Driving Business 2013

DRIVING

Issue 4 Spring 2013 £4.50

Helping you make better decisions

USE LESS FUEL Seven steps guaranteed to save you money

CUT YOUR TAX BILL

Big wins by choosing the right models and funding methods

❚ Why vehicle rental is the flexible option ❚ Low CO2 premium cars: which one is best for you? ❚ Stay on the right side of the law

A WINNING MENTALITY

Red Bull Racing boss Christian Horner’s “all-consuming” world of Formula 1

Contents �

FRONT END

6 Get the lowdown

ISSUE 4 Spring 2013

�24 Christian Horner

Everything you need to know about the 2013 Budget

7 Book review

Do the Maths with industry expert Colin Tourick’s latest publication

8 Opinion

Confusion over out-of-date driving licence photographs

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STRATEGY & FUNDING

10 Capital allowance

Tax changes will have an impact on a small business’s vehicle costs

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HEALTH AND SAFETY

16 Minimising claims

Cutting down on ‘hit while parked’ and ‘driver unknown’ collisions

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BROADER VIEW

21 Business law

The law exists to protect both employers and their employees

24 The DB interview

Christian Horner on why age is irrelevant to business success

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THINK DIFFERENTLY

28 Daily rental

Flexibility means daily rental could work for you

� 16

� 10

Minimising claims

Capital allowance

30 Reduce your fuel bill

Simple solutions can ease the pain of rising pump prices

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CARS AND VANS

32 Low CO2 premium cars

Find out which of these models make the best company vehicles

� 21 �28 Daily rental

Business law

34 Large panel vans

We compile your shortlist of cost-efficient vehicles www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 3

DRIVING

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Editor’s welcome

Driving Business, Media House, Lynch Wood, Peterborough PE2 6EA. Email editorial@mydrivingbusiness.co.uk

Have you ever returned to your parked car to find a ding or scratch?

Or had a member of staff report damage to their car for which they have no explanation?

We visit the topic of ‘hit by unknown third party while parked’ incidents in this spring edition of Driving Business.

It’s the second biggest type of claim, and arguably the most annoying.

Not all of these claims are genuine: it’s a ready-made excuse for drivers that have caused the damage themselves to blame a phantom third party. Who could prove otherwise?

Well there are ways in which you can reduce both genuine and non-genuine claims – safety research director Dr Will Murray explains how on page 16.

This latest issue is packed with top tips, handy advice and best practice.

New tax thresholds which affect the rate at which you can write off the cost of buying cars against profits,

If you or someone you know is aged between 16 and 24 and is interested in work experience opportunities at Bauer Media go to www.gothinkbig.com Editorial Editor Stephen Briers stephen.briers@bauermedia.co.uk Deputy editor Simon Harris simon.harris@bauermedia.co.uk News editor Gareth Roberts gareth.roberts@bauermedia.co.uk Senior features writer Sarah Tooze sarah.tooze@bauermedia.co.uk Contributors John Maslen, Will Murray, Catherine Chetwynd, Ben Rooth, John Charles, Stephen McCambridge Production Head of publishing Luke Neal Production editors Andrew Ryan Alan Salt Designer Charlotte Boon Advertising Group sales manager Sarah Crown 01733 468320 Group advertisement manager Sheryl Graham 01733 468256 Account managers Lisa Turner 01733 468345 Lucy Herbert 01733 468800 Marcus Woods 01733 468269 Stuart Wakeling 01733 468342 Wendy Cowell 01733 468046 Head of project management Leanne Patterson 01733 468332 Project managers Angela Price 01733 468338 Kerry Unwin 01733 468327 Publishing Managing director Tim Lucas 01733 468340 Group marketing manager Bev Mason 01733 468295 Office manager Vicky Meadows 01733 468319 Group managing director Rob Munro-Hall Subscriptions: subscription@mydrivingbusiness.co.uk Printing: Headley Brothers Ltd, Kent © 2013 Bauer Media No part of this magazine may be reproduced without the permission of the publisher. You can purchase words or pictures for your own publications.

Phone 01733 465982 or email syndication@bauermedia.co.uk.

Driving Business will not accept responsibility for unsolicited material.

and alter the rate of recovery on leasing premiums, came into force in April and we assess what it means for your company cars (page 10).

Our cover interview is with Christian Horner, the incredibly successful (and incredibly young – an eight-year F1 veteran but he’s still only 39!) team principal of F1 team Red Bull Racing.

He tells us how he made the transition from racing driver to the boss of a team of 550 employees.

It’s a fascinating story with plenty of insight into how he motivates and excites his staff to produce their very best at all times.

Enjoy the issue; the next edition of Driving Business will be published on September 5. In the meantime, you can keep up-to-date with all the latest company car and van news on our website mydrivingbusiness.co.uk and our sister website fleetnews.co.uk Stephen Briers Editor, Driving Business

Contributors Will Murray With a background in transport and logistics, Will has specialised in work-related road safety research, policy and practice for more than 20 years, working with government agencies and NGOs. He is research director at Interactive Driving Systems.

Catherine Chetwynd Catherine worked for a number of public relations consultancies before moving to Executive Travel magazine, where she stayed for 12 years. She went freelance in 1995 and has written for The Times, FT, Financial Director, Accounting & Business and The Grocer.

John Maslen John is widely recognised as one of the most experienced and knowledgeable writers in the company car and van business. He wrote for trade magazine Fleet News for 10 years and is now brand director at motor industry research business Sewells Insight.

Ben Rooth Over the past 20 years, business journalist Ben has interviewed everyone from Prime Ministers to the chief executives of FTSE 100 listed companies. Prior to specialising in business, he worked as a news reporter and feature writer for many years . mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 5

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n F RON T E N D

HOW TO...

Everything you need to know about the…

2013 BUDGET (but might have missed)

The 2013 Budget wasn’t as radical for companies operating cars and vans as the 2012 statement, but it still included a number of important announcements.

Here we outline the main messages you need to take on board: n The 1.89 pence per litre fuel duty increase that was planned for September 1, 2013, will be scrapped. n Two new company car tax bands are being introduced for ultra-low emission vehicles from April 2015: the appropriate percentage of the list price subject to tax for cars emitting CO2 of 0-50g/km will be 5% in 2015-16, and 7% in 2016-17. Cars emitting 51-75g/km will be subject to 9% in 2015-16 and 11% in 2016-17. n Fuel benefit charge (FBC) – from April 6, 2014, the FBC multiplier will increase by inflation for both cars and vans. For 2013 the van fuel benefit charge increases from £550 to £564, and the car fuel benefit charge increases from £20,200 to £21,100. n Van benefit charge (VBC) – the Government will freeze the VBC at £3,000 in 2013-14 and increase it by inflation from April 6, 2014. The Government commits to pre-announcing the VBC one year ahead.

n Capital allowances for business cars: first year allowances (FYA) – as announced at Budget 2012, the 100% FYA for businesses purchasing the lowest emissions vehicles will be extended until March 31, 2015. From April 2013, the CO2 emissions threshold below which cars are eligible for the FYA was reduced from 110g/km to 95g/km and leased business cars will no longer be eligible for the FYA. n The Government has extended the FYA for three more years until March 31, 2018. From April 2015, the CO2 emissions threshold will be reduced from 95g/km to 75g/km. n Capital allowances for business cars: as announced at Budget 2012, the CO2 emissions threshold below which cars are eligible for the main rate of capital allowances will be reduced from 160g/km to 130g/km from April 2013 (See page 10 to understand how this affects you). The Government will review the main rate emissions threshold at Budget 2016, with amendments effective in April 2018. n For more detail on the 2013 Budget, go to our sister website: www.fleetnews.co.uk and search for ‘Budget 2013’.

Kart racers raise funds for BEN charity Driving Business’s sister magazine Fleet News fielded a team of inexperienced yet fearless amateurs in the inaugural Broker 200 karting race to raise cash for BEN, the automotive industry charity.

Four Fleet News staff arrived at Daytona Milton Keynes on Friday, May 10, with the aims of raising at least £250 – and not to come last.

We qualified eighth out of 17 teams from across the fleet and leasing industry, and finished the 200-minute race in 14th place. By the time the race finished £365 was raised in sponsorship by the team.

You can still make a donation by visiting justgiving. com/user/42200020.

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Overcome boardroom fear Mark Palmer – non executive director, Green & Black’s chocolate.

Boardrooms are full of normal people who just happen to be more senior.

The best way for managers to overcome boardroom fear is to prepare properly, make sure they anticipate likely questions and be themselves and give an honest assessment of the issues.

Good boards can usually see right through people trying to sell to them.

What they want are the facts – warts and all – and to be certain that managers have thought through all of the issues carefully. There are no prizes for bull.

You don’t bet the farm on anything until you are sure it will work. Research isn’t usually enough to convince people.

They want to see live market results.

We prefer to trial new products in small scale live market tests rather than focus groups. It builds confidence and allows us to fine tune products and concepts before rolling them out and spending major money supporting them. It also allows us to spot a failure before it costs us.

BJ Cunningham, Death cigarette founder There are two kinds of [boardroom] fear: ‘Tiger coming, better run’ and ‘Rabbit frozen in the headlights’. One is useful, the other not so much.

I try to encourage the ‘better run’ story. In that sense there is another word for fear… excitement.

I think this is how entrepreneurs view it. It is certainly how I see it. Recession is a great time for entrepreneurs. I recommend (with prudence) the following: n Don’t be afraid…be prudent, be frugal, remain open but do not bow to fear n Stay in constant contact with your creditors and your bank. n Stay flexible, nothing is sacred. Look to the very core of your being as a business and be ready to dump everything surplus to requirements. n Be honest, tell your staff and your suppliers what is going on; involve them in your story. Never pretend.

Remember that there is a light at the end of this tunnel. The world is not going to end. It may well be very different to the world we planned or hoped for but it will be a world nonetheless and you will be there to live it.

n F RON T E N D

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BOO K R EVIEW

MAKING THE SUMS ADD UP Get to grips with discounted cashflow and compound interest n W H Y YO U SH O U L D READ IT n Assess whether to lease or buy vehicles n Understand key financial equations n Get to grips with compound interest and discounted cashflow

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Reviewed by John Maslen espected industry expert Colin Tourick has covered many issues in his growing library of books, but his latest guide has a unique focus – time travel.

The concept of Do The Maths is based around the changing value of money over time and the methods used to understand what money is worth now, compared to its value at a certain point in the future.

An everyday example of how this works can be seen in the falling value of money in the past 30 years.

Purchasing power has been crushed by the rising cost of everyday items, so a pint of beer has soared from 73p to £3.18 between 1982 and 2012. A loaf of bread has risen from 37p to £1.24 in the same period.

