Fleet News

2003: what the year holds for fleet

2003 promises to provide fleet decision-makers with one of the most challenging years in their careers, with a host of issues facing them from tax changes to fleet safety and congestion charging. We ask the experts in a number of industry sectors for their predictions.

The manufacturers

'After yet another record year in 2002, we will see a slowing down of the new car market this year – probably in the order of 6%, as the consumer boom starts to slow down.
Diesel sales and superminis will continue to dominate, but the 4x4 market remains strong and MPVs will still be making up the numbers in this sector.
The changes to benefit-in-kind taxation have been felt strongly in the fleet sector and in 2003 we will continue to see the effects of this as more vehicles are de-fleeted and drivers either opt for cash or move to vehicles with lower carbon dioxide emissions.
The much-debated issue of taxation for double-cab pick-ups continues to challenge the civil servants at the Treasury and it is likely that there will be a consultation with the industry and users over the next 12 months.
Finally, a key issue to track will be the take-up of alternative fuels and conversions of vehicles to run on these fuels. Despite a 30% differential in tax on the fuel, will this be enough to persuade fleet decision-makers and drivers to take the plunge and make the switch? The jury is out.'

  • Al Clarke, Society of Motor Manufacturers and Traders

    The fleet assocation

    'THIS year looks like offering fleet operators at least as many challenges as 2002 did. The Association of Car Fleet Operators (ACFO) will work hard to make sure these challenges are met with the same relative efficiency as the switch to the carbon dioxide-based driver taxation system.
    ACFO will look to work with Government as never before. We will certainly be trying to take transport secretary Alistair Darling up on his invitation for 'fleets to talk to Government'. We will have to hope that this time, it might listen.
    With lots of new important models, the probability of a 'difficult' Budget, and even the prospect of conflict with Iraq, 2003 will require fleet decision-makers to look closely at how their fleets are run, how things can be improved and how to keep costs under control.'

  • Stewart Whyte, director, Association of Car Fleet Operators

    The leasing company

    'As this year begins, fleets will be facing a great deal of red tape. The Fourth Motor Insurance Directive – which requires fleets to keep an up-to-date list of all vehicles covered by their insurance – and congestion charging in London will affect fleets.
    There are other major legislative changes that will impact on fleets. The change to free fuel tax rules in April, the new Block Exemption regime and the development of the transition to International Accounting Standards – these are all factors that business will have to consider.
    That is why companies will need even tighter safeguards on their fleets next year. Those who may have thought it would be a year of calm following the upheavals of 2002 should expect even more changes on the horizon.'

  • Mike Waters, head of market analysis, Arval PHH

    The leasing association

    'Many of this year's issues are borne out of increasing legislation – the distance selling directive, for example.
    Others are more general: the use of mobile phones in cars, while yet more are technical accounting issues such as the unfairness of double disallowance on back-to-back leases.
    But the main issue is congestion charging, which is due to start in London in February. It will be watched with interest by other local authorities.
    I expect announcements from Edinburgh, Bristol and Leeds before the year-end that they will launch schemes, probably from 2005 at the earliest.
    The Fourth Motor Insurance Directive will place an additional burden on fleet operators. I was very pleased when we won the minimum 14 days on fleet exemption last month since this will save the industry about £60 million in what would have been additional compliance costs.
    From January, fleets that fail to send the V5 document with the vehicle to auction will face lower disposal proceeds, or even no sale at all, so we will be working hard to reinforce the Driver and Vehicle Licensing Agency's message: 'It ain't legit without it'.

  • John Lewis, director-general, British Vehicle Rental and Leasing Association

    The industry forecasters

    'The possibility that by the end of 2003 one in three new cars sold will be fuelled by diesel raised the concern of a residual value meltdown.
    As time passes, used car buyers are expected to become powerful advocates for the cause of new diesel technology. Increased desirability from buyers will translate into greater demand, which will mitigate against the increased supply and potential crash in used car prices.
    Even though 2003 is expected to see some market shrinkage, no-one should be left with the idea that we are staring into the abyss. By the standards of the last few years, customer demand for new and used cars will be high but less so than last year.
    There is little doubt that the change in legislation requiring a V5 or V11 to tax a vehicle is likely to cause some disruption in the first quarter.
    This will lead to a two-tier pricing structure.
    The financial penalties will be so acute that trade vendors will quickly put measures in place to ensure that the vast majority of used cars will be accompanied with their documents at sale time.
    The likelihood is of a positive start to the new car market in 2003, but sales are expected to become more restrained by mid-year, as the effects of issues such as the increase in National Insurance Contributions in April, economic slowdown and other signs that disposable income is threatened.
    Our 'guestimate' is for a total of 2.3 million registrations in 2003.'

  • Adrian Rushmore, managing editor, Glass's Information Services

    The training body

    'The year kicks off with the Fourth Motor Insurance Directive. The legislation is not clear whether short-term, daily rental or demonstration cars are included and what, if any, the minimum cut-off is.
    We move swiftly in February to the implementation of London congestion charging. If the Fourth Directive is an administrative nightmare, this one is even worse. It is the registered keeper who pays the penalty of £80 for failing to buy a permit, reduced to £40 if you are quick enough in administration – that means paying up.
    Hard on the heels of that comes the Budget. We already have programmed a further 2% hike in the benefit-in-kind tax charge, but also watch out for more from the Chancellor of the Exchequer.
    But the real issue is managing occupational road risk. Legislation for corporate responsibility is on hold for the moment. Remember the Health and Safety Executive gets new funding for 2004 and the Government could well spell out the law just as they have the tools to apply and enforce it.
    Whoever is driving whatever vehicle, if it is on company business, firms will be accountable.
    The Government probably won't reinvent the wheel so look to commercial vehicle legislation for clues – drivers' hours, rest breaks, safety inspections and even tachographs, maintenance records a legal requirement and the right of the HSE to inspect records, driver training, even compulsory driver assessment – any of these could happen.'

  • Roger Glenwright FICM, Institute of Car Fleet Management

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