Among the measures being considered are merging the digital tachograph driver card with the driving licence photocard and the driver certificate of

professional competence card, as well as removing the need for goods vehicle drivers to carry paper records.

The BVRLA and the other industry representatives were very supportive of the proposal to merge the various cards.

This was seen as a measure which would not only reduce costs but would reduce fraudulent claims for allegedly lost cards.

The DfT agreed with the industry bodies that any changes to the digital tachograph should only apply to new vehicles and should not pose any unnecessary cost burdens on business.

BVRLA members who would like more details of the measures being considered should contact legal services executive Amanda Brandon. n Contact Amanda Brandon, amanda@bvrla.co.uk 01494 545701 BVRLA News | November 2010

V5C admin victory saves millions for members BVRLA lobbying has saved its members an estimated £3.7m by persuading the Driver and Vehicle Licensing Agency (DVLA) not to oblige rental and leasing firms to replace their existing Vehicle Registration Certificates (V5Cs) with the agency’s recently redesigned version.

The new V5C will be issued from July 2011 when a vehicle is relicensed or made subject to a Statutory Off Road Notification (SORN) (see BVRLA News, August 2010).

The BVRLA told the DVLA that this would have created an administration burden for vehicle rental and leasing

companies, because they would have had to retrieve and destroy the old V5C and file the new one.

The association estimates that not issuing a new V5C to its members’ existing fleet of vehicles would save them about £3.7m during the year from July 2011 to July 2012, when all current V5Cs (and the older V5s) will be replaced when vehicles are relicensed or SORN’d.

The DVLA is also considering whether it is necessary to issue a paper V5C at all, given that the documents are rarely referred to. Instead, the V5C could be issued to fleets in an electronic format, allowing rental and leasing companies to check fleet data before uploading it

to their systems. When the vehicle is disposed of, the V5C-holder would be able to request a paper document to accompany the vehicle.

The other uses for the V5C, such as processing cherished numberplate transfers, proving keepership, and issuance of parking permits, could all be covered with a Vehicle on Hire Certificate (VE103) and a letter of authority from the leasing or rental company.

The BVRLA will be working closely with the DVLA over the next few months to put together a detailed case for change and on ensuring that all uses of the paper version of the V5C are covered. n

Leasing Broker Accreditation pilot begins The BVRLA has announced that a Leasing Broker Accreditation scheme to raise standards among sales staff will be launched in 2011.

A pilot programme has already begun.

attend off-site training courses,” said the BVRLA’s head of member services, Nora Leggett. “Online training modules are an efficient alternative”.

Once registered on the programme, individual brokers’ staff will be sent a user name and password to access online learning material and to take the BVRLA accreditation test. Leasing Broker Accreditation denotes that an individual has achieved the appropriate standard of competency to work in the industry.

Topics include corporate and industry governance, regulatory compliance, business vehicle acquisition methods, tips on selling to businesses and an A to Z of commonly used industry terms. The BVRLA envisages that between two and three hours of study, backed up by around six months industry sales executive experience, will be sufficient to prepare candidates for the 40-minute online test.

“Access to quality learning materials is important because not all staff can

Mike Lloyd, managing director of Central Contracts, and chairman of the BVRLA’s

Leasing Broker Committee, welcomed the accreditation scheme.

“It will play an important role helping the sector to promote the high standards being delivered by BVRLA leasing brokers and also to market their respective value propositions,” he said.

Registration costs £95 a year and accreditation lasts for one year. For further information about the scheme, and an application form, contact Nora Leggett. n Contact Nora Leggett, nora@bvrla.co.uk 01494 545713

How should the City & Guilds skills certificate develop?

The BVRLA is calling on its members to help it make the City & Guilds Rental Operator Skills Certificate more relevant to their training needs.

The certificate is designed to enable vehicle rental staff to show their knowledge of best practice and gain the recognition they deserve. It also aims to help them further their professional development by demonstrating business skills and regulatory knowledge.

BVRLA News | November 2010

In 2010 there was an 85% pass rate, with most candidates achieving 80-95% across the five multiple-choice exam papers.

The two highest-scoring candidates will be invited to the BVRLA Annual Dinner on 3 March 2011.