This three-fold increase in retail prices means that someone would need £299 today to have the equivalent purchasing power of £100 back in 1982.

To the same extent someone will need to have £229 in their back pocket in 2042 to have the same spending power as £100 now.

Tourick, whose career includes senior positions with LeasePlan, BNP Paribas and Citibank, brings this concept to the issue of whether to lease or buy a car.

Does it pay to spend now and tie your money up in a depreciating asset, or let leasing take the strain and expose your business to the challenges of working out compound interest?

The answer lies in financial time travel, where a relatively simple spreadsheet can take you back or forward in time to understand the true value of money at any point in history.

All you need is a rough idea of interest rates and the step-by-step guidance Tourick provides in his book.

He says: “This book sets out to explain the underlying principles which you can apply in any country, for any kind of asset and under any set of tax rules.

“This book is all about finance and mathematics. In order to decide whether to lease or buy your vehicles you will need to carry out a financial evaluation. This book shows you how.”

The book includes thorough explanations of concepts, including discounted cashflow and how compound interest works, along with Excel formulas to carry out your own analysis.

This may seem a specialist tome, but there are many advocates of understanding these concepts in the world of business and in personal circumstances.

A respected blogger on Bankers Anonymous, who teaches personal finance to students, points out: “What I’m trying to get across to these students is that all of the key financial choices they will make in their lives – all of their future decisions about consumer debt, retirement, insurance, purchasing a home, tax preparation, and investing – will be much, much better decisions if they deeply understand compound interest and discounted cash flows.”

Reading through the book, the benefits of understanding these concepts are clear and it is well worth absorbing the guidance Tourick provides to help you make better financial decisions in the future. n Driving Business has agreed a special rate for readers. Go to www.tourick.com and quote FNDTMOFFER by July 31 for a 50% discount.

Written by Colin Tourick Published by Eyelevel books Price £40 Website www.tourick.com

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 7

n F RON T E N D

OPINION

LEGISL ATION

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The licence, even with an out-of-date photograph is still valid, in that the holder can continue to drive in the classes displayed on the back of their photo card

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HAVE YOUR DRIVERS GOT THE PICTURE?

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M I CH A E L PACE , PA RT N ER AND HEAD O F L AW A N D PI T E A M , ANDREW & CO L L P

Established in 1832, Andrew & Co is an independent firm of solicitors advising businesses across a range of sectors

he two-part driving licence was first introduced in 1998. Since then, applicants have had to provide DVLA with a passport-type photograph, which is then mounted on the pink plastic card element of the licence.

What many people don’t know is that this photo card expires after 10 years. That’s to say the photograph expires, not the entitlement to drive.

Very little has been publicised about this issue and consequently there are thought to be at least 1.4 million driving licences sporting an out-of-date photograph, which could render the drivers liable for a fine.

But the DVLA appears in no great hurry to be doing anything about it. However, some police forces and insurance companies are aware of the problem and false information is rife.

Most people know that when they pass their driving test they’re entitled to drive a car until they’re aged 70. If they haven’t read the small print on their licence they’re probably unaware of the almost hidden information at 4(b) on the front of the photo card.

Although the photo card design changed slightly on January 19, 2013, the date at 4(b), and its explanation on the reverse of the card, remains the same. The words are ‘licence valid to’. (DVLA website uses the words ‘the expiry date of your licence’.)

And this is where confusion occurs, and where overzealous police officers and some insurance company employees have misunderstood the true meaning of the description.

Local police officers have asked me what offence, if

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any, is committed if a person continues to drive after the 4(b) date passes. I’ve heard stories of such drivers being considered to have committed the endorsable offence of ‘driving otherwise than in accordance with a licence’, contrary to s.87 RTA 1988.

If this were true, the police would have the power to impound any vehicle being driven at the time and impose points on the licence. It would also mean that insurance policies would be invalid as the driver is required, under the terms of any insurance policy, to hold a valid driving licence.

For the record, this is wrong. The correct offence is found at s.99 RTA 1988 and is ‘failing to update details on a driving licence’. This is a non-endorsable offence, carrying no points but could incur a fine.

The licence, even with an out-of-date photograph, is still valid in that the holder can continue to drive vehicles in the classes displayed on the back of their photo card right up to the date they expire (shown in column 11 on the rear of the card). Equally, insurance policies continue to remain in force.

The confusion, I suggest, comes from the use of the words ‘licence valid to’. And I can’t see that the new designed photo card, which came into effect this January, will dispel this confusion as the same words are used.

We shall therefore continue to have ‘confused’ policemen and insurance employees.

So any driver charged with the wrong offences should seek legal advice and enter a ‘not guilty’ plea at Court. This also applies if you face a summons alleging you were driving without insurance.

Companies should have policies in place to inspect the driving licences of all employees driving vehicles on business, whether it’s their own car or a fleet one.

This annual check should not only review the entitlement to drive a particular class of vehicle, but should also look at the date at 4(b), so as to protect the company from any unnecessary involvement should problems arise following an accident, for example.

It would also negate the possibility of companies being charged with aiding and abetting.

The DVLA website and www.gov.uk should be your first port of call to try and understand the rules. It’s not surprising, however, why there’s so much ambiguity when you read a DVLA information sheet that says in one breath “the date in 4b will show the licence expiry date.” and then overleaf states “the expiry date of your licence will be shown on the front in section 4b and the expiry date of your entitlements will be shown on the back of your licence”.

As I’ve said, I can’t see the new photo licence design rectifying this confusion and vehicle drivers and company managers will need to keep their wits about them.

I’m not going to go into the other changes post January 19, 2013, which mainly affect motorcyclists, lorry, bus and minibus drivers and those towing trailers. Suffice it to say, if you’ve got to tow something with a small van you’ll be well advised to check the small print of the new rulings to avoid falling foul of the law.

Again, if in doubt, visit the DVLA website.

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FINANCE

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Funding needs to be provided to the independent sector on competitive terms comparable with the subsidised rates enjoyed by the banks

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ASSET FINANCING: A REAL OPPORTUNITY FOR FUNDING FOR LENDING?

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RO G ER SKIN N ER , CEO, M A X XI A

Maxxia promotes asset finance solutions to private and public sector organisations in the UK

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he Government’s extension of the Funding for Lending Scheme to asset based lenders, invoice finance houses and leasing firms was met with cynicism from the business community. Many have been quick to comment that the initiative is “no game changer” and that it will do nothing to increase demand for credit, which apparently remains low.

The Funding for Lending Scheme, launched in July 2012, intends to increase lending to UK households and businesses by incentivising banks and building societies through low-cost access to funding.

While considered a success in the mortgage market, there has been widespread criticism of the scheme amid concerns that, despite falling costs of banking funding, lending to businesses has continued to decline. So does this announcement mark yet another George-driven disappointment?

Asset finance companies will still be dependent on banks to provide them with access to funds via the Funding for Lending Scheme.

This poses two problems. Banks and bank-owned asset finance companies will remain risk averse and continue to finance only the top quality credit. This means that the extension will simply reduce the market cost of borrowing or increase the margin for these lenders. The level of liquidity and credit available to SMEs will not improve.

On the other hand, independent asset finance firms are unlikely to benefit from the extension unless the banks recognise the role they play in reaching SMEs. Funding needs to be provided to the independent sector on competitive terms

comparable with the subsidised rates currently enjoyed by the banks.

Some form of check and balance is required to ensure the scheme does what it is supposed to. If the playing field is levelled, there’s a fighting chance it could work. The inclusion of asset financing provides significant benefits. Asset finance companies are better suited to serve and understand the needs of SMEs. High street banks have long lost touch with their SME clients and are finding they just don’t have the time, and in some cases the inclination, to know their customers anymore.

It’s the asset finance firms that can provide access to the vital infrastructure SMEs need to survive and thrive. And, contrary to popular belief, assets can be financed in a cost-effective, transparent manner.

So if the banks meet the Chancellor’s promise and provide more funding to the asset financing community, SMEs need to know how to take advantage of it. In many respects, SMEs are in control of their own destiny in terms of avoiding the asset financing horror stories of the past. Homework at the start can save heartache at the end: leasing isn’t a one size fits all solution and each business should work with asset finance professionals to determine exactly how it applies to their business.

As is so often the case, the devil is in the detail.

Businesses need to look beyond monthly fees, determine what happens when primary leases come to an end and think about the tools and support available to manage assets while they own them.

Being locked into inflexible, cumbersome contracts is not the way to go. Businesses change without warning, so an agreement that can adapt to changing circumstances is crucial.

The best providers will tell businesses all of this. If they don’t, businesses should run, keep running and not look back.

But what of the concern that demand for credit just isn’t there – that SMEs are much more focused on paying down debt rather than investing in growth for the future? Data from the asset financing community shows this simply isn’t true. Statistics from the Finance and Leasing Association indicate that in 2012, while bank lending fell, asset financing grew by 5%.

The future of funding in the business community does remain largely in the hands of the established financial institutions. But the Chancellor has thrown the banks a lifeline that enables them to put the power back in the hands of the experts.

Asset financing firms and SMEs must now work together to mobilise the banks to ensure the extension of the Funding for Lending scheme delivers meaningful change rather than simply another failed bid to boost borrowing.

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n STR ATEGY

C APITAL ALLOWANCE AND LE A SE RENTA L S

A TAXING PROBLEM

Understanding the new tax rules could save you money

n W H AT T HIS M E A NS FO R YO U Tax rules have implications for employees (benefitin-kind) and employers (capital allowance and lease rental restrictions, plus National Insurance).

Calculations are based on CO2 emissions, with the amounts a company will pay or save changing as the Government tightens the key thresholds. Here we consider the impact of the Budget on the allowances.

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By John Charles ew corporate tax rules impacting on company cars were introduced on April 1 and in simple terms it means that CO2 emissions of 130g/km becomes the de facto benchmark for businesses.

The changes (see new rules explained, p13) impact on business costs and cash flow, although the extent of the measures depends on individual company car CO2 emissions and whether vehicles are leased or bought.

Consequently, managers are being urged to ensure they are aware of the capital allowance and lease rental restriction changes but as tax expert David Rawlings, a director of business car consultancy BCF Wessex, says: “They don’t give any need for a wholesale shift in company car policy except to move to cars of 130g/km or less. There is nothing in the changes on their own to force companies to switch from outright purchase to leasing or vice versa.

Be aware of the changes, but don’t panic.”

However, Tony Murtagh, head of the SME Division at Lex Autolease, is concerned at just how aware of the new rules

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some managers responsible for vehicles in small businesses are.

He explains: “There is a variety of levels of knowledge about the changes, and where they are understood there is a variety of responses ranging from doing absolutely nothing to reviewing the whole car and procurement policy. The changes are not great but they are taking place in a challenging economic environment and they will impact on company costs.”

