Fleet News

News review 2002: new tax regime marks a year of major change

THE launch of the carbon dioxide-based company car tax system was undoubtedly the biggest change experienced by fleets this year but there were also many other challenges to contend with.

Ford revealed it was planning to sell fast-fit giant Kwik-Fit as part of a massive worldwide overhaul that it said would see 35,000 job cuts, out of a workforce of 345,000.

Employers faced a major headache while they prepared for the new company car tax system after a computer error at the Inland Revenue led to thousands of drivers receiving the wrong tax codes.

An RAC report found that company car drivers were the worst motorists on UK roads. It said they were twice as likely to be involved in an accident and twice as likely to have points on their licences for speeding compared with private motorists.

The RAC Report on Motoring found that 58% of company car drivers admitted speeding on motorways, compared to 41% of private motorists. Also, 37% admitted that their last accident was their own fault, compared to 24% of private motorists The Fleet News internet and e-commerce conference featured a top-level line-up of speakers who delivered a series of presentations that showed the online fleet future was beckoning and promised to offer real time and money savings. The event, held at the Motor Industry Heritage Centre, Gaydon, featured presentations from leaders in e-commerce and fleet managers who have implemented electronic trading.

In answer to a question on the involvement of fleet drivers in road crashes, transport minister David Jamieson confirmed the Government had no plans to make driver training compulsory for company car and van drivers.

The Government also went on an LPG offensive. It issued its clearest and strongest commitment to the long-term viability of liquefied petroleum gas as a road fuel, claiming that fleets which were not considering LPG-powered vehicles were living in the past.

Transport minister David Jamieson also unveiled a £1 million package of measures to promote the fuel at the opening of the 1,000th LPG station in South London.

Mayor of London Ken Livingstone announced his congestion charging plan would start on February 17, 2003.

He said: 'For the first time there will be a serious attempt to tackle the chronic traffic congestion in central London by reducing the number of vehicles terminating their journeys in, or passing through, the charging zone.'

Fleet News held two regional Healthchecks, which provided a practical checklist for fleet decision-makers to ensure they have covered all their bases in the key elements of fleet management. Two successful Healthchecks were held at the Belfry and Wentworth golf clubs.

Car manufacturers unveiled a host of new models and concept vehicles at the Geneva Motor Show. New unveilings included the luxurious Volkswagen Phaeton, Mercedes-Benz CLK, Citroen C8 people carrier and Volvo XC90 SUV.

The finest in fleet were recognised at the 14th annual Fleet News Awards. In total, 29 awards were presented to a packed audience at London's Le Meridien Grosvenor House Hotel.

The industry's 'Oscars' named Somerfield Stores as UK Fleet of the Year. Fleet Manager of the Year awards went to Keith O'Connor of Nightspeed (over 250 vehicles), Mary Blackwell of the Yorkshire Building Society (101-250 vehicles) and Gill Garrett of Premier Products (sub-100 vehicles).

Volkswagen was named Fleet Manufacturer of the Year. The cabaret was provided by comedian Ardal O'Hanlon, of TV's Father Ted fame.

The carbon dioxide-based company car tax system was launched – marking the end of three years' preparation for the fleet industry and the start of a new challenge.

Ford won its largest single fleet deal in history with the signing of a contract to provide telecommunications giant BT with about 4,000 Transits per year over a three-year period. At showroom prices, the deal was worth £289 million.

It was announced that sales of new cars to fleets hit record levels during the first quarter of the year – dispelling fears that the new company car tax system would have a negative impact on the fleet sector.

Official figures showed that the fleet sector bought 296,704 new cars, up by 7.3% from the same period the previous year.

Hundreds of fleet decision-makers attended two Fleet News Drive events, one at the Brands Hatch circuit in Kent and the other at Oulton Park in Cheshire.

It was warned that fleet running costs could rocket by more than £50 million following a £4 billion hike in National Insurance announced in the Budget. The increase in NI contributions (NIC) would hit both employers and employees and could force companies to rethink the value of cash alternatives offered to staff in lieu of a company car.

Lloyds TSB autolease bought First National Vehicle Holdings in a deal worth more than £400 million, leapfrogging rivals Lex Vehicle Leasing and LeasePlan to become the largest leasing firm in the country. It added 73,000 vehicles to the Lloyds fleet of 85,000 vehicles, and created a 158,000-vehicle fleet.

The Royal Society for the Prevention of Accidents (RoSPA) created a series of safety guidelines urging every fleet in the country to commit both to restrict company car drivers' daily mileages and to improve driver skills. It also asked professional and trade associations, unions, local authorities, insurers, police and safety groups to sign up to the codes, covering driver fatigue and driver competence.

Manheim Auctions said fears of diesel-powered ex-company cars swamping the used car market in three years' time and damaging residual values could be wide of the mark.

It added it believed used car traders were already gearing up for the anticipated huge influx of defleeted diesel company cars in 2004 and 2005.