But, despite the exam’s usefulness, the number of BVRLA members participating has been declining. As a result, the association wants to hear from

members about what they consider to be the training and accreditation needs of frontline counter staff.

Suggestions, and enquiries about the future of the BVRLA’s training programme for rental staff, should be directed to member services administrator Fran Hampson. n Contact Fran Hampson, frances@bvrla.co.uk 01494 545703

‘Big Four’ give lease accounting views The BVRLA met with the ‘Big Four’ accountancy firms last month to discuss the proposed changes to lease accounting (see BVRLA News for October, September and July 2010).

damage the commercial benefits of vehicle rental and leasing – such as sheltering companies from the risk of fluctuating vehicle values and freeing working capital that would otherwise have been spent buying an asset.

“The BVRLA is encouraged that the firms echoed the association’s view that the proposals would not erode the commercial benefits of renting or leasing,” said BVRLA chief executive John Lewis after meeting with representatives of PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young.

While the proposed changes to accounting standards would impose an extra reporting burden, in the view of the BVRLA, they would only apply to companies that report to International Financial Reporting Standards (IFRS) and the public sector.

“The accounting experts were also of the view that firms leasing or renting vehicles should only be required to reflect liabilities for which they are committed and avoid having to speculate on their liabilities.”

The BVRLA believes there is nothing in the proposed changes that would

With the majority of UK firms reporting to generally accepted accounting practice (GAAP), the proposals will have limited impact on UK businesses.

Some BVRLA members have asked if the proposals would apply to customers using daily rental or flexible leasing products. The Big Four accounting firms confirmed that they would because daily

rental is an ‘operating lease’. Auditors would decide if a daily rental or lease has to be accounted for by applying the ‘materiality’ or ‘non-core’ rules.

This means that if the rental or lease payments had little financial impact on the accounts they could be ignored.

The BVRLA will give its response to the proposals of the International Accounting Standards Board (IASB), which is driving the changes, before its consultation closes on 15 December.

The association wants the proposals to be simplified and for the reporting burdens they would impose on businesses to be addressed.

It is understood that if the proposed accounting standards go ahead they will be introduced in the first half of 2011. The BVRLA will be calling for a transitional period of up to three years for implementation of the changes. n

Rental customers Obituary: Stanley Thompson – with their own former chairman of the BVRLA insurance: a guide Stan Thompson, a former chairman The BVRLA has seen an increase in queries from members about how they should deal with customers who want to use their own motor insurance when renting vehicles.

The key issue concerns when the period of the customer’s responsibility for insuring the vehicle begins and ends.

The BVRLA has a best practice guide on the use of customer’s own insurance to help members ensure that their vehicles are always insured and that damage can be charged correctly.

The guide also offers advice for members who provide vehicles via rental brokers and accident management companies and therefore have very little contact with the corporate customer who uses the vehicle. n Customer Own Insurance can be downloaded here.

of the BVRLA and managing director of Jessups Vehicle Contracts, passed away last month.

Chairman of the association from 1987 to 1989, Thompson then became honorary treasurer. In this role he continued to provide his valuable assistance to the BVRLA and its office holders for a number of years.

Stan Thompson had a long career at Jessups from its days as a successful, family-owned Vauxhall/Bedford dealership group. He founded Jessups Vehicle Contracts and led the company until retiring as chairman in 1999.

A keen cricketer, Thompson also loved playing golf.

“With his warm, whimsical, sense of humour and firm-but-fair approach, Stan was a delight to work with throughout his time,” said Max McHardy, who succeeded him as BVRLA chairman in 1989.

Thompson: humorous, whimsical and fair

Thompson is also remembered fondly

by Brian Back, current BVRLA honorary treasurer and chairman from 2003 to 2005: “He was a very stylish and accomplished dancer and put everybody else to shame when he took to the floor with his lovely wife. A real class act.”

His is survived by his wife, Sue, and his son, James. n BVRLA News | November 2010

Registrations show why the UK economy needs leasing The BVRLA has highlighted the role of the vehicle rental and leasing industry in supporting new vehicle registrations in its response to a government consultation on how the private sector can lead recovery in the UK economy. Legal services executive Amanda Brandon explains.

Since the end of the car scrappage scheme in March 2010, fleet and business purchases have dominated the market for new cars, reaching a share of almost 60% in August (see chart 1).