Alan McCleave, business development director, Venson Automotive Solutions, adds: “Irrespective of how businesses fund their company cars they should look at the financial impact of the tax changes sooner rather than later on existing policies and seek expert advice.”

Consequently, with businesses fully focused on cost management amid a continuing tough economic climate, a failure to adapt company car choice lists to meet the new rules could prove expensive Stewart Whyte, managing director of fleet consultancy Fleet Audits, advises: “Don’t provide any vehicles that are not necessary and only provide vehicles with the

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SPONSOR’S COMMENT

By Neil Broad, general manager Toyota & Lexus Fleet and Vehicle Re-marketing Services

Ignore low-emissions savings at your cost. If there’s one thing the recent budget shows, it’s the government’s determination to promote low and ultra-low emission vehicles. It’s a move we applauded and have long championed.

As the global pioneer and developer of low emissions vehicle technologies, Toyota and Lexus vehicles lead the way. We now market the widest range of low emission, low tax models.

Our sub-100g/km CO2 range will span 10 models by mid 2013. From city cars to sevenseat MPV, luxury compact hatch to ultra-clean plug-in hybrid, each one delivers low emissions with budget-savvy savings, without compromising on style, equipment levels or specification.

“Low emission driving doesn’t mean compromise”

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minimum CO2 value providing they are fit for purpose.

There should be a drive to select cars with a CO2 value of 130g/km or below.”

The tax changes are intended to further focus business decision making on the environmental impact of vehicles. It is an area that companies must continue to address within their vehicle policies and the choice of vehicles that they offer to their drivers.

Tax and leasing experts are agreed that company cars with a CO2 level of 130g/km or below are now essential to minimise costs, but they also agree that the cost impact of the tightening of emission thresholds will not have an explosive effect on corporate decisions to lease or buy – although there is some suggestion that for executives preferring to continue to drive company cars above 130g/km offering a cash option may be the most costeffective solution from a corporate tax perspective.

Paul Hollick, sales and marketing director at Alphabet, summed up the news rules saying: “They marginally increase the cost of acquiring new cars whose emissions fall between the old and new CO2 thresholds, since the

Low-emissions driving doesn’t mean compromise. Take the new Lexus IS 300h for instance. It emits just 99g/km CO2 yet delivers 221bhp by coupling a 2.5 litre petrol injection engine with a high-power electric motor, this is an executive class car that also happens to be a full petrol hybrid – minimising income tax charges for employees, ensuring superior wholelife costs for companies. Eco-efficiency need not be at the expense of style, image or driving enjoyment.

As the World’s No.1 Green Brand, (Interbrand 2011 & 2012) we are keen to ensure our customers can stay ahead of future sustainability legislation. With the Euro6 standard on the horizon, Toyota & Lexus Fleet Services is helping businesses accurately understand emissions and the wholelife savings associated with running cleaner, tax efficient vehicles. The air quality issues associated with diesel engine exhaust emissions (particulates and NOx gasses) further strengthen the corporate case for petrol hybrid motoring.

Excellent fuel efficiency, amazing green credentials plus valuable tax and operating cost savings is clearly brilliant for business. To find out more about adding Toyota and Lexus sub-100/kg CO2 vehicles to your fleet, call 0844 701 6186 or visit brilliantforbusiness.co.uk

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g/km CO2 is the new company car benchmark for businesses www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 11

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SMEs that lease their company cars are expected to see an increase in some monthly rentals

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C APITAL ALLOWANCE AND LE A SE RENTA L S

owners of such cars (fleets or leasing company) will no longer be able to make use of the maximum allowances.”

However, he adds: “It is important not to get too hung up on the lease rental or the list price when choosing a company car. There is a very good reason for letting whole life costs be your guide – they save money.

“We helped one company to switch from a lease rental-driven policy to one based on wholelife costs. As a result their costs have fallen by as much as £600 per car per year. That’s a far bigger difference than April’s tax change will make.”

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n STR ATEGY

CARS WITH EMISSIONS UP TO 95G/KM SMEs that buy company cars will continue to benefit from the most advantageous writing down allowances (100% in the first year) for cars up to 95g/km.

Rachael Dudley, partner in East Anglia-based tax experts BulleyDavey, which specialises in helping SMEs, says: “The benefit of qualifying for the 100% first year allowance is obtaining the tax relief up front in the year of purchase, tax allowances are not lost otherwise, just available over an extended period.”

However, SMEs that lease their company cars are expected to see an increase in their monthly rentals as the Government has removed the eligibility of contract hire companies to obtain 100% tax relief on low emission cars (95g/km and below).

The impact this on rates will vary due to differences in a raft of factors affecting suppliers, including their own funding costs and interest rate.

BCF Wessex calculates the impact on monthly lease rates to be in the region of a 3-5% increase which, the company says, is ‘insignificant’ within the entire total cost.

McCleave says: “Some funders may decide the impact of the removal of the tax allowance is bigger than other providers. Businesses that use a single bank/leasing provider have no choice with rates, but at Venson we use a panel of funders and at any point in time on any single car the impact of a rate increase can be offset to an extent by selecting one funder ahead of another.

Sample rental rates obtained by Driving Business

suggest the impact is a £5-£12 a month increase. For example, Ogilvie Fleet has calculated the monthly lease of a BMW 116d EfficientDynamics five-door (99g/km) will rise by less than £11 on a three-year/60,000 mile contract.

That equates to an annual rise of £132, or £1,980 for a company running 15 such vehicles.

Murtagh says: “The quandary facing all leasing companies is do they absorb the cost and not pass it on or if the cost is passed on when do they do it.”

Already, leasing companies are taking different views with Alphabet, in a letter to customers, explaining the changes had triggered “a slight increase” in the monthly lease rental with the rise “effective immediately”.

Dudley says: “It is not anticipated that businesses will fundamentally change their preference on how to fund a new vehicle, at least until the market opens up with choice of vehicles which meet the new thresholds.”

Rawlings adds: “The changes do not outweigh the VAT advantages that leasing offers even on 95g/km and below cars. An obvious knee-jerk reaction for an SME that currently leases low emission cars would be to move to purchasing them to take advantage of the ability to continue to claim 100% tax relief in the first year.

“But, the fact is that the value of 100% first year allowances is greatly outweighed by the VAT advantages of leasing. It is essential that businesses look at the whole cost of ownership picture.”

Not all leasing companies agree, however, with the likes of Hitachi Capital actively promoting mixed funding solutions of part outright purchase, part contract hire, based on emissions levels.

CARS WITH EMISSIONS 96G/KM – 130G/KM The impact of the changes are two-fold in this emissions segment – and it is the lower emissions cars that suffer.

SMEs that outright purchase their company cars will suffer a reduction in writing down allowances from 100% to 18% on models with emissions between 96g/km and 110g/km, while those that lease will see costs rise if leasing companies choose to pass on the impact of the removal of 100% capital allowances.

SMEs will continue to gain full tax relief on low CO2 cars like the Golf Bluemotion 12 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

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Sponsored by

Lease costs could rise on a 109g/km Citroën C4

The 88g/km Ford Focus Econetic is not affected

VEHICLE PURCHA SED ON FEB 1, 2013 Year ended December 31, 2013

Writing down allowances

Cost First Year Allowance

£21,000 £21,000

Tax written down value carried forward

£Nil

Tax relief (at 20%) £4,200

CARS WITH EMISSIONS 131G/KM – 160G/KM This is the sector where the most significant impact of the changes fall – along with the impact on low emissions cars.

Figures from GE Capital on two sample cars based on a four-year/80,000 miles replacement cycle and the small business corporate tax rate of 20% show the full extent of the impact.

Reduced tax relief for lessees means an effective cost increase on a BMW 3 Series 320i SE (147g/km) of £13.88 per month in 2013/14, but businesses buying the model will see an average cost increase of £38.22 a month.

The saving is equivalent to £292 a year, or more than £17,500 for 15 cars over a four-year operating cycle.

Meanwhile, the company calculates that the lessee cost rise on a BMW 520i BluePerformance M Sport Diesel (133g/km) versus 2012/13 will be £18.52, while for SMEs purchasing the average increase will be £28.68 a month.

Both examples illustrate the benefits of leasing rather buying cars outright in this CO2 segment.

Killeen says: “The figures underline that while it is better to be driving a sub-130g/km model, operating one above that barrier is not necessarily a major cause for concern.

“The 320i petrol will see its cost climb by 3.6% due to reduced tax relief for the lessee. While this is not welcome in the current climate, neither should it prompt panic.”

Dudley adds: “The cost of the restriction may not be sufficient to fundamentally change the cars selected by

▲

Meanwhile, irrespective of whether SMEs buy or lease their company cars with emissions between 111g/km and 130g/km there will be no tax change-related cost increase.

Dudley says: “There will be a cash flow disadvantage for businesses that were purchasing vehicles that would obtain the 100% relief under the rules pre-March 31 (up to 110g/km models). Money isn’t lost as such, but cash flow will be hindered slightly due to tax bills increasing from the relief available in the year of purchase.”

Calculations by business car consultancy BCF Wessex reveal the impact of the changes in writing down allowances on a Volkswagen Golf BlueMotion 1.6 SE TDI (99g/km) bought by an SME. (See table below left – Vehicle purchased on February 1, 2013.)

When the car is sold, say in the year ended December 31, 2016, for £10,000 the disposal proceeds reduce the tax written down value of other cars and assets in the pool, which will effectively reduce the tax relief available.

However, if the vehicle is purchased on May 1, 2013 (see table below right), when the car is sold for £10,000 the disposal proceeds reduce the tax written down value as shown. But the remaining tax written down value of £1,578 will continue to qualify for writing down allowances, at the rate of 18% on the reducing balance basis, until the tax written down value is reduced to nil.

To write down £1,578 at 18% per annum to just £1 would take 38 years.

If the business wanted to continue to obtain full tax relief then it could buy a Golf BlueMotion 1.6 TDI 110 PS which is due to be launched this year with emissions of 85g/km.

Meanwhile, Venson calculates that on a Citroën C4 1.6 e-HDi (109g/km) SMEs that lease could see a typical cost increase of £260 over three years/45,000 miles (£7.20 a month) with those that buy seeing average costs rise by £460 due to the tightening of writing down allowances.

However, Gary Killeen, fleet services commercial leader for GE Capital UK, says: “Leasing companies may not have to automatically pass on all of the increased cost of the changes in allowances to customers and there will be variances from model to model.”

He highlighted a Volkswagen Golf 2.0 TDI SE with CO2 emissions of 106g/km, a car that is no longer eligible for 100% writing down allowance for either company or leasing provider, adding: “This is a specific example where we have been able to hold rates.”

