Auto Industry Digest Issue no. 421 This week’s news for company executives May 12, 2011




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Auto Industry Digest Issue no. 421




This week’s news for company executives May 12, 2011







Fleet sales support declining new car market
Business has key role in reducing road casualties
New car price fall could mark start of new trend
Used car prices soften as supply increases and demand is weak
Van sales accelerate with trend forecasted to continue
Saab on the move with rising residual values
Model update: Ford, Hyundai, Volkswagen, Volvo
Battery leasing will give best electric vehicle whole life costs




YESTERDAY (Wednesday) saw the launch of the global Decade of Action for Road Safety 2011-2020 with a series of events worldwide - including in London involving vehicle manufacturers, corporate fleets, the insurance, road safety and public health sectors. The campaign is symbolised by a yellow ‘tag’, which organisers hope will act as a driver to save five million lives and prevent 50 million serious injuries around the world. The 11-point United Nations’ declaration supporting the Decade of Action includes encouraging ‘organisations to contribute actively to improving work-related road safety through adopting the use of best practices in fleet management’. It is all too easy for people in the UK to think, for example, that such campaigns are only focused on Third World countries. This one most certainly isn’t. It is well documented that in Britain more people are killed and seriously injured on the roads while driving on behalf of their employer than in any other work-related activity. Let the ‘tag’ symbolise the start of your focus on road safety.

The Editor’s View
This Week’s Briefing



















Fleet file_____________________________________________________



Corporate sector urged to play major role in decade of road safety
EMPLOYERS across the UK that have yet to introduce at-work driving safety best practice policies and procedures should use the launch yesterday (Wednesday, May 11, 2011) of the Decade of Action for Road Safety to kick-start implementation.
The Driving for Better Business campaign, which is managed by RoadSafe, is one of the influential UK-based supporters of the United Nations-backed initiative, which is being launched globally.
Representatives of many of Britain’s safest fleets - the campaign’s almost 60 ‘business champion’ fleets that have introduced a wide range of measures to cut road traffic crashes and improve the safety of employees behind the wheel - attended a London event to launch the Decade of Action for Road Safety in the UK.
The rally and conference at Church House in Westminster was organised by the Parliamentary Advisory Council for Transport Safety with support from RoadSafe. Speakers included Lord Robertson, chairman of the Commission for Global Road Safety and Transport Secretary Philip Hammond.
Additionally, ‘business champion’ Tesco.com, the online home delivery arm of supermarket giant Tesco, which operates a fleet of 2,400 vehicles that make approximately 74,000 deliveries per day to homes across the UK, spoke in support of the campaign.
More than 1.3 million people are killed on the world’s road each year - a figure that is higher than malaria - and that alarming death toll is forecasted to rise to 1.9 million by 2020. In addition, 50 million people are injured on the world’s roads each year.
The aim of the 2011-2020 Decade of Action for Road Safety is to save five million lives and prevent 50 million injuries.
The campaign has calculated that if 50% of businesses that currently manage people who drive at work implemented initiatives similar to those of the ‘business champions’ around five million lives globally would be saved.
In the UK there are an estimated up to 150 road deaths and serious injuries a week resulting from crashes involving at work drivers, and more employees are killed and seriously injured on the roads while driving on behalf of their employer than in any other work-related activity.
Prince Michael of Kent, a patron of the campaign, said: ‘The corporate sector has an important role to play in achieving the aim of the Decade of Action by placing the management of drivers high on business agendas.’
Adrian Walsh, director of the campaign and of RoadSafe, said: ‘With up to 30% of all road crashes estimated to be work-related it means that worldwide if other organisations adopted the safety focus of our ‘business champions then millions of lives would be saved over the decade and the lives of millions of other people would not be blighted by injuries caused in road crashes.’
The 11-point United Nations’ declaration supporting the Decade of Action includes encouraging ‘organisations to contribute actively to improving work-related road safety through adopting the use of best practices in fleet management’.
Many of the campaign’s ‘business champions’ are supporting the London rally and conference with a public declaration of their support for road safety by having their company logos displayed at the event.
Walsh added: ‘The campaign has achieved much because it has demonstrated that many businesses put safety performance on the road high on their boardroom agendas. However, we are aware that many organisations across the public, private and voluntary sectors have yet to follow the lead of our ‘business champions’. We are therefore using the launch of the Decade of Action for Road Safety as a further platform to encourage employers to understand the benefits of promoting road risk management in the work place.’

