Fleet News

Year in review: What happened in 2015?

​The year started much as it will end, with falling fuel prices and fears that the Government would decide it was time for a hike in fuel duty.

Brent crude fell below $50 a barrel – a six year low – and two-thirds of respondents to a Fleet News poll believed a litre of diesel would cost them less than £1.20 come the end of 2015.

Almost one-in-four (23%) predicted a pump price of between £1 and £1.10 and less than one-in-five (19%) thought it would be less than £1.

But as the fleet industry got to grips with fuel prices, figures from the Society of Motor Manufacturers and Traders (SMMT) confirmed it had just witnessed a record-breaking year for new car registrations.

It has been a familiar story this year. Fleet and business registrations hold a majority market share and have already passed the 1.3million-mark – last year’s total – with one month to spare

However, that buoyant fleet car market wasn’t being reflected in local authority figures, obtained exclusively by Fleet News in February. 

Freedom of information requests were sent to more than 430 councils across the UK - shining a light on local authority fleet activities.

The analysis revealed that the UK’s council fleet had dropped below 50,000 vehicles. More than two-thirds (70%) were based in England and local authorities in Scotland were responsible for 20% (9,901 units). Welsh councils controlled 3,990 units, equivalent to 8% of the fleet

However, the data showed Northern Ireland had the smallest share, with local authorities collectively operating just 904 units – just 2% of the UK total.

£50m grey fleet bill

Further analysis revealed that cash-strapped councils were stumping up an estimated £50m a year in lump sum payments to almost 43,000 grey fleet drivers.

Local authorities in England were footing three-quarters (76.3%) of the annual bill, reimbursing £209 million to more than 267,000 employees who drive their own car in the course of their work.

In Scotland, some 43,000 grey fleet drivers had cost council coffers £32m, which was slightly more than the £28.9m paid out by Welsh local authorities to their 30,000-plus grey fleet drivers.

Meanwhile, Northern Irish councils had 3,106 grey fleet drivers – 1.4% of the UK total – costing £3.9m.

New drug-driving laws come into force

The first big legislative change of 2015 came with the introduction of the new drug-driving law from March 2.

The new law, which was introduced in England and Wales, set limits for eight illegal and eight prescription drugs. But one-in-four respondents to a Fleet News poll said they were in the dark about the new legislation.

Dave Nichols, professional engagement officer for Brake, told Fleet News: “This much-needed progressive move by government will make it easier for police to catch illegal drug-drivers.

“However, it’s worrying that many companies that employ at-work drivers are still unaware of the new legislation and how this could impact their business.”

The Coalition’s last Budget

There was good and bad news to follow in the last coalition Budget before the country went to the polls.

Company car drivers were told they would face a three percentage point year-on-year hike in their company car tax from 2019/20. However, the Government announced that the rates for ultra-low emission vehicles (ULEVs) would increase “more slowly than previously announced”.

Fears over a hike in fuel duty meanwhile, were laid to rest – for the time being at least. The fuel duty increase planned for September 1, 2015, due to be 0.54 pence per litre, was cancelled.

Fleet and mobility

But, as fleets grappled with changes to benefit-in-kind tax, the definition of a fleet manager was beginning to change.

A study showed a growing number of organisations were looking at merging fleet, travel and expense management to improve cost control and compliance.

Martyn Briggs, industry principal for mobility at Frost and Sullivan which carried out the research, told Fleet News: “We are witnessing a shift away from just considering the total cost of ownership of fleet towards managing the total cost of mobility for the organisation.”

Polls and paper licences

The General Election was to dominate the national news agenda through March and April before votes were cast on May 7.

Fleet News, in partnership with fleet representative body ACFO and the British Vehicle Rental and Leasing Association (BVRLA), had launched the Fleet Industry Manifesto in advance to ensure the industry’s voice was heard.