Killeen says: “Making a sub-130g/km choice involves almost no compromise at all on the part of the driver.”

VEHICLE PURCHA SED ON MAY 1, 2013 Year ended December 31, 2013

Writing down allowances

Cost £21,000 Writing Down Allowance £3,780 (WDA) at 18% Tax written down value £17,220 carried forward

Tax relief (at 20%) £756

Year ended December 31, 2014

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£3,100 £14,120

£620

Year ended December 31, 2015

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£2,542 £11,578

£508

Year ended December 31, 2016

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£10,000 £1,578

n THE NEW RU L E S E XP L A IN ED

Capital allowance A system that enables companies to offset the cost of assets used in their business against taxable profits.

Lease rental restriction Allows the cost of a company car lease to be deducted against taxable profits April 1, 2013 changes: n The 100% writing down allowance (a form of capital allowance) threshold applies to company cars with emissions of 95g/km and below (2012/13: 110g/km) n The 18% writing down allowance threshold applies to company cars with emissions of 96g/ km-130g/km (2012/13: 111g/km-160g/km) on a reducing balance basis n The 8% writing down allowance threshold applies to company cars with emissions from 131g/km (2012/13: from 161g/km) on a reducing balance basis n Leasing companies no longer able to claim 100% first year writing down allowance on cars with emissions up to 95g/km instead they are restricted to 18% (0-130g/km) on a reducing balance basis n The 15% lease rental restriction threshold falls to 130g/km (2012/13: 160g/km).

The new rules are not retrospective so don’t impact on cars bought or leased prior to April 1.

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 13

n STR ATEGY

C APITAL ALLOWANCE AND LE A SE RENTA L S

▲

businesses. With small business administration costs rising all the time many would not wish the burden of such detailed assessment for a saving so small.”

Meanwhile, calculations by business car consultancy BCF Wessex reveal the impact of the change in writing down allowances on a Ford Mondeo Titanium X 1.6 EcoBoost (149g/km) bought by an SME. (See table below left – Vehicle purchased on February 1, 2013.)

When the car is sold, say in the year ended December 31, 2016, for £11,000 the disposal proceeds reduce the tax written down value as shown.

The remaining tax written down value of £2,233 will continue to qualify for writing down allowances, at the rate of 18% on the reducing balance basis, until the tax written down value is reduced to nil.

However, if the vehicle is purchased on May 1, 2013, when the car is sold for £11,000 the disposal proceeds reduce the tax written down value as shown in the table (below right).

The remaining tax written down value of £7,689 will continue to qualify for writing down allowances, at the rate of 8% on the reducing balance basis, until the tax written down value is reduced to nil.

To write down £7,689 at 8% per annum to just £1 would take 108 years!

If a company wanted to maintain current year allowances

(18%) for a post-April 1, 2013 purchase it could choose a Mondeo Titanium 2.0 TDCi with emissions of 129g/km and price of £23,300 or a 1.6 Titanium X TDCi with emissions of 112g/km for the higher price of £24,700.

Although, manufacturers are racing to produce low emission models, experts say careful selection is critical if organisations are to keep tax increases to a minimum.

For example, BMW has more than 900 models below the 160g/km threshold, but fewer than 400 below 130g/km.

And while almost all Ford diesel models in the Focus and Mondeo ranges fall beneath the 130g/km mark, petrol derivatives are above that threshold with the exception of the 1.0 litre Ecoboost engine in the Focus.

However, Toyota Lexus will have 10 models below 100g/km alone come mid 2013, ranging from city cars to a seven-seat MPV, premium to plug in hybrid.

Murtagh says: “No vehicles on the core fleet should have emissions more than 130g/km otherwise the cost implications whether you purchase or lease are significant.”

CARS WITH EMISSION ABOVE 160G/KM No changes in writing down allowances or lease rental restriction in this category.

Lease rate increases for a BMW 320i because of reduced tax relief

VEHICLE PURCHA SED ON FEB 1, 2013

VEHICLE PURCHA SED ON MAY 1, 2013

Year ended December 31, 2013

Year ended December 31, 2013

Writing down allowances

Cost £24,000 Writing Down Allowance £4,320 (WDA) at 18% Tax written down value £19,680 carried forward

Tax relief (at 20%) £864

Writing down allowances

Cost £24,000 Writing Down Allowance £1,920 (WDA) at 8% Tax written down value £22,080 carried forward

Tax relief (at 20%) £384

Year ended December 31, 2014

Writing down allowances

Tax relief (at 20%)

Year ended December 31, 2014

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£3,542 £16,138

£780

(WDA) at 8% Tax written down value carried forward

£1,766 £20,314

£353

Year ended December 31, 2015

Writing down allowances

Tax relief (at 20%)

Year ended December 31, 2015

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£2,905 £13,233

£581

(WDA) at 8% Tax written down value carried forward

£1,625 £18,689

£325

Year ended December 31, 2016

Writing down allowances

Tax relief (at 20%)

Year ended December 31, 2016

Writing down allowances

Tax relief (at 20%)

(WDA) at 18% Tax written down value carried forward

£11,000 £2,233

(WDA) at 8% Tax written down value carried forward

£11,000 £7,689

14 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

Sponsored by

n CO N CLUSI O N Key action points: n Focus on reducing CO2 output of company car fleet n Introduce cars with emissions of 130g/km and below n Where possible introduce cars with emissions of 95g/km and below.

Tony Murtagh believes the changes add a further degree of complexity that could drive SMEs that presently purchase company cars to opt for contract hire, which, as Venson highlights, is cheaper in all scenarios it has calculated.

However, that view is not shared by SME tax expert Rachael Dudley, who says: “There may be increased demand for outright purchases under the revised regime as firms like to obtain maximum tax relief up front.”

Alastair Kendrick, tax director at accountants, tax and business advisers MacIntyre Hudson, believes that the changes on cars with emissions above 130g/km could trigger a drive towards cash allowances.

“The cost of running cars with emissions above 130g/km is going to increase and in real terms will become a major fiscal drag on companies as it will take them years and year to fully get the tax relief back,” he says.

Lex says it is seeing a rise in demand for personal contract hire schemes in the SME sector – a rate of increase greater than the move to contract hire.

Murtagh says: “Businesses are looking at the option to provide their staff with a cash allowance as that continues to be seen as a utopian solution to these complexities.”

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n HE ALTH & SAFE T Y

MINIMISING HIT WHILE PARKED CL AIMS

CUTTING DOWN ON CAR PARK DAMAGE Reducing ‘hit while parked’ and ‘driver unknown’ collisions n W H AT T HIS M E A NS FO R YO U Few accident claims are more frustrating than hit while parked. Many are caused by unknown third parties and most companies tend to accept them as an unavoidable part of life. But are they?

Not according to one expert who believes a robust reporting policy will reduce hit while parked claims.

By Dr Will Murray Research director, Interactive Driving Systems recurring theme in our recent safety work is ‘damage caused to vehicles while parked’, which is why we recently updated and published a detailed research report – Reducing hit while parked and driver unknown events in your fleet – aimed at helping managers and drivers to avoid hit while parked events.

The issue is not new. Research analysing vehicle claims data from around the world over the past 20 years has continually shown that a high percentage of insurance claims happen at low speed, and that effective parking and manoeuvring is a perennial issue.

Hit while parked incidents are invariably one of the top five collision types in car and small commercial vehicle fleets.

This is especially when telephone-based reporting is in place.

Recently we analysed more than 100,000 company

A

16 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

motor insurance claims across 35,000 vehicles: 24% of the company cars claims were classified as damage while parked.

Although relatively minor in nature, such events are a serious issue for businesses – averaging £600 to £700 for each repair.

SOME KEY ISSUES FOR MANAGING AND REDUCING THE RISKS ARE: n Obtaining the facts to get good data, to allow targeted policies, procedures, coaching, appropriate vehicle selection and journey/site risk assessment. n The financial and other implications of hit. n Accurate data, which is vital for selecting the correct type of management, driver, vehicle or site-based interventions. n Policies that allow for genuine cases but ensure drivers are not better off by being selective with the truth when reporting events.

w w w.mydrivingbusiness.co.uk

▲

As an example, in the data table (right), there are two types of hit while parked data, those where the third party is known (3.4% of all claims) and those where the third party is not (14.6% of claims). Our research suggests that these should be treated separately, because the first figure is more certain than the second – as third-party evidence is available.

In this particular company, an off-the-record survey of 100 drivers found that 75 of them had falsely reported or had been selective with what they remembered about their hit while parked events.

This data led to the implementation of a specific slow speed coaching intervention for relevant drivers, and detailed guidance for drivers and managers on how to report events.

Compare this data with your own and see how your data stacks up. Your insurer or claims management company should be able to assist.

ACCIDENT DATA IN DE TAIL Claim type Glass TP (unknown) hit client while parked Hit fixed/temporary object Break-in/theft Vehicle returned damaged by user Third party (TP) hit client in rear Client hit third party (TP) in rear Third party (known) hit client while parked Client reversed into third party Client hit parked/stationary TP vehicle Pulling out: third party into path of client Pulling out: client into path of third party All other (20-plus categories)

% of claims 20.8 14.6 12.0 10.3 5.8 4.2 3.6 3.4 2.9 2.5 2.0 1.1 16.8

% of costs (£) 3.2 11.6 11.9 5.4 4.6 5.7 14.4 3.7 4.0 3.9 4.1 4.5 23.0

CAUSES OF HIT WHILE PARKED EVENTS? In our experience, damage while parked incidents are a symptom of several factors. n Telephone-based reporting systems, where it is easier for drivers to be selective with the truth or lose their memory about what actually happened. Clearly there are many benefits from telephone-based reporting, such as improvements in ‘time to report’, compliance with rules on speed of insurance claims management, better data, easier for driver, less paperwork and centralised reporting and data capture. Such systems, however, need to be managed effectively, and staffed by appropriately experienced and trained people who ask the correct questions and are diligent in entering/coding the data effectively. n Limited control over post-incident investigations and one-to-ones, which are often neglected by line managers. n Bonus scheme penalties that just shift the problem from the claims to the maintenance budget by encouraging memory loss or dishonesty. n Poor parking skills and/or site or car park layouts. n Inappropriate vehicle selection and scheduling decisions. n Organisations requiring drivers or the workshop to have an incident number before they can get a vehicle repaired need to be managed carefully, as this can lead to the driver, company, pool/hire car manager or the workshop reporting incidents when the vehicle is due for repair or sale.