Prime Minister Tony Blair issued a direct challenge to UK businesses and fleets to lead the world in investment in clean fuel vehicles. Blair's message was contained in the hard-hitting RAC Foundation report, Motoring Towards 2050, about the future of transport in the next 50 years.

Fleets were warned that police forces and the Crown Prosecution Service were investigating crashes involving company cars to find a high-profile test case to prosecute any company breaching its duty of care to drivers. The warning was made at the annual general meeting of the Association of Car Fleet Operators.

Leaders from all areas of the fleet industry set out a strategic action plan for new Transport Secretary Alistair Darling, who stepped into the hot seat after the resignation of Stephen Byers. As Darling settled into his new role, the Association of Car Fleet Operators wrote a letter calling on him to concentrate on five key areas and asking for a face-to-face meeting to hammer out policy.

ACFO said cornerstones of policy should be honesty, realism about the importance of the car in the modern economy, determination to act instead of talking, action to clear congestion and real investment to spend some of the £180 billion promised for transport in the Government's 10-year transport plan.

The Health and Safety Commission (HSC) stepped back from tough proposals that would have seen the Health and Safety Executive scrutinise employers' fleet risk management policies and investigate road traffic accidents involving at-work drivers. In a confidential letter to transport minister David Jamieson, HSC chairman Bill Callaghan said the HSE did not have the resource to play an active role in either vehicle accident investigations or road safety enforcement.

Inland Revenue figures exposed the value of the company car to Government coffers.

They showed that the Treasury raised a total of almost £2.5 billion in benefit-in-kind tax alone from company cars, vans and the free fuel perk. Shell Capital pulled the plug on its vehicle finance operation just a fortnight before it was due to launch a fleet finance facility. The financial services arm of the Royal Dutch/Shell Group of companies said that following an internal strategic review, it decided to discontinue the future development of its Shell Auto Finance business. The Mercedes-Benz C-class achieved a five-star Euro NCAP rating, equalling the achievement of the Renault Laguna.

Fleet executives were warned they must adapt or die in a new environment where the company car must be considered as just another part of a company's travel requirements. They were urged to conduct reviews that would throw into doubt the future role of the fleet decision-maker. A report called Rethinking the Business Car highlighted the changes facing fleet managers and called on employers to conduct a complete fleet audit.

Department store giant John Lewis Partnership launched a new car scheme for its 60,000 employees. The new service, called Partnerdrive, offered staff access to company car-style motoring agreements on a wide range of cars, through a partnership with Alphabet (UK). Every agreement was available for a fixed monthly payment, covering all routine servicing and repairs, insurance, AA breakdown cover and road tax.

Fleets were warned they could become victims of 'conversion cowboys' by not using approved Liquefied Petroleum Gas Association installers. Drivers risk taking to the road in potential deathtraps, claimed Birmingham Trading Standards.

The European Commission announced new rules for its car distribution block exemption. Under the new system, dealers can sell more than one make of car and manufacturers must choose one of two distribution methods per country – exclusive or selective.

It was revealed that the Health and Safety Executive was raising the stakes on fleet safety by demanding to see corporate road risk policies during company safety audits, reversing its decision to step back from the issue in June. Fleet News learned that the HSE had approached a number of large fleets asking to see occupational road risk policies during routine visits looking at office and factory safety.

A major study into European new car prices singled out the UK once again as being the most expensive market for more than half of all the models surveyed. It also said British consumers still faced obstacles when attempting to source cars from abroad.

The fleet responsible for driving cabinet ministers around the country was in the process of analysing the merits of a diesel-powered car fitted with a particulate filter as alternative to liquefied petroleum gas-powered cars. The Government Car and Despatch Agency (GCDA) encompasses both the Government Car Service for transporting ministers and the Interdespatch Service that delivers mail between Government buildings. It was one of the earliest adopters of LPG cars.

The GDCA bought a Peugeot 607 HDI to assess its environmental and emissions performance.

Rival utility firms Scottish Power and United Utilities worked together to conduct a reverse auction via the internet that saw manufacturers bid by cutting their prices. Vauxhall beat nine other manufacturers to secure one of the biggest fleet deals in its history, for 10,000 vehicles worth £150 million.

Ford sold Kwik-Fit to European venture capital firm CVC Capital Partners, which assured fleets that maintaining a quality service was its key aim. The firm bought Kwik-Fit for £330 million.

Companies were warned they were endangering the lives of their employees and the public by neglecting the lethal problem of tiredness while driving for work, claimed safety campaign group Brake. Its survey, backed by Green Flag, found that only 22% of 305 company car drivers interviewed at service areas had received advice from their employers about how to combat fatigue.

British fleets which invested billions of pounds in diesel technology were warned that expected fuel savings could be wiped out by soaring pump prices as fears of a Middle East war grew.