The Conservatives secured a majority, despite pollsters predicting the opposite, and fleets prepared for the abolition of the paper counterpart of the driving licence.

A new online service, which fleets had originally been promised early access to, weeks before the implementation date of June 8, was instead unveiled by the Driver Vehicle Licensing Agency (DVLA) with just a few days to spare.

The Freight Transport Association (FTA) warned that the DVLA service wouldn’t “deliver the goods”.

FTA chief executive David Wells wrote to the DVLA explaining that the organisation, which represents light and heavy commercial vehicle operators, was “not convinced that the proposed online checking system will be robust enough to cope with industry demands”.

Paying a ‘fair’ share

As fleets got to grips with the new online service, or turned to licence-checking companies instead, the Government was raising concerns over salary sacrifice, and its impact on the Treasury’s tax take.

To counter concerns, salary sacrifice provider Tusker commissioned PricewaterhouseCoopers (PwC) to look at the impact of salary sacrifice for cars on Treasury coffers, the results of which were exclusively revealed by Fleet News in June.

The report argued that car schemes provide a net financial benefit to HM Treasury, and deliver a range of benefits to the wider society.

Mark Sinclair, chief operations officer at Tusker, said: “There is such a misconception in the market place around the net effect of salary sacrifice.

“We wanted to demonstrate that, from a tax perspective, salary sacrifice car schemes benefit the UK as a whole.”

However, those Government concerns still remain, and were reiterated in the recent Autumn Statement.

Air quality concerns

There was also mounting concern over air quality. London had announced it was launching the world’s first ultra-low emission zone as the Government looked at how it could mitigate the harmful effects of exhaust emissions.  

But, in July it was ordered to clean up the UK’s air quality by the Supreme Court following a case brought by activist lawyer group Client Earth.

The group blamed the UK’s tax policies for encouraging the uptake of diesel cars, which it said were a “principal source” of nitrogen oxide (NOx) emissions.

Client Earth lawyer Alan Andrews said the Supreme Court ruling would “force the Government to finally take this issue seriously and come up with an urgent plan to rid our towns and cities of cancer-causing diesel fumes”.

The Department for Environment, Food and Rural Affairs (DEFRA) was forced to act and responded with draft plans.

And, Fleet News revealed that diesel car and van operators were likely to face restrictions on driving in city centres as part of those plans to improve air quality.

New so-called ‘clean air zones’, which could result in charges being introduced for the most polluting vehicles or them being banned altogether, are likely to be needed in six English cities that are projected to fail EU air quality standards by 2020.

The Government is also aiming to lead by example. A DEFRA report said that the Government “will seek to ensure that NOx emissions are taken into account in procurement decisions”.

Defeat devices and CO2 “irregularities”

However, the biggest environmental story of the year was also the biggest news story of the year. The motor industry, and Volkswagen Group in particular, were in the dock over emissions.

The maker of VW, Audi, Skoda and Seat cars had been employing a so-called defeat device to cheat strict emissions rules in the US.

Globally, 11 million diesel cars sold worldwide were fitted with software that disguised pollution levels during testing.

It then got worse still when Fleet News revealed Volkswagen Group brands were telling fleets they couldn’t guarantee the CO2 emissions of certain vehicles. Quoted figures were instead being labelled "provisional".

It was initially thought that globally some 800,000 vehicles were involved. But just weeks later, the VW Group said issues with CO2 data hadn’t been as widespread as first thought.

It remains to be seen what lasting impact it will have on the Volkswagen Group and confidence in its brands.

Mergers and acquisitions

This year, brought another round of mergers and acquisitions for the leasing industry however, showing confidence here remains high.

In June, Arval announced it was buying GE Capital.

The move was part of a global transaction under which Element Financial Corporation, Arval’s partner in North America, acquired GE Capital’s fleet businesses in the USA, Mexico, Australia and New Zealand for around £5.5bn.