MANAGING AND REDUCING HIT WHILE PARKED EVENTS Research and experience point to the following steps: n Implementation of detailed procedures, coaching, guidance, rules and work instructions for drivers, supervisors, managers, workshop staff and claims handlers. n Ensuring that when damage while parked incidents are reported by drivers they give complete information on the exact time, location address and event type. n Better reporting, recording, investigation and analysis of incident types and locations to identify at-risk staff and particular hotspots. Hit while parked incidents should be fully investigated. Ensuring drivers report all such to the police and obtaining a crime number has seen numbers reduced substantially. n Developing a campaign on the issue through communications, safety committees, investigations and training. n Ensuring that the correct vehicles are being allocated to the correct jobs.

Source: Interactive Driving Systems 2013 n Using plug and play or mobile phone-based telemetry data to monitor vehicles and drivers involved in repeated events. n Targeted coaching interventions aimed at parking and manoeuvring, and the importance of honest and accurate claims reporting by drivers. n Making hit while parked an at-fault incident type when there is no known third party or witness; or changing the name to ‘inappropriate parking’. n Detailed analysis of parking offences by drivers. n Improved risk assessment of locations, such as car parks and company or customer sites, where there are recurring problems. n Improved communications and guidance for drivers on safe parking. n Online coaching tools such as our own RiskCoach modules, which are available in English and 35 other relevant languages around the globe.

Overall, damage caused to vehicles while parked is a major issue for companies worldwide: typically 25% of collisions in car and small commercial vehicle fleets. Our work with a large number of organisations over many years has focused on the extent of the risks and costs involved, causation factors and how to reduce such events – at both management and driver level.

A free copy of our research and guidance document Reducing hit while parked and driver unknown events in your fleet is available by emailing: will.murray@ virtualriskmanager.net

“

Damage caused to vehicles while parked is a major issue for companies

”

24%

of vehicle accident claims in a survey were the result of hit while parked incidents

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 17

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BUSINESS L AW

STAY ON THE RIGHT SIDE OF THE LAW It exists to protect both employers and their employees

B

FLEXIBLE WORKING

By Catherine Chetwynd usiness law may appear to be a minefield, but for the most part it is clearly spelled out, easily understood and applied.

Here, we look at the main elements of the law that affect small businesses.

It is necessarily a summary but for further information, check out the panel at the end of the article.

n W H AT T HIS M E A NS FO R YO U Part of our Broader View of business section, this article looks at other elements of running a small business. Law can appear to be a minefield but a common-sense approach usually pays dividends.

INTELLECTUAL PROPERTY

▲

First, protect the family silver. Intellectual property (IP) is what is created in the mind, every product of the brain that the law allows you to protect, and it is worth looking at what you do in forensic detail: protecting IP is a matter of self-preservation. If your product or service is sufficiently attractive for your clients to buy, then it is attractive enough for competitors to copy it – and undercut your prices.

It is also worth looking at patenting products that look or sound similar to yours so that rivals cannot bring on to the market something that might take some of your business.

Protect your e-commerce, too – website address and content, email address and database – to ensure that no-one registers a comparable name or names, known as cyber squatting, either with a view to selling it to you (expensively) or using it as a gripe site. And trademark protection covers not only the words but also the logo, which together comprise your brand. Registering trademarks and your IP can be done only at the Intellectual Property Office.

If the worst happens and someone infringes your patents, taking them to court is not the only option. It is a lengthy and expensive process and Alternative Dispute Resolution (ADR) is more economical.

In the workplace, an increasingly popular option is flexible working. Employees have the right to request a change in their working hours once a year and the employer is obliged to meet them within 28 days of the request and make a decision Employees have the right within another 14 days. to request a change in “It is intended for parents their working hours of children under 17, or 18 if disabled, and applies to a mother, father, adopter, guardian, foster parent or carer, who is living at the same address as the child,” says business and HR consultant and IIP specialist Simon Baylis.

Some jobs lend themselves better to flexible working than others and businesses that employ a lot of shift workers, for example, will be able to accommodate flexible working more easily than one that needs a presence throughout the conventional working day.

Maternity/paternity leave is another area to be considered. A pregnant employee has the right to 26 weeks of maternity leave, plus 26 weeks of additional leave. To qualify for this, she must tell her employer by the end of the 15th week before the week the child is expected to be born: (i) that she is pregnant; (ii) the expected week of childbirth (a medical certificate can be requested); (iii) the date she plans to start maternity leave, usually no earlier than the beginning of the 11th week before the expected week of childbirth, up to the birth.

Within 28 days of notification, you (the employer) must write to the employee, setting out her return date. She must give eight weeks’ notice if she wants to change that.

Under a new system of flexible parental leave, parents may choose to share care of the child in the first year of its life.

A pregnant employee has the right to 26 weeks of maternity leave and an additional 26 weeks leave

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 21

BUSINESS L AW

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n BROADER VIE W

EMPLOYMENT LAW “Employment law is written entirely to protect employees, it is there to ensure fair treatment,” says Baylis.

“It is also true to say that an employer can do anything to protect the business. You don’t have to keep people, you can get rid of them but you have to do it fairly and for the right reasons. Observe best practice, notice periods, etc. – none of that is onerous. Clarity is really important and having a contract in place is a good thing.”

It is particularly useful if you end up wrangling with an employee in court.

A written contract, however, is not a must. “As soon as someone walks into your office and picks up a pencil, a contract exists,” says Baylis.

Companies are obliged, no later than two months after the employee has joined, to give a statement of employment particulars to explain the key aspects of employment. This can be done in an offer letter, giving job title, description – ‘secretary’ or ‘filing clerk’ is sufficient – how and when they will be paid, holiday and sickness terms.

In addition, “review contracts periodically and have them brought up to date because employment law is very dynamic and changes all the time”, advises Ian Skuse, a partner of law firm Piper Smith Watton.

Sickness needs to be managed by the employer Sickness is a thorny area but do not be tempted to pass judgment on whether someone really is or was ill; that is a doctor’s brief. Unfortunately, the longer someone works for you, the more likely they are to get ill, simply because they are getting older, but they are the loyal, long-standing employees.

Otherwise, sickness needs to be managed: keep a record of who takes sick leave, when and for how long. And do a return to work review. Show concern.

“Ask them, are you better? Are you fit to come back to work? Can you do the job? And indicate how you managed without them – if they were having a duvet day, most people will feel really guilty,” says Baylis.

And the number of days sick leave employees can have per year can vary from five to 100 before having to accept statutory sick pay. “It is an area of tension,” says Skuse.

When hiring, set up a robust process of interviewing. If replacing someone who has left, this is a good moment to review the job content: do you really need someone full time? And write the job description in terms of what it looks like when done well, defining skills, attitude and behaviour, so that you get a receptionist who not only answers the telephone but takes ownership of queries, makes sure people get their messages, etc.

“People rarely fall foul of their employer for lack of skills but because of attitude,” says Baylis.

During an interview, do not discuss maternity or family issues with applicants.

How many children have you got? How will you manage 22 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

“ ”

People rarely fall foul of employers for lack of skills but because of attitude

if you work for us? Ask questions such as these and you may reap the full force of the pregnant pause. Always seek advice on maternity issues.

“You are very limited in what you can do. It’s a bit of a nightmare,” Baylis says.

Having dealt with arrival, departure is another issue and redundancy features ever larger in the marketplace.

Statutory redundancy pay depends on age and length of service, starting at one week’s pay per year of employment after two years’ service. And regarding dismissal, Skuse underlines the need for best practice: “If you get the procedure wrong, even if you are justified in dismissing someone, it can be considered to be procedurally unfair.”

Procedurally fair involves a disciplinary hearing (also if the employee has a grievance) and advice about how to do this is to be found on the ACAS website.

Summarily throwing someone out is never sufficient, even if they are rubbish at the job.

With dismissal and any other procedure, it is crucial to know how to do things correctly, it is a matter of selfpreservation. Do your research: ignorance is no defence.

5-100

Variation in the number of sick days an employee can have before having to accept statutory sick pay

n WA N T TO K N OW M O R E ?

www.acas.org.uk CLEAR ADVICE IN ALPHABETICAL CATEGORIES

www.ipo.gov.uk

INTELLECTUAL PROPERTY OFFICE

www.pswlaw.co.uk LAW FIRM WITH EXPERTISE IN CORPORATE LAW

www.baylis.biz CONSULTANT SIMON BAYLIS During an interview do not discuss family issues

G IN OR

es NIT lud MO inc E YL ST GIN IV DR

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Van Fleet World

0870 013 6663

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THE DRIVING BUSINESS INTERVIE W

‘Age is irrelevant; it’s down to how you conduct yourself’ Formula 1’s youngest team boss tells Stephen Briers about life at Red Bull

T

The transition started when he created Arden in 1997, initially as both driver and owner. He retired from racing shortly afterwards to concentrate full time on team management.

“Even as a driver I’d always worked on the commercial side of the business, helping to raise sponsorship. But at this level I needed a new skills set,” Horner explains.

Entering Formula 1 as its youngest ever team principal, aged 31, the immediate reaction from his peers suggested Red Bull had taken an unnecessary risk. But Horner shrugs aside any age-related concerns: “Age is irrelevant; it’s down to how you conduct yourself.”

His business philosophy lives by a set of four managerial objectives: achieving targets, supporting staff, removing obstacles and encouraging innovation and ingenuity.

The initial goal for Red Bull was to win the championship. The second goal was to sustain its position.

“There are two scenarios: the first goal where you are striving to achieve success and then the realisation that you have it,” Horner says. “Then there is a whole new pressure to maintain that success, which is all about continuity, stability, setting realistic goals and also challenging and being critical of your own team’s goals.

“In 2010 we won [the F1 championship] in the last race. In 2011 it was a difficult challenge to repeat that success. But we defended better than we won it.”

How do you continue to achieve that level of success? “You have to see evolution within the company and within people’s roles and responsibilities. But you also need stability and continuity. The two are not necessarily married.”

The high profile side of the Red Bull Racing team is seen every fortnight between March and October. The results of the company’s hard labour come to fruition over the course of those glitzy weekends.

▲

hree constructors’ titles, three drivers’ titles, 34 race wins (to end of April, 2013) and 48 pole positions, amassed over 150 races. Since collecting its first victory in 2009, Red Bull Racing has been the undoubted star of Formula 1.

That the Infiniti-sponsored team owned by the giant energy drinks manufacturer has reached such heights just eight years after entering the ultra-expensive cut ’n’ thrust of Grand Prix racing only serves to accentuate its achievements.

Formula 1 is littered with examples of organisations launching teams with big budgets and big talk of podium places and championship wins. Few live up to those bullish aspirations.

Red Bull was different. For one, it brought in F1 rookie Christian Horner as Team Principal. Horner, an ambitious former racing driver, had spent six years building up his own racing team Arden in the International F3000 Series.