  • See ‘Professionals unite to launch Decade of Action for Road Safety’


Fleet and business sales support declining new car market
ROBUST fleet and business sector new car sales in April boosted the market as private buyers continued to boycott showrooms, according to data from the Society of Motor Manufacturers and Traders.
New car registrations last month totalled 137,746, down 7.4% on April last year (148,793) making it the 10th successive monthly decline in volumes.
However, the SMMT said that new car registrations were ahead of expectations - by 1.5% - despite challenging marketplace conditions and on a par with the 2010 market with scrappage scheme volumes removed.
Fleet registrations in April totalled 77,117, up 6.5% on a year ago (April 2010: 72,379) with business sector sales up 12.2% at 6,794 (April 2010: 6,054). However, private sector sales slumped 23.5% year-on-year to 53,835 units (April 2010: 70,360).
Registrations over the first four months of 2011 are down 8.5% to 696,082 units (2010: 760,341). However, that decline is entirely due to the fall in private sector demand as both fleet and business car sales are up year-on-year.
Fleet sales in 2011 are 2.2% up on the first third of last year at 352,487 (2010: 344,890) and business sector sales are up 6.6% at 39,171 (2010: 36,738). However, private demand is down 19.6% with 304,424 vehicles registered (378,713).
The SMMT linked the 64,259-vehicle decline in new car sales this year directly to the ending of the scrappage incentive scheme. It calculated that during the first four months of 2010 over 100,000 cars were reportedly registered through the scheme.
But, despite economic and supply chain uncertainty due to the impact on vehicle production of the Japanese earthquake and tsunami earlier this year, the SMMT’s full year forecast remains unchanged at 1.93 million units. It says that the April market was within 1.5% of the forecast level and is predicting that the full-year market will be 5% lower than in 2010. The market is then expected to recover in 2012, back above two million units.
‘New car registrations in April demonstrated continued stability in the marketplace, with demand remaining lower than in 2010, although slightly ahead of industry expectations,’ said Paul Everitt, SMMT chief executive.
‘The coming months will remain challenging, but we do expect to see a return to growth in the second half of the year.’
Diesel cars represented 52.7% of the total market in April and have shown year-on-year growth in every month of 2011. The Volkswagen Golf was the best selling diesel in April. Alternatively fuelled car registrations rose by 48.1% in April to almost 2,000 units with almost 10,000 vehicles registered so far this year.
The Ford Fiesta was the top selling car overall in the month and year-to-date and Ford was the top manufacturer last month and holds that position for the year-to-date
New BVRLA group to help boost funding availability
THE BVRLA has set up a new steering group to improve the availability of competitively-priced funding for the vehicle rental and leasing industry.
The aim of the Funding Steering Group is to help existing and potential funders better understand the vehicle rental and leasing industry and its related risks and rewards.
It is already working with at least half-a-dozen new funders to evaluate the opportunities and product requirements of the industry and identify any barriers.
‘This group has been created to help replace some of the liquidity lost since the credit crunch as banks have struggled to build up their balance sheets and improve their flow of lending,’ said BVRLA chief executive, John Lewis. 
‘Our industry has coped with this squeeze and now it’s time to help lenders return to the market and explore new funding opportunities. From the conversations we have had with potential lenders already, I am confident that there is new finance available for leasing and rental companies.’
The BVRLA’s new initiative comes as the industry’s main funder, Lloyds Banking Group, continues to slowly reduce its £1 billion exposure to the rental and leasing market. Although Lloyds has pledged to work with the industry to make this transition as smooth as possible, the association says it is keen to help Lloyds’ customers in particular to reduce their dependency on its funding.
The steering group is chaired by BVRLA honorary treasurer and board member Brian Back and includes representation from the association’s three key sectors of membership: Graham Hale, of Fleet Hire, Andrew Cope, of Zenith Provecta, Roger Hancock, of Thrifty Car Rental and David Barlow, of ProHire.
Following the group’s initial meeting, the BVRLA has begun work on producing an ‘Industry Profile’ document for potential funders and aims to conduct a funding survey of members by the end of May.
‘We want to get a clear understanding of which sort of finance they want to provide and what sort of companies they want to deal with. The information we get from the survey of members will help us point them in the right direction,’ said Lewis.
In the longer term, the BVRLA is also working with the Finance and Leasing Association and exploring alternatives to bank funding.
