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Brokers warned not to sell on cars

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Contract hire companies and brokers have been warned that their contracts will be terminated immediately if they are caught selling on discounted new cars.

Ford said it is now monitoring websites that advertise heavily discounted cars to discover who is supplying the vehicles.

GM confirmed it had already “taken action” against brokers who have breached their agreements.

Volkswagen said it has put a number of checks in place to ensure against any illegitimate business practices.

“We would take any incidences of wrong-doing very seriously in order to protect our brand, our residual values and our genuine Volkswagen customers,” said a spokesman.

Nissan said any company caught disposing of vehicles before the required retention period would be treated as a “serious breach of agreement and more than likely terminate its business relationship immediately".

“We also make it very clear from the outset with all contract hire companies that we have set rules regarding this area of the business and they must strictly adhere to them – any deviation is not tolerated," said a spokesman.

Last year Ford discovered that some contract hire companies were offering cars for sale on websites within three months of purchase.

“In a handful of cases we have terminated deals,” Ford of Britain chairman and chief executive Roelant de Waard said.

Companies were typically operating fleets of around 500 vehicles.

In some cases, an individual in the business had taken the decision to sell on cars; in other instances, it had been company strategy to sell on cars at profit.

The practice is illegal, but Ford decided not to take legal action. It recovered the cars and ended the contracts.

The British Vehicle Rental and Leasing Association’s (BVRLA) broker committee is working to improve the broker industry and has established a set of compulsory standards for its members.

“The BVRLA works hard to ensure that the block exemption regulations are upheld across the industry.

Just as we challenged the manufacturers when they tried to demand our members’ customer data, we will do everything in our power to stop people posing as leasing brokers or contract hire companies in order to obtain discounted cars that they can sell on at a profit,” said BVRLA director general, John Lewis.

“We have already spoken with Mr de Waard to try and give him and his team a greater insight into this part of the industry.

"Our eventual goal is that Ford and other manufacturers can place promotional deals in the knowledge that they are working with a legitimate broker.

"This is what our leasing broker and leasing committees are working hard to achieve.”

While the broker industry is working hard to improve its reputation, incidences of bad – and in some cases illegal – practices remain.

“The real problem is with pseudo contract hire companies or fleet customers who purport to be buying for specific fleet customers or for business contract hire, and then put the cars straight on the web at cash prices,” explained Jeff Peyton-Bruhl, national corporate operations and remarketing manager for Hyundai Motor UK.

“I have come across many of these in the past, but not so many now.

"We did have a company do this to us last year and we cancelled the contract immediately after only a handful of cars had been bought.

“Where manufacturers agree extra support direct with brokers, then they should be well-known and trusted and with a good contract in place.

"If not, then the manufacturer would have itself to blame,” he said.

Audi overcomes the problem by refusing to offer discounts to brokers.

“Audi UK isn't susceptible to this problem because we don't offer incentives to contract hire companies or resellers when supplying cars, and therefore we aren't exposed to the potential negative implications of transactions of this kind,” said a spokesman.

Meanwhile Toyota said it will only deal with a group of just four brokers and also operates a direct invoicing policy ensuring Toyota fleet terms remain confidential.

There are some areas where both supplier and broker have difficulties.

“The grey area is sometimes with PCP products, where a cash price has to be shown even though it is not meant to be the acquisition method,” said Mr Peyton-Bruhl.

“As the market deteriorates I guess there is a likelihood that manufacturers will offer stronger deals through possibly riskier channels that will then come back and bite them on the backside.”

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