He learned his craft the hard way, raising his own sponsorship, building contacts and knowledge, and refining his allencompassing management style. All would stand him in good stead in the close-knit F1 community.

Nevertheless, the initial move from driver to team owner required a change of mind-set.

“As a driver you only have yourself to think about. You have to be focused on your own performance,” Horner tells Driving Business.

“But when you step out of that and recognise that you have the responsibility of the individuals that work within the team, that’s when you start to think about collective responsibility. Personnel are the most important asset.”

Christian Horner – a business timeline 1990: Third in British Karting Championship

1991: Formula Renault Scholarship

1992: Joined Formula Renault

24 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

1993: Second in the British F3 National Class with five wins

1994: Moved to British F3

1997: Formed Arden International F3000 team; retired from race driving

2000: Arden wins Euro F3000 team title

2002: Arden wins FIA F3000 Team and Drivers’ Championship with Tomas Enge.

(Enge’s title was later rescinded)

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2003: Arden wins the FIA F3000 Team and Drivers’ Championship with Björn Wirdheim

2004: Arden wins the FIA F3000 Team and Drivers’ title with Vitantonio Liuzzi

2005: Appointed Team Principal of Red Bull Racing.

The team ends the season in seventh place with 34 points

2006: Red Bull’s first podium with third for David Coulthard at the Monaco Grand Prix

2009: Red Bull’s first victory and first 1-2 finish at the Chinese Grand Prix. Leads team to second in the Constructors’ Championship

2010: First Constructors’ and Drivers’ titles after just six seasons on the grid

2011: Successfully defends both titles with 12 wins, 18 pole positions, and 27 podiums

2012: Third consecutive Constructors’ and Drivers’ Championship wins with seven race victories, eight pole positions and 14 podium finishes overall

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 25

n BROADER VIE W

THE DRIVING BUSINESS INTERVIE W

“ ”

Fear of failure drives you on, especially with a competitive business like Formula 1 which is so reliant on constant evolution

▲

Every single person within every department needs to do their bit, according to Horner.

“You need the right people in the right positions and they need to be empowered,” he says. “You need to set reasonable and realistic objectives and you have to create an environment where people feel that they can make a contribution without fear of their ideas getting shot down.

“I have an open door policy: any individual within the business can come and see me if they have that need.

But it’s also important that are managers are empowered to make decisions.”

After every Grand Prix, the entire workforce is invited to a de-brief. Discussions centre on what was good and what was not so good. Achievements are recognised in public.

“The team enjoys its success together and understands the targets for the weeks ahead,” Horner explains.

On the surface, Formula 1 appears untouched by the global recession. The glitz and glamour on race days continues unabated while the TV sponsorship combines with financial inducements from countries eager to stage their own races which ensures the coffers stay filled. But for the teams, it is a different matter.

“We have all been affected by the recession and with a number of teams leaving Formula 1 we have had to cut cost. The sport has to achieve economic viability,” Horner says.

“Significant savings have been introduced; we had to get efficient. There is still more to do, but this is the only reason that Red Bull as an independent team could compete for championships – because budgets were reduced.”

Horner has a single-minded focus on success borne from his days as a racing driver. His leadership and

3

drivers and constructors titles won by Red Bull in its first eight years in Formula 1

34

races have been won

by Red Bull since it first entered Formula 1

n E VO LU T I O N – R ED B U L L S T Y L E Change is about understanding what needs to be implemented, whether it’s being driven by regulation or other means, according to Christian Horner.

“Reflect on the issue and take time to assess it properly before committing resources,” he says.

“Then responsibility for identifying solutions can be passed to the relevant teams.”

Red Bull is divided into four key areas for the vehicle:

aerodynamics, design, performance and simulation.

The operational team is divided into three: production, research and development, and logistics.

The sport is at the cutting edge of modern technology, much of which eventually finds its way into company vehicles.

“We are working with Nissan [parent of Red Bull’s main sponsor Infiniti] on battery technology that affects the

26 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

performance of the car,” says Horner. “We are constantly designing elements and processes which will find their way through the chain.

“For example, hybrid technology on the 2014 engine where fuel use will be restricted to improve efficiency while maintaining significant performance. There are lessons learnt here that will find their way to the automotive market.”

management skills are self-taught on-the-job, not learnt in a classroom.

Softly-spoken and outwardly genial and relaxed, he clearly does not suffer fools and struggles to hide his irritation when facing foolish questions.

Asked whether luck plays a role in business success, for instance, he looks aghast.

“You make your own luck. If you have good people, good objectives and the right support, you will make your own luck.”

This is not someone who is in danger of resting on his laurels: complacency is not in his dictionary. In an interview with another magazine, he was asked to name the thing he most hated in the world. “Losing,” was the laconic reply.

He provides a fuller explanation now. “Fear of failure drives you on, especially within a competitive business like Formula 1 which is so reliant on constant evolution.

There is no room for complacency.

“The constant search for improvement is cultural and comes from the top down. We set aggressive targets and we push the boundaries. Even if you win there are lots of lessons to learn that you can apply to future races.”

Learning from mistakes is a fundamental part of future success for any business – but failures have to be managed in the right way.

“You have to learn and minimise mistakes but you also have to have a culture where people aren’t afraid to make a decision for fear of making the wrong one,” Horner says. “What’s critical is to learn. The worst thing is not to make any decision.”

The intensity of Formula 1 is, he admits, “allconsuming”. However, Horner recognises the importance of striking a balance between his work and home life – not least because it improves efficiency and productivity.

“It’s not the number of hours you do; it’s the efficiency you have when you are working,” he says.

You can’t be efficient working 18 hours a day.”

His own relaxation comes from an enjoyment of living in the “tranquillity of the countryside”, albeit with a menagerie of animals, including ducks, donkeys, dogs and chickens. He also has his helicopter private pilot licence, “but I don’t get to fly as much these days”.

As for the future, with a new season recently underway, Horner has his sights set firmly on being the dominant force in Grand Prix racing.

“My challenge is to achieve more success for the team and to be a force to be reckoned with as a benchmark for Formula 1,” he says.

“My motivation is to ensure the team realises its potential. We are in the top 10 most successful teams of all time and we are only eight years old. But we want more – this is only the beginning.”

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www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 29

n THINK DIFFERENTLY

DAILY RENTAL

DAILY RENTAL – WHY IT COULD WORK FOR YOU Several buzzwords abound when it comes to describing daily rental contracts. But one word features most... n W H AT T HIS M E A NS FO R YO U Companies have many options when it comes to funding cars and vans, each with its own pros and cons (go to the Driving Business website for more details).

Short-term rental is often misunderstood by smaller businesses but it offers a flexible and cost-efficient way to fill a temporary need for company vehicles.

5%

The average increase in cost between contract leasing and daily rental

I

By Ben Rooth t’s the word which is most frequently used to describe the main benefit of using vehicles with daily rental contracts.

“Flexibility” lies at the heart of this rental process – and it’s this which causes businesses to use it time and again.

In essence, daily rental allows a business to hire a car or van on a day-to-day basis depending on its needs.

This is frequently just for a few days but it can be for much longer, if necessary.

Vehicles hired this way are often regarded to be an excellent ‘stopgap’ solution when employees suddenly find themselves needing a car or van.

Or it might be that a smaller business has found the need to hire a car for several employees to attend a meeting one day and a van to carry goods the next.

Daily rental also works well if – for example – someone is employed on a short-term contract or a new recruit is working for a probationary period.

Once that employee’s contract ends then the rented vehicle can simply be returned to the company that provided it.

But if leased, there’s a possibility that it might have to either be paid for – or redeployed – for the duration of its contract.

John Lewis, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), says: “Rental firms offer a flexible solution that frequently suits the needs of small and medium sized businesses (SMEs).

“In recent years, rental companies have recognised that there are growing business opportunities with these companies as they can be cost-effective depending on their needs.

“As the economy starts to improve, I believe that we’ll see these businesses looking to rent vehicles even more as it doesn’t lock them into longer term leasing commitments.”

28 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

Rob Ingram, director of business rental at Enterprise Rent-a-Car, agrees.

He says: “In addition to flexibility, I’d say that accessibility and availability are also a fundamental part of what daily rental offers business.

“These days, all rental companies have an online presence which makes it very easy for our vehicles to be quickly incorporated into their day-to-day running.”

THE COST ARGUMENT – AND POTENTIAL PITFALLS Renting a vehicle over a period of days, weeks or months will not be as cheap as leasing a vehicle over a three- or four-year period.

Colin Wilson, head of national sales for Northgate Vehicle Hire, adds: “I would estimate that contract leasing works out around 5% cheaper than daily rental on average over longer periods.

“But companies leasing vehicles don’t have the same options to change a vehicle for a larger one if it suddenly becomes clear that this would better suit their needs.

“They can do this if they are hiring that vehicle on daily rental.”

Rental companies have different rules governing the use of their vehicles and – as a general rule – if employers don’t want additional bills when handing the keys back, they should be aware of: n Mileage limits – these will vary according to the time the vehicle is hired for n The fuel gauge – return the vehicle with the same amount of fuel n Keep it clean – or potentially face a bill for a valet

THE DIFFERENT OPTIONS As ever, it’s important to consider all the renting and leasing options that exist according to how long the

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n C A SE S T U DY: N OVO G R A F Novograf required several new vans which offered the most “cost-effective solution” to meet its needs.

The company, which is headquartered in East Kilbride in Scotland, specialises in the design and fit-out of everything from bespoke wall graphics for restaurants to checkout refurbishments – and much more besides.

For 25 years, it had either purchased vans outright or sourced them on contract hire before deciding to review its policy two years ago.

Novograf – which has 50 employees – wanted to stop being penalised for high mileages with leased vehicles and avoid the large capital expense of buying the vans.

After working with Northgate Vehicle Hire, the

vehicle is needed for. If an employer knows for definite that a vehicle will be required for several months, it might be more prudent to rent the vehicle using a longer-term rental agreement or using mid-range flexi rental (see panel – Different aspects of daily rental explained).

Among the other options are: n Asking employees to use their own car for business – often known as ‘grey fleet’ n Pool cars – these vehicles are available to be used by all staff and are normally based on company property n Pay-as-you go car and van clubs – these vehicles are usually based in public locations around cities and can be hired as necessary by the hour.

The argument against using pool cars and vans is that these vehicles – which are frequently bought or leased – have the potential not to be cost effective if they are unused for long periods.

And pay-as-you-go clubs are only an option for businesses if one exists on their doorstep.

Ingram adds: “It’s very easy for employers to ask staff to use their own cars – but this can potentially have duty-of -care implications. But if they put that employee in a rented vehicle then they have peace of mind that it’s been properly maintained.”