The leasing and rental sector has led this surge, responsible for more than 70% of registrations.

Leasing and rental company purchases also make up nearly half of all commercial vehicle registrations. Taking a look at all vehicle registrations, it is clear just how much the UK automotive industry relies on fleet and business sales, which are dominated by the leasing and rental sector (see chart 2).

The BVRLA believes these figures provide clear evidence of the significance of vehicle leasing to the UK’s automotive industry. The association has put forward a number of suggestions for what the government should do, including:

k requiring credit rating agencies to take a more realistic approach to the risk rating of vehicle leasing which takes into account that vehicle leasing is asset-backed and therefore low risk

k requiring banks to take a more realistic approach to their internal risk rating of vehicle leasing

k ensuring that all businesses are able to take advantage of the opportunities available through equity markets as an alternative to the normal funding routes such BVRLA News | November 2010

CHART 1 Percentage of monthly car registrations: business and retail July 2009 – August 2010

60 Q Fleet and business

Q Retail

55

50

45

40

ly

Ju

g pt Au Se

t

Oc

v

No

c

De

Jan

b Fe

r

Ma

r Ap

y

Ma

ne

Ju

g Au

ly

Ju

CHART 2 All vehicle registrations: business vs retail (THOUSANDS) January – August 2010

250 Q Fleet and business

Q Retail

200

150

100

50

0 Jan

Feb

March

April

as banks. Equity markets are less risk-based in terms of costs but are time-consuming for a small business to access on its own.

As part of the BVRLA’s response, the association showed the difficult operating climate that its members have been facing due to a number of funders leaving the market or offering finance at unaffordable rates.

May

June

July

Aug

“It is important that the government understand the vital role rental and leasing companies play in meeting UK businesses’ transport needs – especially in the current economic climate. They help free valuable capital rather than tying it up in fixed assets,” said Jay Parmar, the BVRLA’s head of legal services. Q The BVRLA’s full response to the government can be downloaded here.

5

Top speakers and hot topics make our forums a success The BVRLA’s Service, Maintenance and Repair (SMR), and Residual Value and Remarketing (RVR) forums have attracted over 700 delegates since 2009. Here, member services executive Steph Czaplinska explains what they’ve achieved – and how to get involved.

a call from SMR Forum members for consistency in vehicle recall notification processes.

The issues surrounding the introduction of electric vehicles are an increasing feature of SMR Forums. In June, for example, Axeon Power gave a presentation on the progress and implications of implementing battery technology in fleets.

The previous government’s scrappage scheme raised initial scepticism with forum members but, over its lifetime, speakers presented encouraging statistics and positive accounts from manufacturers.

The most recent debate, and one which looks likely to continue, is the viability of introducing electric vehicles to fleets. An expert panel made up of representatives from CAP, the Society of Motor

These events, featuring expert speakers, address all of the hot topics for practitioners in these areas. They also qualify for continuing professional development (CPD) credits for members of the Institute of the Motor Industry (IMI) and the new ATA Technical Customer Service Advisor accreditation (a qualification set up by the SMR committee).

Service, Maintenance and Repair The SMR Forum focuses on general issues of vehicle service and repair, as well as vehicle and contract administration. The agendas aim to promote practices to minimise the impact of fleets on the environment and to debate the merits of new technology and added value services.

The forum has featured discussions on maintaining optimum CO2 emission levels on vehicles using diesel particulate filters, exhaust gas recirculation (EGR) and selective catalytic reduction (SCR) systems, and low rolling-resistance tyres.

There has also been debate about the relative merits of franchised dealers and independent repair outlets.

The BVRLA has set up the industry recall project – a centralised database that will be populated by motor manufacturers’ vehicle recall data and details of members’ fleets, generating an electronic notification for fleet vehicles subject to recall. The database will use both VIN and VRM numbers thanks to 6

SMR Forum: in June, Thatcham introduced attendees to an important member of the team

Residual Value and Remarketing The RVR Forum debates all aspects of vehicle remarketing, including pre-procurement, whole-life costs and resale. The forum attracts regular speakers from trade guides and auction houses, including Glass’s Guide, CAP, BCA and Manheim, who provide information on the state of the used vehicle market and share their views on future residual values.

