Fleet News

Changes to Block Exemption serve up hidden fleet savings

CHANGES to Block Exemption could save fleets hundreds of millions of pounds a year on their leased vehicles.

However, many leasing companies are keeping these savings to themselves when they ought to be passing them on to their customers, a fleet management company has claimed.

Graham Rees, business development director of Fleet Logistics, claims there are savings of about £180 million a year to be made in aftersales care and overall costs to the 1.5 million company cars currently being run under contract hire agreements.

He said: 'Most organisations that own a company fleet will have a high percentage of drivers tied into contract hire agreements.

'It is predicted that the Block Exemption changes will see these ancillary costs drop. However, businesses currently tied into agreements don't even realise these savings exist as leasing companies are not telling them.'

Fleet Logistics claims that for every £50 spent per month per vehicle for servicing under contract hire agreements, about £5 could be saved as costs are driven down as the market becomes more competitive and more independent servicing firms are allowed in. However, a spokesman for the British Vehicle Rental and Leasing Association claimed it was far too early for leasing companies and fleets to see any changes.

He said: 'We need to see the evidence that costs are going to drop and we are not going to see that until some of the new authorised repairers come into being.'

The European Union certainly believes that changing the structure of the motor industry will have the effect of lowering prices, both pre- and post-sale.

Speaking as the new rules came into effect on October 1, EC competition commissioner Mario Monti, the driving force behind the changes, said: 'There will be new possibilities for operating stand-alone after-sales services and I expect these new service providers to exercise a downward pressure on the high after-sales service prices.'

Under the rules, a dealer can choose whether to carry out repairs and servicing itself, or sub-contract them to an authorised third party.

Alternatively, any repair shop that meets the quality standards set down by the manufacturer can become an authorised repairer, without having to sell cars. The manufacturer cannot limit the number of repairers in any one area and the repairer can work with any number of carmakers.

This is good news for the independent service network, according to Tom Dunn, managing director of Nationwide Autocentres.

He said: 'We welcome the changes to Block Exemption and support the EU objective to provide greater choice. We are confident that it can meet the needs of new car owners today but recognise that some independents may want to apply for approved repairer status.

'Nationwide Autocentres will consider joining such schemes but believes that they may be priced beyond the reach of some independent garages that don't have the volume to support the investment.'

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