And the temptation to hang onto one or two vehicles – in addition to what’s required on a day-to-day basis – is also best avoided.

Wilson says: “Companies treat these like a safety net which means that they’re in place in case other vehicles break down.

“But what’s often overlooked is that duty of care still needs to be adhered to with these and that involves ensuring that these vehicles are taxed, tested and properly maintained – at the least.

“In these circumstances, it could well be cheaper for companies to look at hiring a vehicle to meet their immediate needs through daily rental rather than hanging onto expensive old vehicles.”

company identified that it would be possible to source six Mercedes-Benz Sprinters on a flexi-rental contract.

This saved the company an immediate capital expense of £120,000 – in addition to £15,000 to £20,000 a year service and maintenance costs.

Stuart Fraser, finance manager at Novograf, explains: “We’ve been delighted with the ease that flexible vehicle hire brings to our business.

“By renting our vehicles it’s saved us a fortune on the capital expenditure that would be required if we were to buy them.

“And I don’t believe that there will be a problem when it comes to replacing them once they reach the end of their useful life.”

n

D IF F ER EN T A SP EC T S O F DA I LY R EN TA L E XP L A IN ED

Daily rental As its name suggests, this allows businesses to hire vehicles for a day at a time – or longer if required. Ideal as temporary solution or if an employer suddenly finds themselves needing a vehicle at very short notice.

Mid-range flexi-rental This flexible solution is widely regarded to be a hybrid of daily rental and leasing. It is more costly than leasing, but less expensive than daily rental.

It is generally used by companies requiring a vehicle for a couple of months or more. The vehicle can usually be returned at short notice if circumstances change with no early termination fees.

Longer-term rental agreements These agreements are frequently in multiples of 28 days – providing employers with the peace of mind that the right vehicles are in place when needed. Once again, they often come without early termination fees.

“

Rental companies offer a flexible solution that can suit the needs of SMEs Rental can offer a flexible solution to transport issues www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 29

n THINK DIFFERENTLY

REDUCE FUEL BILL

HOW TO SAVE FUEL

Simple solutions can ease the pain of rising pump prices

n 7 STEP S TO A LOW ER F UEL BIL L

1

2

3

Around 71% of firms running five or more vehicles use fuel cards, which can help them control fuel costs from a total business level down to individual vehicles or drivers.

Shell advocates linking fuel reporting to a journey management system that enables the identification of private and business mileage to meet HMRC benefit-inkind tax requirements.

Every driver should plan their journey in advance and select the quickest and cheapest route, when best to travel, whether car sharing is an option and if the trip is really necessary.

A set of pointers that drivers need to address every time they think about a business trip is a good idea. Telematics can also help. In addition, driver behaviour can be monitored.

Smarter driving reduces fuel bills by encouraging drivers to travel more safely and economically by anticipating what is ahead and avoiding harsh acceleration and braking.

The Energy Saving Trust (EST) calculates that smarter driving techniques cut fuel bills by £200 to £250 a year. Its training takes place with a qualified instructor in 50 minutes.

FUEL CARDS POTENTIAL SAVING: 10-15%

JOURNEY PL ANNING POTENTIAL SAVING: 5-20%

30 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

SMARTER DRIVING/ TRAINING POTENTIAL SAVING: 7-10%

4

5

Review the rate at which employees are reimbursed for fuel payments. The actual cost per mile of running the vehicle may be considerably less than the advisory fuel rates (AFR): www.mydrivingbusiness. co.uk/costs/car-runningcosts/ has actual fuel running cost figures. In order to change from an AFR to actual fuel used, a company needs a mileage management system.

Effective fuel management begins with the company car/van choice lists featuring low emission, fuel-sipping models.

Companies can save up to £1,000 per vehicle a year.

Company car drivers’ benefit-in-kind tax burden will fall. Bosses will save on NI contributions and gain from lower Vehicle Excise Duty and fuel.

TACKLE FUEL REFUNDS POTENTIAL SAVING: 5-10%

SWAP GASGUZZLERS FOR EFFICIENT MODELS POTENTIAL SAVING: 10%

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n W H AT T HIS M E A NS FO R YO U Fuel is one of the biggest costs facing a company running cars and vans, second only to the cost of depreciation. Yet many businesses are wasting thousands of pounds by not taking action to reduce their fuel bill. Here’s how.

A

By John Charles recent poll revealed that 70% of companies running cars and vans expect fuel prices to rise this year.

Prices have already hit a record high this year of 146p per litre for diesel. Although they have since fallen back due to falling oil demand and a supermarket price war, the average pump price is still much higher than it was a couple of years ago.

Many believe that the additional cost to the business is unavoidable. It isn’t.

There are many options when it comes to reducing the amount of fuel your business uses and, in some cases, the price you pay for fuel.

Some are easy to achieve, others take a bit more effort. It depends how much money you want to save, but bear in mind fuel can account for 25% to 30% of the total cost of running your cars and vans.

There are essentially three component action areas when implementing measures to reduce your fuel bill: n Measures that impact on employees who drive their own cars for business purposes n Initiatives to drive down company vehicle mileage n Steps that can be taken when renewing vehicles – replacing gas-guzzlers with fuel-sipping company cars Stewart Whyte, managing director of consultancy Fleet Audits, estimates that fuel bill savings of 5% to 20% are achievable by driving down mileage with further savings of 5% to 10% in each of the other two areas.

“It sounds draconian, but it is possible. There is the potential for savings of 40%,” he says.

Here we focus on seven steps to a lower fuel bill.

NB – the percentage savings stated in the seven steps shoud be taken in isolation, not accumulated, and will vary depending on current performance.

6

7

Almost 400,000 people in receipt of private use mileage could be financially better off if they gave it up, according to tax experts. No matter what the benefit is for employees, businesses must pay for the fuel and it is a cost that could be saved alongside NI contributions paid on benefits-in-kind.

The pump price differential between forecourts can be several pence per litre so drivers can make significant ongoing savings by taking a prudent approach to where they refuel.

Go to www. mydrivingbusiness. co.uk/static/forecourtlocator/ to locate the cheapest forecourts.

PRIVATE USE OF COMPANY FUEL POTENTIAL SAVING: UP TO 30%

TARGETING CHEAP FUEL FORECOURTS POTENTIAL SAVING: 5-10%

n C A SE S T U DY: T H E CO U N T RYSID E CO U N CI L FO R WA L E S The Countryside Council for Wales (CCW) reduced the volume of fuel it bought by 9% in one year.

The council is a good example of a company where all three areas of fuel management are addressed: Vehicles More than half of CCW’s fleet of 57 vehicles are now sub-100g/km of CO2.

The vehicles are high mpg and CCW saves on running costs as well as road tax All new vehicles are also fitted with Michelin Energy Saving Tyres with expected fuel savings of 2% to 3%.

“We benchmarked the cost against the current price of tyres and there was about a £15 to £20 difference,” says Gareth Roberts, CCW’s fleet manager.

Drivers Roberts stresses the importance of filling up at cheap supermarket forecourts and has negotiated a rebate with his fuel card supplier giving additional savings.

All drivers receive eco driver training, with the driver achieving the highest fuel economy awarded £100. Roberts is considering offering annual rewards to incentivise drivers to drive in an ecofriendly manner, using monthly fuel reports for benchmarking.

Journeys CCW has set a target of reducing mileage by 15% and has developed an in-house mileage capture system for vehicle bookings.

Transport managers at each of CCW’s offices are responsible for completing mileages using the system as Roberts found that drivers were submitting inaccurate mileages with their fuel cards.

CCW has a travel decision tree which means that each driver must consider whether a journey is necessary, and if so, whether public transport or car sharing is a viable option.

n C ASE STUDY: BURGIN MAINTENANCE SERVICES, COLCHESTER Heating/air-con firm Burgin Maintenance Services introduced vehicle tracking units to its fleet of 24 vans three years ago with fuel savings among the benefits.

After overcoming some workforce resistance, Nick Burgin, financial controller and company secretary, says it has been a boon to business.

“With a fleet the size of ours, where engineers are paid on a door-to-door basis, savings per year are in excess of £20,000. The savings arise through more efficient call placing, with associated reductions in travel time, fuel outlay and mileage.

“The Quartix tracking system effectively pays for itself.”

n D RI V IN G T IP S Eco-driving – driving smoothly, accelerating gently and braking sensibly using the natural momentum of the car – can cut fuel consumption by almost a third saving.

Sticking to 70 mph, 2 instead of 80 mph, can save around 4p per mile.

Plan your route: 3 continuous, smooth driving on uncongested routes is always more economical, even if longer.

Check tyre pressures 4 (and condition) regularly. Incorrectly inflated tyres can increase fuel consumption by up to 10% and can endanger lives.

1

Change into a higher gear at the most economical point: at around 2,500 rpm in petrol cars and 2,000 rpm in diesel cars.

Always switch off the 6 car’s engine in stationary traffic or on temporary parking.

Remove unnecessary 7 weight. An unused roof box could increase fuel consumption by up to 10% and unnecessary baggage in the boot will impact on fuel efficiency.

Switch off the air 8 conditioning and heated windows when they aren’t needed. Together these can increase fuel consumption by 15%.

Service the car 9 regularly. Missing a service is false economy.

Ensure drivers look 10 after their vehicle and check fluid levels, including oil.

5

Source: Institute of Advanced Motorists/Arval/SMMT

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 31

n C ARS

BEST IN CLASS Helping you to choose the best cars for your business n LOW CO 2 PREMIUM C ARS

Audi A4 2.0 TDIe 163 SE

Mercedes-Benz C220 CDI Executive SE

Lexus IS 300h SE

LEASING PRICE £422 PURCHASE PRICE £28,660 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 68.9MPG MAINTENANCE COSTS £2,406 RUNNING COST £26,394

LEASING PRICE £470 PURCHASE PRICE £29,495 DRIVER APPEAL ✪✪✪ FUEL ECONOMY 65.7MPG MAINTENANCE COSTS £2,736 RUNNING COST £27,048

KEY REASON TO BUY: Sharp styling

KEY REASON TO BUY: Most diesel power per CO2

KEY REASON TO BUY: Low BIK tax and NIC payments

BEST FOR: Interior quality feel

BEST FOR: Low running costs

BEST FOR: Refinement

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

Audi has begun to simplify its model range to make the choices less confusing. It also offers a few lower CO2 options in the range with the 2.0 TDIe available as 136bhp or 163bhp variants. The 163bhp version offers a good balance of performance, cost and low emissions. It isn’t quite as good on paper for economy and CO2 but there should be little to choose in real-world driving. The A4’s interior quality sets the benchmark for the class.

