Fleet News

Anger over move to ban discounts

THE UK’s leasing and rental industry has reacted angrily to calls by the retail sector for a new law that will stop fleet buyers getting bulk discounts on cars which are later remarketed in competition with dealers.

CECRA, the European Council for Motor Trades and Repairs, has voiced concerns that leasing and rental firms buy cars with bulk discounts from manufacturers then sell them on the open market against franchised dealers, which pay more for the cars.

It wants a clause added to a future Block Exemption, likely in 2010, that will mean leasing and rental companies have to have an identified customer for any vehicle bought from a manufacturer.

If the move was successful, it could force huge changes in the way the UK fleet market does its business in terms of purchasing, logistics and remarketing.

It will raise the issue with Competition Commissioner Neelie Kroes at its conference in Brussels next month.

In response, the British Vehicle Rental and Leasing Association (BVRLA) is urging CECRA ‘to look to its facts before lobbying for a change in Block Exemption’.

A spokesman said: ‘In the UK, leasing and rental companies do not launder cars. They buy them, use them and sell them. Not so, dealers. We demonstrated last year that dealers were setting up bogus rental companies to buy cars at higher discounts which then reappeared on the forecourt with delivery mileage only.

‘As for having an identified customer, leasing companies are the owners of the vehicles. Who they choose to lease them to is their business, except for PCP and ECOS, where the user already has to be identified to the manufacturer under the current Block Exemption arrangements.

‘Rental companies can never know who the customer is until the point of hire. The BVRLA would oppose any change in the present arrangements and hope that we are not put in the position of exposing the real culprits.’

Mark Connor, purchasing manager at leasing giant Lex, said the company constantly worked with dealers and added: ‘We already have a clause in our contracts with manufacturers that hints towards the EC rulings, but the leasing market is just like any other – if a big company buys anything in volume it expects a relevant discount. That’s just the rules of business wherever you are in the world.

‘If strict rulings were put in place about new car discounts, we would expect the same legislation to be introduced across the board on other commodities.’

A spokesman for CECRA told Fleet News it was collecting data on the fleet and leasing industry which it would release soon.

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