Public sector may cut fleet size and increase grey fleet use
THE total public sector fleet in the UK could contract by as much as 15% over the next three years with a resulting increase in grey fleet use, according to new research by ING Car Lease.
However, Clive Buhagiar, national public sector manager at ING Car Lease, argues the potential move away from professionally-managed fleets, back to the ‘grey fleet’, will create short term costs savings but will also sow the seeds for longer term problems.
He said: ‘It is not surprising that, in this time of austerity and cost-cutting, the public sector is re-evaluating its relationship with professional fleet management companies. In fact, the local, health and education authorities should be encouraged to carry out audits of fleet performance on a regular basis. However, many of those organisations which are currently considering de-fleeting, may not have considered the knock-on effects of this move.
‘While there will obviously be headline-grabbing cost savings to be made - a potential annual saving of almost £500,000 on a fleet of 100 cars, each doing 5,000 business miles - there are a number of serious issues to be considered before pulling the plug.’
Those issues include health and safety and environment as well as mileage reimbursement costs.
Buhagiar said: ‘Duty of care and employer responsibility both often play a large role in the decision by organisations to outsource their fleet management. Rules around health and safety have become more stringent and it is a lot more straightforward for an organisation to meet duty of care obligations through a managed fleet. There may also be a strong job need associated with running the fleet or the company car may be a key element of recruitment and retention.
‘If staff use their own cars then the organisation will need to ensure regular checks are carried out on driver licence validity, insurance cover, vehicle maintenance and risk management.
‘Additionally, the EU Directive 2009/33 requires public organisations to consider the environmental impact of their vehicles. Research has shown that carbon dioxide emissions go up when company car fleets are cut, as drivers tend to go back to older cars which are not maintained as frequently as leased alternatives.
‘While a one-off saving may be tempting, it is important to consider the whole cost of the fleet - rental, National Insurance contributions, fuel and insurance. A robust cost analysis will also consider elements such as pay increases to compensate for the lack of a company car, training costs for new appointees if staff retention is affected and the administration costs required in ensuring all expenses and mileage is paid correctly.
‘The decision to close down a managed fleet should not be taken lightly. Although the initial financial saving can appear significant, careful consideration needs to be given to the alternative transport solution, its efficiency and impact on the organisation.’
Battery leasing will give best electric vehicle whole life costs
BATTERY leasing for electric vehicles is likely to provide whole life costs superior to other commercial approaches, according to vehicle valuation experts at Glass’s Guide.
The figures are believed to be the first comparative values released for an electric vehicle with the battery included, an electric vehicle with a leased battery and a range-extender electric vehicle.
The values show that the Nissan Leaf, the purchase cost of which includes the battery, retains 35% of its value after three years/36,000 miles. In comparison, an electric vehicle similar in size, but with a leased battery, should retain 54% of its original value over the same period. A range-extender electric vehicle, which drives only using electric power - but in which additional electric power is supplied by a petrol engine - will retain 43% of its value.
For comparison, Glass’s also included an average residual value for the equivalent diesel vehicle, which will be 44% after three years/36,000 miles.
Andy Carroll, managing director at Glass’s UK, said: ‘The use of whole life costs is the only way to assess the new powertrain technologies and differing business models. Our analysis shows that the new wave of vehicles is economically viable, even before taking allowance of company car tax and local incentives. 
‘In particular, the battery leasing option that we assessed is attractive for the car buyer as it not only means the initial purchase price of the electric car is closer to a conventional vehicle, but also removes the uncertainty of battery durability and replacement cost.’
The overall depreciation costs over three years for these electric vehicles are calculated to be £16,765 for the Nissan Leaf, £16,570 for the range-extender and £8,275 for the electric vehicle with a leased battery. A similar diesel model will depreciate by £9,750 over three years.
In terms of cost per mile over three years, the Nissan Leaf works out at.49p per mile, the range-extender at.52p per mile, the diesel at 39p per mile, whilst the clear winner is the electric vehicle with a leased battery 33p per mile, says Glass’s.
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