companies and the imminent new business car taxation regime
dominate the agenda at the BVRLA for the coming year, Antonio
Fabrizio discovers.
time of it, and its main champion, the British Vehicle Rental and
Leasing Association (BVRLA) is having to fight hard to protect its
members’ interests.
The lack of credit available to help lessors fund their fleets
is a growing worry for motor finance companies, and the BVRLA
recently also wrote to Lord Mandelson’s department asking for more
support to the UK’s car rental and leasing industry.
BVRLA chief executive John Lewis told Motor Finance that the
association is trying to play an “educational role” in order to
change the attitude of many banks, which “are not giving funds to
car companies despite the quite reasonable amount of business out
there.”
Go deeper with GlobalData
Maintaining the market
Indeed, despite the depressed car market, Lewis said signs that
the market is still holding out were that new registrations for
fleet cars in 2008 were only 7 percent down. This strikingly
contrasts with the 34 percent fall in January this year, which
Lewis said was mainly due to the lack of funding.
He said: “Although many SME firms are turning to rental or
leasing to offset their difficulties in obtaining finance from
their existing credit lines, BVRLA members are not being able to
satisfy that need because they can’t access sufficient
funding.”
Lewis described some banks as having a “very narrow” and
“overcautious” view, because they failed to recognise that by
funding one leasing or rental company, they were not supporting one
business, but “actually funding hundreds of customers through one
central point.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAccording to Lewis, to get things moving again, the government
should put more pressure on these banks so that they “spread” their
liquidity.
He said: “As an industry, we don’t want any bailout or state
aid.
“What we are looking for is the government to make sure that the
liquidity it has given to the banks flows through to our sector,
because we have got a good risk profile and a good customer
spread.”
New legislation
As the credit availability issue dominates the debate, BVRLA’s
members are also preparing for the government’s proposed changes to
business car capital allowances, which will come into effect on 1
April.
The goal of the new legislation is to incentivise businesses
into low-emission vehicles, as cars emitting less than 160g/km of
CO2 will have a more advantageous tax position than those emitting
over 160g/km.
Lewis explained how this could affect BVRLA members and their
customers: “What this new legislation is forcing people to do for
the first time, is to look very closely at the environmental impact
of the cars they choose on their car policy.
“In leasing terms, the difference between a car emitting 158g/km
and one emitting 162g/km could be £30 a month, or £900 over three
years” he said.
“That is a lot of money and people will really focus on the
types of cars they have in their car policy and on the net
after-tax cost of the lease or rental.”
BVRLA leasing members saw the average CO2 emissions of vehicles
coming onto fleet in 2008 fall to 149.9 g/km, outstripping the
figure of new car emissions as a whole, which according to the SMMT
was 158g/km.
Lewis said he expected the figure to go down even more with the
new tax regime coming into force on 1 April, “although progress
will be a bit slower if we can’t replace the cars.”
Waiting for the new regime
The BVRLA had predicted that because of the new tax regime,
there would be a downturn in the new fleet car market in the first
three months of 2009, because people would wait until April to
register their cars under the new tax system.
But Lewis said that some motor manufacturers seemed “not to
listen to their customers at all”, because they haven’t taken into
account the deadline for cars registered from 1 April.
“A number of them have registration incentives schemes running
till the end of March – closing one day before the new business car
taxation entering into effect,” he said.
“I usually don’t criticise the motor industry,” he added, “But
we have got dealers ringing our members saying they want to
register a car to get in the manufacturer incentive, and our
members have to tell them that they can’t because if they
registered in March, they wouldn’t get the benefits of the new
taxation regime.”
Issues like these, Lewis concluded, showed how the role of the
BVRLA is critical in protecting the interests of the car leasing
and rental sector, as well as helping it communicate with other
segments of the car in-dustry.
BVRLA joins Leaseurope
The BVRLA has become a member of the European leasing
federation, Leaseurope.
The move will allow the association to campaign more effectively
for the British car rental and leasing sector in Europe, as EU
legislation increasingly affects its members.
The BVRLA will have representatives on the leasing working group
as well as the accounting and taxation group. It is also to chair
the working group for the car rental sector.
Lewis said that the BVRLA has a number of objectives it intends
to achieve as a Leaseurope member.
These include putting together a European code of conduct –
similar to the one it already has in place and which is mandatory
upon its members – as well as a cross-border dispute resolution
process.
Lewis admitted these were “challenging objectives” which needed
some time to come into effect.
He said: “Looking at a pan-European perspective, we have to be
realistic. I think what will happen is that big multinational
companies will adopt the code first, and then will make it
compulsory upon all of their branches.”
The BVRLA had previously been a member of Leaseurope’s car and
truck rental committee ECATRA, but left it in 2004, due to “a lack
of confidence in its ability to support the industry,” said
Lewis.
Since then, it has been in “constant dialogue” with Leaseurope
before deciding to join it as a full member, he added.