Mercedes-Benz has made huge efforts to make its products more competitive for business users. The result is that prices are usually similar to equivalent models from Audi and BMW, manufacturer support for leasing companies is more generous and equipment levels are also good. The C-Class has adopted a more sporty look with the large Mercedes logo on the grille, and with 170bhp it offers the lowest CO2 per bhp for diesel models here.

Lexus has ditched diesel in favour of petrolelectric hybrid for the latest IS, which arrives with UK customers in July. This entry-level SE version steals the headlines for its low CO2, although drivers who choose their company cars might prefer the more sporty looking F-Sport variant. The IS uses a 2.5-litre petrol engine and electric motor to cut CO2 and allow emissionsfree running for short distances. Quality and refinement are exceptional.

LEASING PRICE £443 PURCHASE PRICE £27,900 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 64.2MPG MAINTENANCE COSTS £2,418 RUNNING COST £26,898

32 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

* Source: www.comparecontract hire.com * * Source: www.fleetnews.co.uk * * * Source: KeeResources

To read reviews of these models visit: w w w.mydrivingbusiness.co.uk

Why is this important? Every company has different requirements from its cars and vans, whether the priority is lowest costs, best reliability, or driver appeal. Best in class helps you to choose the vehicles most appropriate for your needs.

Best performers in each category Any box that is shaded green means that this car or vans has the best value or top rating in that category.

Key reasons to buy We have also highlighted key reasons to buy each model and the type of business need each model is best suited to fulfil.

Want to know more? Full driver impressions about each car and van is available on the mydrivingbusiness.co.uk website. You can also calculate your running costs.

Volvo S60 2.0 D4 SE

n TERMS EXPL AINED Leasing price* The best price at 3yr/60k miles – with maintenance

Fuel economy The lowest mpg car will also have the lowest CO2

Purchase price The P11D price on which driver’s BIK and employer’s NIC is based

Repair costs Includes servicing and maintenance based on 3yr/ 60k miles ownership

Driver appeal** A car rating based on how good it is to drive and be seen in

Running costs*** Repair and fuel costs and residual value over 3yr/60k miles

BMW 320d ED

Peugeot 508 Hybrid4

LEASING PRICE £386 PURCHASE PRICE £28,410 DRIVER APPEAL ✪✪✪✪✪ FUEL ECONOMY 68.9MPG MAINTENANCE COSTS £2,100 RUNNING COST £26,544

LEASING PRICE £553 PURCHASE PRICE £31,850 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 78.5MPG MAINTENANCE COSTS £2,484 RUNNING COST £32,616

KEY REASON TO BUY: Safety features as standard

KEY REASON TO BUY: Class benchmark

KEY REASON TO BUY: Spacious interior

BEST FOR: Equipment levels for the money

BEST FOR: Lowest lease costs, driver appeal

BEST FOR: Low CO2, high mpg

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

The S60 is Volvo’s best attempt yet at creating a credible alternative premium saloon. The stylish S60 was facelifted in time for summer 2013 and also has a high level of safety equipment as standard, including City Safety which is an autonomous emergency braking system that can prevent crashes at low speeds.

Other manufacturers usually charge for this technology. The five-cylinder diesel engine sounds sporty and is also surprisingly efficient.

BMW’s 320d EfficientDynamics uses smaller wheels and low rolling resistance tyres to achieve remarkably low CO2 emissions for a 163bhp diesel car. The latest 3 Series has a much better interior and is roomier than its predecessor, and BMW’s strategy to produce cars that are as efficient as they are enjoyable to drive has forced other manufacturers to play catch-up. It is thanks to BMW that we have a wide choice of low-CO2 premium models today.

Peugeot has been a pioneer in diesel hybrid technology and while the 508 wouldn’t normally be seen in a collection of premium-badged cars, the high level of equipment and the cost of the technology gives the 508 Hybrid4 a premium price tag. Although it has higher running costs than the other cars here, it isn’t too far adrift, and its CO2 emissions of 95g/km ensure it offers competitive BIK tax liability and employers National Insurance contributions.

LEASING PRICE £424 PURCHASE PRICE £27,945 DRIVER APPEAL ✪✪✪✪ FUEL ECONOMY 65.7MPG MAINTENANCE COSTS £3,108 RUNNING COST £28,308

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 33

n VANS

BEST IN CLASS Helping you choose the best commercial vehicles for your business n L ARGE PANEL VANS

Peugeot Boxer 330 L1 2.2HDi 110 DPF D5

Ford Transit 300 SWB FWD 2.2TDCi 100

Volkswagen Crafter CR30 Bluemotion Tech 2.0TDI 109

LEASING PRICE £271.89 PURCHASE PRICE £20,495 LOAD VOLUME 5.6CU M FUEL ECONOMY 39.2MPG MAINTENANCE COSTS £1,620 RUNNING COST £27,064

LEASING PRICE £326.61 PURCHASE PRICE £21,525 LOAD VOLUME 7.5CU M FUEL ECONOMY 39.8MPG MAINTENANCE COSTS £1,788 RUNNING COST £28,086

KEY REASON TO BUY: Diesel engines are top notch

KEY REASON TO BUY: Heritage and good levels of reliability

KEY REASON TO BUY: Strong residual values

BEST FOR: Robust and reliable

BEST FOR: The benchmark for all large panel vans

BEST FOR: Great all-rounder

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

PSA developed the Peugeot Boxer and the Citroën Relay as two separate offerings in the large panel van market. Look closely and you will see that both are very alike apart from the badge on the front grille and some interior spec. The Boxer has a wide range and should be able to accommodate builders to market traders thanks to its versatility. The engine has an electronic onboard diagnosis system to monitor exhaust emissions. The most popular engine is the 2.2-litre HDi diesel and is available in two versions with either 100bhp or 119bhp.

The Ford Transit is the most popular van in the UK and is rightfully called by many the ‘backbone of Britain’ – no other vehicle is as highly regarded as this. The Transit has been the benchmark for 40 years and continues to grow in stature. The latest version features a Euro5-compliant 2.2-litre turbodiesel in various power offerings that replaces all previous engine choices. The Transit is a sound choice if you are after a robust van, however, it’s also refined and comfortable. A new large Transit will go one sale early in 2014.

The Crafter has been Volkswagen’s large panel van since the LT was discontinued in 2006. It’s a capable vehicle, not least because it’s effectively a badge-engineered Mercedes-Benz Sprinter.

However, a facelift last year injected a little more Volkswagen into the vehicle, and its 2.0 TDI diesel is available as a fuel-efficient Bluemotion. Build quality is excellent and the Crafter is available in a large number of body variations, although not quite as many as the Sprinter, and is a capable hard-working business tool.

LEASING PRICE £336.92 PURCHASE PRICE £18,570 LOAD VOLUME 8CU M FUEL ECONOMY 37.6MPG MAINTENANCE COSTS £1,698 RUNNING COST £27,444

34 ❚ Spring 2013 ❚ www.mydrivingbusiness.co.uk

* Source: www.comparecontract hire.com * * Source: www.fleetnews.co.uk * * * Source: KeeResources

To read reviews of these models visit: w w w.mydrivingbusiness.co.uk

Why is this important? Every company has different requirements from its vehicles, whether the priority is lowest costs, reliability, or driver appeal. Best in class helps you to choose the vehicles most appropriate for your needs.

Best performers in each category Any box that is shaded green means that this car or vans has the best value or top rating in that category.

n TERMS EXPL AINED Leasing price* The best price at 3yr/60k miles – with maintenance

Key reasons to buy We have highlighted key reasons to buy each model and the type of business need each model is best suited to fulfil.

Purchase price The P11D price on which driver’s BIK (if applicable) and employer’s NIC is based

Want to know more? Full driver impressions about each car and van is available on the mydrivingbusiness.co.uk website. You can also calculate your running costs.

Load volume** Capacity of the cargo compartment

Mercedes-Benz Sprinter 210 SWB 3.0t 2.1CDi 95

Fuel economy Lowest mpg also means the lowest CO2 Repair costs Includes servicing and maintenance based on 3yr/ 60k miles ownership Running costs*** Repair costs, fuel costs and residual value over 3yr/60k miles

Renault Master MWB 33 FWD 2.3dCi 100 D5 Debut

Vauxhall Movano F33 L1 2.3CDTi 100

LEASING PRICE £352.03 PURCHASE PRICE £21,920 LOAD VOLUME 8CU M FUEL ECONOMY 37.7MPG MAINTENANCE COSTS £2,124 RUNNING COST £30,834

LEASING PRICE £375.98 PURCHASE PRICE £20.433 LOAD VOLUME 7.8CU M FUEL ECONOMY 36.2MPG MAINTENANCE COSTS £2,046 RUNNING COST £30,546

KEY REASON TO BUY: Prestige badge

KEY REASON TO BUY: One of the best large panel vans you can purchase

KEY REASON TO BUY: Discounts may be available

BEST FOR: Great value for money while the badge gives it kudos

BEST FOR: Good to drive

BEST FOR: Excellent 2.3-litre diesel engine

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

DRIVING BUSINESS SAYS

Aiming to be one of the best vans for the money, the Mercedes-Benz Sprinter is a cracking tool for many companies. The current generation offers enhanced safety and comfort, and has a larger load space than its predecessor. All engines are mated to a sixspeed manual and there is a wide choice of Sprinters available – counting all the derivatives there’s around 1,000. The cabin is car-like in that the materials are of a high quality and feel durable. This Sprinter does the badge on the grille justice.

When Renault launched the Master in 2010 the manufacturer made a massive leap forward in terms of quality and comfort levels. It also offered the Master in rear-wheel drive – a first for the range. This allowed for a longer vehicle length option and hence greater loadspace of up to 22cu m for the box van or 17cu m for the panel van. Accessibility was also easier thanks to the sliding side door – it was made 17cm wider than before, making it one of the widest on the market. The Master also has some of the lowest rear sill heights in the sector.

When Vauxhall launched the Movano it heralded the dawn of a new era in the light commercial sector for the Luton-based manufacturer. The Movano is a sister to the Renault Master, and with 29 body styles available and the option of rear-wheel-drive, it is a very attractive proposition especially when there’s the chance of a good deal too. It is a company favourite thanks to low running costs, good fuel economy and an easy-to-access cargo area. Accessibility is good and the standard side door is wide enough to allow a Euro pallet to be loaded sideways.

LEASING PRICE £417.44 PURCHASE PRICE £20,620 LOAD VOLUME 7.5CU M FUEL ECONOMY 33.2MPG MAINTENANCE COSTS £1,854 RUNNING COST £29,406

www.mydrivingbusiness.co.uk ❚ Spring 2013 ❚ 35

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