Speakers have identified effects of the recession, such as increases in vehicle age and mileage profiles in fleets. Despite this trend, the trade guides reported increases in current values. Auction houses are experiencing steady increases in online auction sales, demonstrating growing buyer confidence in the internet.

Manufacturers and Traders (SMMT) and Inchcape Fleet Solutions explored the different residual value aspects to operating electric vehicles, with a particular focus on battery ownership and warranties.

Both forums have been praised for their informative agendas and speaker presentations, and for giving members the opportunity to debate key issues in the industry.

You can be part of this. If you would like to become a member of either forum, and attend events in 2011, contact me for further details. Q Contact Steph Czaplinska, steph@bvrla.co.uk 01494 545702 BVRLA News | November 2010

BVRLA Industry Conference 2010 Heritage Motor Centre Gaydon, Warwickshire • 2 December

Hear experts including transport minister Mike Penning, VOSA chief executive Alastair Peoples and Sunday Times economics editor David Smith share their insights and experience, giving a vital perspective on key business issues. Topics include:

k How will the government’s spending cuts

k What are the ultra-low-carbon vehicle options

affect the economy?

for fleets?

k What are the prospects for inflation, interest rates and bank funding? k Which new cars, vans and trucks should we look out for in 2011/12?

k Does freight transport deserve special treatment? k What impact will the latest generation of vehicles have on the aftermarket?

Also appearing: CAP, DAF Trucks, the RAC Foundation, Thatcham and Vauxhall

k Are we Key speakers Penning, Peoples and Smith

supported by

sponsor

Committee meetings 2010 If you have an issue that you would like your sector representative committee to discuss, click on the relevant link below to access contact details and put your suggestion forward.

Committee of Management

18 November

Commercial Vehicle Committee

30 November

Leasing & Fleet Management Committee

7 December

Residual Value & Remarketing (RVR) Committee

23 November

Service, Maintenance & Repair (SMR) Committee

25 November

Training programme 2010 Fair Wear and Tear Standards

Dunton Park

Certificate in Fleet Consultancy

Amersham

30 Nov 19-20 Jan 2011

(MODULE TWO)

In-house training – dates available upon request For further information about all BVRLA courses, contact Fran Hampson: frances@bvrla.co.uk, 01494 545703

New associate member The Miles Consultancy (TMC) TMC, the mileage audit specialist, works directly with fleet customers and in partnership with leasing and fleet management providers to supply online, automated systems. These help users to cut costs by ensuring that company car and grey fleet drivers record their business and private mileages accurately.

BVRLA News | November 2010

BVRLA Fair Wear and Tear Standards Training Course 30 November Dunton Park, Warwickshire The BVRLA Fair Wear and Tear course is run by BVRLA-accredited training provider Manheim Inspection Services.

The one-day course is delivered through a mixture of classroom and ‘hands-on’ practical workshop sessions and is ideal for staff who regularly discuss vehicle condition and those in business development roles.

Contact Fran Hampson, frances@bvrla.co.uk 01494 545703

Download your booking form here

heading for a double-dip recession?

Training courses

Its solutions, which include fuel management, CO2 reporting and optimisation of cash allowance and eco schemes, also reduce administration costs, support compliance with occupational road risk requirements and are recognised by HMRC. www.themilesconsultancy.co.uk

Certificate in Fleet Consultancy – new dates announced for 2011 Module One: 13-14 April 2011 Module Two: 31 May-1 June 2011 Amersham Devised in association with the Institute of Car Fleet Management (ICFM) and accredited by the Institute of Leadership and Management (ILM), this course is aimed at sales executives and account managers.

It covers key principles of fleet and asset management, policy purpose and delivering fleet solutions, including finance and acquisition needs.

Contact Nora Leggett, nora@bvrla.co.uk 01494 545713

ATA Technical Customer Service Advisor Assessors can be booked at dates to suit candidates Intended for staff in technical service departments, this Automotive Technician Accreditation (ATA) aims to boost individual careers and professional development while improving an employer’s reputation for professional excellence. Regulated by the Institute of the Motor Industry (IMI) the accreditation lasts five years. Skills are assessed through an online test and practical assignments based on real-life situations. The assessment, which only takes half a day, can be carried out at the candidate’s own business premises.

Contact Fran Hampson, frances@bvrla.co.uk 01494 545703 7