ACFO, the major representative body for car and van fleet operators, fears its concerns over the Government scrappage scheme may have been realised with the latest new vehicle registration figures from SMMT (Society of Motor Manufacturers and Traders), revealing the massive decline in the sale of new cars and vans to businesses this year and the scheme’s failure to help Britain’s businesses which are traditionally responsible for buying at least 60% of all new cars sold and almost all vans, according to ACFO.
Fleet car sales – vehicles bought by companies running more than 25 vehicles – in September totalled 136,819 units, 13.6% down on September 2008 (158,330) to leave year-to-date sector registrations down 25.1% after nine months of 2009 at 683,163 (2008: 912,644).
The sales picture is equally grim, says ACFO, in the business sector – sales to sub-25 fleets – where registrations in September 2009 totalled 19,930, 11.3% down on 12 months ago (22,468). This year sector sales are 29.4% down at 79,688 units (2008: 112,821).
While private buyers have visited new car showrooms in significant numbers, the overall drop of 277,000 units in new car sales is now composed almost entirely of the decline in fleet and business car registrations, which together amount to 262,614 vehicles. Meanwhile, van sales continue to spiral down with figures down more than a fifth last month and more than 40% this year, again almost entirely due to businesses not replacing existing vehicles.
Additionally, the recession has resulted in many companies extending vehicle replacement cycles from three to four years and even into a fifth year in many cases. With companies delaying fleet replacement cycles it means that the Government’s push to encourage the uptake of lower emission vehicles has effectively ‘lost’ a year.
ACFO director Stewart Whyte said: "The scrappage scheme was launched in haste and amid much lobbying from the motor manufacturers and retailers. But it has helped only one sector of the marketplace – private buyers who are in the minority when it comes to buying vehicles. The scheme has done absolutely nothing to encourage businesses to renew their company cars and vans."
In April at a pre-scrappage scheme meeting held at the SMMT, ACFO said that the whole UK new and used car market must benefit from any Government-funded scheme.
ACFO wanted to see: A scrappage scheme apply to new and used cars up to four-years-old; Used vehicles to be Euro4 compliant with CO2 emissions below 160/165 g/km, linked to one of the current VED or corporation tax thresholds for clarity, simplicity and administrative ease; A sliding scale of scrappage scheme payments linked to the age of the vehicle being purchased; Priority to replacing many older Government-operated units as ‘real’ sales; Scheme in place for a pre-determined period of time, for example 18 months
Mr Whyte said: "The Government choose to ignore our pleas. We had a short-term scheme which appears to have worked well, but has only benefitted the retail buyer and the dealer networks. The collapse in residual values of three to five-year-old fleet cars and vans is on-going: although there has been some recovery from the depth of early 2009, these residuals are still well below historic norms. That represents a very real cost to businesses, through the increased depreciation costs.
"Many businesses have yet to see any signs of the much-talked about green shoots of recovery. With company finances remaining under pressure and no incentive scheme to take advantage, many public and private sector fleets are simply not in the market for new vehicles and are being forced to run older vehicles.
"This is not only damaging to new car and van sales, but also means that fleets, which have traditionally operated the majority of the newest cars in Britain and therefore led the drive towards lower emission vehicles, are struggling to help the Government’s environmental drive."
He concluded: "It is probably too late for this Government to re-launch the scrappage scheme to make it more accessible to fleets. However, the Government and the motor industry should acknowledge that new car and van sales would probably have been significantly higher in 2009 if an incentive scheme had applied to the whole market and not just one minority section."