It came less than a year after Element bought PHH Arval, then the USA’s third biggest fleet management company, which created the global partnership with Arval. Jointly, the two organisations would manage more than three million vehicles in 40 countries.

Another multi-billion pound deal was around the corner when LeasePlan’s Dutch parent company was sold to a consortium of investors for £2.6bn.

Hans Dieter Pötsch, chief financial officer of Volkswagen Group, said the change of heart was due to an “attractive offer received from investors”.

The deal came just a few months after LeasePlan had terminated talks with an unnamed consortium over its possible sale, declaring it had no plans to pursue further options leading to a “divestment of LeasePlan in the near future”.

There were also to be ownership changes at FMG and Nexus Vehicle Rental.

It was the lure of a long-term investment plan from Redde which helped convince FMG’s management team to accept a £42.3 million bid for the business.

The deal saw incident management firm FMG join Helphire and Total Accident Management and a further four companies that are already under Redde’s stewardship.

Meanwhile, private equity firm Bowmark Capital took a majority stake in Nexus Vehicle Rental earlier this month.

The £51m buy-out came seven years after private equity firm Livingbridge bought the company for £9.5m in 2008.

Chancellor makes fleets pay

George Osborne was back at the dispatch box in July, giving his first Budget speech as the chancellor of a majority Conservative Government.

He announced changes to vehicle excise duty (VED) in the Budget which Fleet News revealed could create extra cost for the fleet industry and damage the take-up of the ‘greenest’ cars.

The chancellor wanted to plug a growing tax shortfall from road tax receipts and, for the first time since 1936, he ringfenced funds for spending on strategic roads.

He warned that, if left unchanged, more than three quarters of new cars would pay no VED at all in the first year by 2017. 

Gary Killeen, fleet services commercial leader for GE Capital UK, said: “Overall, total increases ranging from £250 to £1,470 will be seen over four years for cars in the typical fleet CO2 range of 91g/km to 130g/km.”

The Government again targeted the fleet industry, and company car drivers in particular, in the Autumn Statement.

It reacted angrily after being hit with a £1.36 billion bill, thanks to a Government U-turn on company car tax.

Fleet operators and company car drivers had expected the 3% diesel differential to be ditched from April 2016.

However, more than three years after making that pledge, the chancellor announced it will be removed in April 2021 – five years later than originally planned. 

Duty of care

There was also an announcement in July’s Budget of a consultation on a proposal to raise the first MOT test for cars from three to four years from registration.

“Cars are more reliable than ever, but extending the first MOT deadline could pose safety issues for cars that are doing high mileages and aren’t serviced regularly,” said Gerry Keaney, chief executive of the BVRLA.

Duty of care concerns were brought even sharper into focus by the country’s first driving case under corporate manslaughter.

Baldwins Crane Hire became the first firm to be charged with corporate manslaughter where a company driver had been killed.

Lindsay Easton was driving a heavy crane down a steep road away from a wind farm at Scout Moor, Lancashire, when the vehicle crashed into an earth bank and fell from the road.

The company was found guilty earlier this month and will be sentenced this week, with a hefty fine expected.

Dart confusion and driverless cars

It was more a case of the number of fines rather than its size when it came to the newly introduced Dart Charge.

Fleet News reported in August how industry concerns about the new payment regime for the Dartford Crossing would be included in a report on the new system.

Fleets were left exasperated having reported problems with roadside warning signs, the Dart Charge website and an increase in administration dealing with fees and fines.

Another subject which was in and out the news during 2015 was to be driverless cars.

The Government announced that driverless cars could be tested on public roads at the start of the year, with trials of autonomous vehicles approved in Bristol, Coventry, Milton Keynes and Greenwich as part of a £19 million programme.

The then business secretary, Vince Cable, said: “The projects we are now funding will help to ensure we are world-leaders in this field and able to benefit from what is expected to be a £900 billion industry by 2025.”