Commentators predicted an increase of up to 20 pence per gallon for diesel, which would add £10,000 a year to the fuel bill of a 100-vehicle diesel fleet.

One of Britain's biggest food companies announced it had saved more than £100,000 a year and improved fleet driver safety by controlling the use of mobile phones among 'lonely' company car drivers. The firm, which asked not to be named, slashed £128,000 a year from its mobile phone bill following a safety audit designed to identify areas where drivers were at risk.

Six key issues facing fleet operators were covered in detail at the Fleet News Hit For Six conference. Topics included maximising residual values, going green, how to be a fleet hero, health and safety, the latest thinking on structured employee car ownership schemes and how to cover all necessary bases when offering a cash-for-car scheme.

One of the largest studies carried out into the health effects of diesel exhaust emissions warned that long-term exposure could cause lung cancer. The findings of the Health Assessment Document for Diesel Engine Exhaust, released by the United States Environmental Protection Agency, were revealed as figures showed UK fleet diesel sales had risen by 47.2% from January to September.

A report suggested that fleet decision-makers could improve vehicle residual values by hundreds of pounds per car by researching the prices used car dealers were charging on their forecourts. The Used Car Market 2002, a report by BCA Europe, in association with Fleet News' sister company Sewells International, showed that the average price of a three-year-old car sold by dealers had risen by £200 in a year.

Aussie pop superstar Kylie Minogue graced the cover of Fleet News as part of in-depth coverage of the Paris Motor Show. She was on the Ford stand where she unveiled the Streetka.

Fleets were warned they could see their end-of-contract company cars rejected by the used car market if they tried to dispose of the vehicles with incomplete sets of documents.

It was reported that some used car retailers, including major dealer group Bristol Street, had been instructed, from November 1, not to accept any vehicle without a V5 document.

It was in anticipation of a new law coming into force on February 1, 2003, that required car owners to present a V5 document in order to obtain a vehicle tax disc, making it vital for the appropriate part of the registration document to be passed on to the buyer when the vehicle was sent for auction or sale.

New research found that flexible working to combat congestion had led to massively extended rush hours for Britain's car commuters. In London and the south of England, the Trafficmaster report said, peak hours now extended from 6am to 11am and then from 3pm to 8pm.

The live traffic information service provider estimated that drivers would waste a record 1.4 million working days this year in traffic jams, compared to 975,000 lost working days in 1997, the year Labour came to power.

A shock report suggested that up to a third of UK fleets risked prosecution for failing to comply with major new European legislation on insurance. It was warned that thousands of fleet decision-makers were unaware they had to submit details of all vehicles covered by their insurance by next year as part of the new Fourth EU Motor Insurance Directive.

Research by the Motor Insurers' Information Centre (MIIC) found that almost one in four fleets was unaware of the legislation. The British International Motor Show in Birmingham featured a range of new models, concept cars, stunt drivers and celebrities.

New research revealed fleets which contract hire company cars are paying millions of pounds in unbudgeted end-of-lease re-charges for excess mileage wear and tear. The findings were contained in the FN50, Fleet News' annual analysis of the UK's 50 largest contact hire and leasing companies. The publication was unveiled at a special dinner at the Café Royal in London.

Fleets were warned they faced fines and could find their insurance invalidated if they failed to keep up records updated on the Motor Insurance Database (MID), under the terms of the new Fourth EU Motor Insurance Directive. The directive will force fleets to supply the MID the registration details of every vehicle driven by an employee that is covered by the corporate insurance policy.

Transport minister John Spellar issued an open invitation to fleet decision-makers to play a more direct role in influencing future debate on how the country could tackle its growing congestion problems.

BMW UK managing director Jim O'Donnell branded London mayor Ken Livingstone's congestion charging scheme 'barmy', adding it could cost bigger businesses in the capital up to £750,000 a year.

Silverstone was announced as the new venue for next year's new improved Fleet Show. Fleet News revealed the event for fleet decision-makers would take place on September 23, 24 and 25. Chancellor of the Exchequer Gordon Brown started the countdown to a year of change for fleets in 2003 in his pre-Budget statement. The announcement offered fleets a four-month window to prepare for the introduction of tax schemes that the Government is introducing as part of its commitment to use taxation to protect the environment.

Transport Secretary Alistair Darling revealed that fleet decision-makers and company car drivers would be in the front line of a new initiative to fight congestion. Speaking at the RAC Moving Towards 2050 Conference, Darling said a team of traffic managers throughout the country would receive calls from business drivers raising the alarm about congestion problems, which they could then deal with using new powers.

Prime Minister Tony Blair joined Nissan president and chief executive officer Carlos Ghosn to celebrate the first new Nissan Micra leaving the production line in Sunderland.

One of Britain's biggest leasing firms, CitiCapital Fleet, closed to new business following a review of the operation by parent firm CitiGroup. The contract hire and leasing firm, which ranked 28th in this year's FN50, wrote to its fleet customers informing them of the decision to close the business.

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