Fleet News

Industry divided over Motability disposal plan

LEADING fleet industry figures remain deeply divided over the effect of Motability Finance Limited's remarketing plans, just a year before the first major wave of returned vehicles go on sale. Some industry pundits claim there will be little effect from MFL deciding how and where to dispose of vehicles, rather than the previous route of buy-back arrangements with dealerships.

MFL will continue to use approved dealerships as its main route to market, but concerns remain that the firm is entering uncharted waters by managing the whole process itself. A spokesman for Volkswagen, which has already raised concerns that the residual values being set for its vehicles by MFL, do not reflect the value of the brand, said: 'We have worked with them for two years and have agreed a disposal cascade, starting with the dealership network. We would rather be in control and we do not know what the results will be until they begin remarketing volumes of vehicles.'

Manufacturers and MFL clashed when the disposal plan was first announced two years ago, with some threatening to pull out altogether. But Tom Madden, customer affairs director of British Car Auctions, was adamant that the market would be unaffected. He said: 'Selling 130,000 cars a year in a market of 7.5 million vehicles is just 1.7% of the market. These are not company cars that will be on sale, they are niche cars that can be considered a bit special, because they are different from other vehicles due to their low mileage and private use.'

Like most of the industry, MFL has already been affected by the collapse in used values last year, as losses on early terminations, for which MFL takes responsibility, were higher than expected. A spokesman said: 'MFL, together with manufacturers and dealers who have supplied vehicles on 'buy back' agreements in the past, are suffering losses equivalent to the gap between residual values set up to three years ago and current market values. MFL is making financial provision to cope with the current problem. This has resulted in some price increases to customers.' It insists it is fighting to keep leasing rates low for disabled people, keeping to the spirit of the scheme.

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