It was followed by the news that the creation of a cross-departmental approach to intelligent mobility, called for in the Fleet Industry Manifesto, had been adopted by the Government.

The new joint policy unit was established by the Department for Transport (DfT) and the Department for Business, Innovation and Skills (BIS).

Called the Centre for Connected and Autonomous Vehicles (C-CAV), it will co-ordinate Government policy on driverless cars and connected technology.

Fatal crash and the DVLA

The deaths of six people in Glasgow city centre just before the start of the year meanwhile, put driver health checks in the spotlight in 2015. 

The fatal accident inquiry into the Glasgow lorry bin crash called on the Government to overhaul the law governing the non-disclosure of medical information.

Sheriff John Beckett’s report suggested the DfT should consult on how best to ensure the DVLA has the proper information to make fitness-to-drive licensing decisions, with consideration given to increasing the penalties and altering the method of prosecution for non-disclosure.

Beckett also recommended the DVLA should change its policy so relevant information on fitness to drive, from third parties such as the police, could be investigated and it should "redouble its efforts to raise awareness of the implications of medical conditions for fitness to drive".

The fatal accident inquiry (FAI) found that the tragedy could have been avoided if the driver Harry Clarke had not lied about his medical history.

Company cars and the environment

The dramatic change in the CO2 emissions make-up of the company car fleet was illustrated by newly published data from HM Revenue and Customs (HMRC).

In the tax year 2002/03, more than half of the company car fleet (58%) had emissions values in excess of 165g/km. Ten years later, that had fallen to just 9%.

The data also revealed that the number of company cars on UK roads had remained at the same level for the past two years.

The provisional figures for the 2013/14 tax year showed that benefit-in-kind tax was paid on a total of 940,000 company cars and that about 81% of company cars used diesel fuel. Looking back to 2002/03, only 33% of company cars used diesel.

The introduction of Euro 6 engines would have suggested a softening of attitudes towards diesel, given their more stringent standards.

However, the Volkswagen emissions scandal and air quality concerns have forced the car industry mount a staunch defence of the engine type in 2015.

The automotive industry launched the 'CleanDieselTech campaign at the beginning of September to coincide with all new cars having to meet Euro 6 emissions regulation.

Demonising diesel

It came in the wake of a report from the London Assembly which called on all diesel cars to be banned from the capital.

'Driving away from diesel: Reducing air pollution from diesel vehicles,' found that diesel road traffic is responsible for 40% of London's NOx emissions.

However, Glass's warned that knee jerk reactions to studies showing the negative impact of diesel emissions on urban air quality could be counterproductive as well as affect sales and use of diesel cars and commercial vehicles.

Rupert Pontin, head of valuations, pointed out that while some older diesel vehicles undoubtedly pump out too much nitrogen oxide and other potentially harmful substances, those that meet the latest emissions standards are virtually as clean as petrol.

It led to the Government having to insist that it’s “not anti-diesel”, amid concerns from the fleet industry that the Volkswagen Group emissions scandal was negatively influencing taxation decisions.

“The Government is not anti-diesel,” transport minister Andrew Jones told delegates at the 2015 BVRLA Industry Conference via video link.

“Diesel cars have played, and continue to play, a valuable role in reducing fuel usage and emissions of CO2.”

Total average CO2 emissions of BVRLA members’ fleets are currently 118.3g/km, while the average for new orders by BVRLA members is 113g/km.

“We can be a significant enabler in driving down CO2 and NOx if they allow us to work with them and if they can put in place the right framework to support some of these initiatives,” said BVRLA chief executive Keaney.

“They have not been particularly friendly in terms of how they have treated us for capital allowances, or in terms of benefit-in-kind changes.

“They’re not particularly friendly in terms of what they’ve done with recent changes to vehicle excise duty, but I think there is an opportunity for us to get Government support in terms of where we can help them with this key issue.”

Keep up to date with the latest, breaking news in 2016, with www.fleetnews.co.uk.

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